-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K3qVBOASQKJIxhIVhS2U/ky89hhlJgfDDMylaJpOnSdrsqauhy7PYW66Z0AF5FhD YYaSEqsDK0kouHR06znoJQ== 0000796912-98-000009.txt : 19980702 0000796912-98-000009.hdr.sgml : 19980702 ACCESSION NUMBER: 0000796912-98-000009 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980701 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAYERS INTERNATIONAL INC /NV/ CENTRAL INDEX KEY: 0000796912 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 954175832 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-14897 FILM NUMBER: 98658998 BUSINESS ADDRESS: STREET 1: 1300 ATLANTIC AVENUE STREET 2: SUITE 800 CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 609-449-7777 MAIL ADDRESS: STREET 1: 1300 ATLANTIC AVE STREET 2: STE 800 CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 FORMER COMPANY: FORMER CONFORMED NAME: PLAYERS CLUB INTERNATIONAL INC DATE OF NAME CHANGE: 19861020 10-K 1 42 THIS DOCUMENT IS A COPY OF THE FORM 10-K FILED ON JUNE 30, 1998 PURSUANT TO RULE 201 TEMPORARY HARDSHIP EXEMPTION. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 1998 OR [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number: 0-14897 PLAYERS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Nevada 95-4175832 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Suite 800, 1300 Atlantic Avenue, Atlantic City, New Jersey (Address of principal executive offices) 08401 (Zip Code) (609) 449-7777 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.005 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of June 25, 1998, the aggregate market value of the registrant's Common Stock held by non-affiliates of the registrants was not less than $114,000,000. As of June 25, 1998, there were 31,941,737 shares of the registrant's Common Stock outstanding. Documents Incorporated by Reference: The information required by Part III of this report is incorporated by reference from the Registrant's Proxy Statement to be filed with the Commission not later than 120 days after the end of the fiscal year covered by this report. PART I Item 1. Business General Players International, Inc. (the "Company") is a multi- jurisdictional gaming company with operations in Illinois, Louisiana, Missouri and Kentucky. The Company operates a cruising riverboat casino in Metropolis, Illinois (the "Metropolis Riverboat"), two cruising riverboat casinos in Lake Charles, Louisiana (the "Lake Charles Riverboats"), two dockside riverboat casinos in Maryland Heights, Missouri (the "Company's Maryland Heights Casinos") and the Players Bluegrass Downs horse racetrack in Paducah, Kentucky ("Players Bluegrass Downs"). The Metropolis Riverboat, which is the only riverboat operating in Southern Illinois, attracts patrons from its target markets in Illinois, Indiana, Kentucky, Missouri and Tennessee. The Lake Charles Riverboats serve the Houston, Texas and southwest Louisiana markets. On March 11, 1997, the Company and Harrah's Entertainment, Inc. ("Harrah's") each opened two dockside riverboat casinos and jointly opened a landside hotel and entertainment facility in Maryland Heights, Missouri (collectively, the "Maryland Heights Facility"). The Company's marketing and operational strategy is designed to provide its guests with superior customer service and entertainment value for their gaming dollar and focuses on middle- income customers who live within a 150-mile radius of the Company's facilities. The Company's sites are conveniently located near frequently traveled interstate highways and have easy access and ample parking to satisfy the demands of local and frequent visitors. On-site customer service efforts are intended to establish personal relationships with patrons that result in ongoing loyalty to, and repeat patronage of, Players' casinos. Player tracking systems record gaming activity and corresponding complimentary expenses in a player database from which each property targets its best players with special offers through direct mail. In September, 1996, the Company determined to focus its financial resources and core operating competencies on its Metropolis, Illinois and Lake Charles, Louisiana facilities and its Maryland Heights, Missouri dockside casino project. Consistent with this focus, the Company subsequently (i) eliminated development efforts in emerging and developing gaming jurisdictions, (ii) sold its unprofitable land-based casino spa and resort in Mesquite, Nevada (the "Mesquite Property"), (iii) reduced senior management and corporate staff that had concentrated on development activities and (iv) disposed of assets held for future development and assets that were not needed for its core operating focus. The Company's capital expenditures since that time have been used to complete and open the Maryland Heights Facility in March, 1997, open a new island- themed dining and entertainment barge at the Metropolis facility in December, 1997, and acquire, in January, 1998, a 269-room hotel formerly operated as the Lake Charles Holiday Inn, which is located adjacent to the Company's Lake Charles facility (the "Lake Charles Holiday Inn Acquisition"). The Company's principal executive offices are located at 1300 Atlantic Avenue, Suite 800, Atlantic City, New Jersey 08401 (Telephone: 609-449-7777). Metropolis Operations The Metropolis facility commenced operations on February 23, 1993 and is the only riverboat casino operating in southern Illinois. The Company holds one of ten statutorily authorized gaming licenses in Illinois. Under Illinois law, licenses are renewed annually after the first three years of operation. The Metropolis gaming license was most recently renewed for a one- year period in February, 1998. The Metropolis facility offers a four deck historical replica of a paddlewheel riverboat. The riverboat features a fully-equipped Las Vegas style casino that contains approximately 22,000 square feet of gaming space. The casino is equipped with 900 slot machines and 50 table games for a total of approximately 1,200 gaming positions as defined by Illinois regulation. Beginning in June, 1995, the Company changed its Metropolis cruising schedule from a three-hour cruise to a two-hour cruise in order to increase patron boarding opportunities. The docking site at the Metropolis facility includes a new $9.6 million dining and entertainment facility which was added in December, 1997. This 27,000 square foot barge has a tropical theme and offers a 300-seat upgraded buffet facility, a 140-seat fine dining facility, a new entertainment lounge, a queuing and guest services area and a VIP area. The Metropolis facility has approximately 1,400 automobile and bus parking spaces. The Company also holds a 12.5% limited partnership interest in a joint venture which constructed a 120-room hotel adjacent to the Metropolis facility. The hotel opened in March, 1994. The Company is entitled to a discounted rate for a specified number of hotel rooms used for casino guests. The Company also leases, under a ten-year agreement, a 350-seat cabaret style theater adjacent to the hotel, which is used for special events and promotions. The Metropolis facility is located approximately three miles from U.S. Interstate 24, a major highway through Illinois, Kentucky and Tennessee. Passenger counts are higher during warmer weather (from late Spring through early Fall) than during the Winter months. The Company anticipates that this seasonal passenger count trend will continue in the future. Lake Charles Operations The Lake Charles facility commenced operations in the City of Lake Charles, Louisiana on December 8, 1993 with one riverboat casino, the Players Lake Charles Riverboat. In January 1995, the Company acquired all interests in a partnership that owned another fully-equipped Las Vegas style riverboat casino, the Star Riverboat, which previously operated for one and one-half years on Lake Pontchartrain near New Orleans. The Company relocated the Star Riverboat to Lake Charles and reopened it in April, 1995. The Company presently holds two of a current maximum of fifteen statutorily authorized riverboat casino licenses in Louisiana. Under Louisiana law, licenses are initially issued for a term of five years and then considered for renewal annually thereafter. The initial Players Lake Charles Riverboat license will expire December 6, 1998. The initial Star Riverboat license will expire August 9, 1998. The Players Lake Charles Riverboat and the Star Riverboat are docked at a common docking site. The Players Lake Charles Riverboat is a fully-equipped three deck Las Vegas style casino that has approximately 29,200 square feet of gaming space and is equipped with 998 slot machines and 60 table games for a total of approximately 1,427 gaming positions. The Star Riverboat is a fully-equipped three deck Las Vegas style casino that has approximately 21,730 square feet of gaming space and is equipped with 729 slot machines and 46 table games for a total of approximately 1,069 gaming positions. Both the Players Lake Charles Riverboat and the Star Riverboat operate staggered three- hour cruises up to 24 hours a day. While each riverboat is required by state law to cruise, the staggered cruise schedules allow the Company to offer patrons the equivalent of dockside gaming since a riverboat is almost continually available for boarding by patrons at the docking site. The Lake Charles facility features the Players Hotel, a Company-owned land based 134-room hotel with meeting and entertainment space and a 60,000 square foot floating entertainment "Island." Riverboat casino passengers walk through the Island, which is connected to the Players Hotel by a covered walkway, to board the Players Lake Charles Riverboat and the Star Riverboat. The Island offers a tropical theme with lush foliage, waterfalls and rockscapes. The Island includes a gift shop, a 150-seat upscale restaurant, a 350-seat buffet restaurant, a 145- seat sports bar, and a 50-seat Cajun themed snack bar. The Island also offers a large queuing area and a pirate themed animatronics show for guests to view on their way to board the riverboats. The Company also maintains a permanently moored barge of approximately 10,000 square feet adjacent to the Island, which houses an employee breakroom, administrative offices and mechanical rooms. On January 9, 1998, the Company completed the acquisition of a 269-room hotel formerly operated as the Lake Charles Holiday Inn, for a total purchase price of approximately $19.2 million. The Company's management believes that the Lake Charles Holiday Inn Acquisition will allow it to enhance its Lake Charles gaming operations by offering additional hotel rooms as part of its marketing programs and increasing the length of stay of traveling patrons, thereby increasing traffic to the casinos. The hotel, which is located adjacent to the Company's Lake Charles property, is not operated as a Holiday Inn-franchised hotel. Parking facilities at the Lake Charles facility consist of a 540 space, on-site multi-story parking garage, a 270-space surface parking area obtained through the Lake Charles Holiday Inn Acquisition and several off-site surface parking facilities that provide approximately 900 additional automobile and bus parking spaces. The Company recently reached an agreement with the City of Lake Charles, both to settle certain litigation with the City and to establish a permanent method of calculating the admission fee payable to the City on the Company's two Lake Charles Riverboats. Under the new agreement, which began as of March 1, 1998, the Company will pay the City both a percentage of gaming revenue in lieu of a per-passenger admission fee, and a fixed annual payment of approximately $544,000 per year for ten years. The percentage payment is subject to certain minimum payments, as specified in the agreement. See "--Louisiana Gaming Regulation." The City of Lake Charles and the surrounding area have a population of approximately 300,000 adults of legal gaming age within a 50-mile radius. The Lake Charles facility's primary market area also includes such population centers as Houston, Beaumont, Galveston, Orange and Port Arthur, Texas and Lafayette and Baton Rouge, Louisiana. Approximately 4.4 million adults of legal gaming age reside within 150 miles of the Lake Charles facility. The Lake Charles facility is situated immediately adjacent to U.S. Interstate 10 which connects Houston, Beaumont and Lake Charles providing easy access to the casinos. The Lake Charles Riverboats draw over half of their patrons from Texas, due in large part to the current absence of legalized casino gaming in Texas. The facility faces direct competition from Isle of Capri casino, situated approximately one mile from the Lake Charles facility, and the land-based Coushatta Indian casino situated in Kinder, Louisiana, approximately 35 miles away. Road construction is tentatively scheduled to begin on U.S. Interstate 10 near the Company's Lake Charles facility in September, 1998 and is scheduled to be completed in March, 1999. The construction will result in lanes of U.S. Interstate 10 being closed for periods of time, although the Company has been advised that one Eastbound lane and one Westbound lane will always remain open, permitting access to and from the casino. The Company does not know what effect, if any, the traffic delays caused by road construction will have on patronage to the facility, although significant delays may adversely impact patronage to the Company's facility. Maryland Heights Operations On March 11, 1997, the Company and Harrah's opened a riverboat casino entertainment facility in Maryland Heights, Missouri, a suburb of St. Louis. The Maryland Heights Facility offers four permanently moored, dockside riverboat casinos totaling approximately 120,000 square feet of gaming space. The four casinos at the Maryland Heights Facility are permanently moored to a land-based 95,000 square foot entertainment facility, which has a turn-of-the-century St. Louis theme and includes retail shops, two 125-seat specialty restaurants (the Company and Harrah's each operate one of the specialty restaurants), a 540- seat buffet, a 125-seat entertainment lounge, a variety of retail stores, a child care facility, 10,000 square feet of convention/meeting space, a 9,000 square-foot sports bar and a 1,850 space parking garage and 2,650 surface parking spaces (the "Maryland Heights Entertainment Facility"). The Maryland Heights Facility also offers a 291-room hotel with 12 luxury suites (individually, the "Maryland Heights Hotel," and together with the Maryland Heights Entertainment Facility, the "Landside Facility"). The Company and Harrah's each individually manage, operate and market two of the four permanently moored, dockside casinos pursuant to separate gaming licenses. The Company's Maryland Heights Casinos have total gaming space of approximately 60,000 square feet and are equipped with, in the aggregate, 1,334 slot machines and 80 table games for a total of approximately 1,814 gaming positions. The Company's Maryland Heights Casinos feature a tropical island theme with lush foliage, waterfalls and rockscape. In accordance with Missouri gaming regulations, one of the Company's two casinos remains open for patron boarding for a _ hour period while the other Company casino is closed to boarding, and only one casino facility is open for boarding at any given time. Only one of the Harrah's casinos at the Maryland Heights Facility is likewise open for boarding at any given time. The Company's Maryland Heights Casinos pay Harrah's a ground lease payment based upon a percentage of their annual net gaming revenue. Both the Company and Harrah's are 50% owners of the Maryland Heights Joint Venture, the entity which (i) owns the Maryland Heights Entertainment Facility and the Maryland Heights Hotel and (ii) owns the dockside barges that house each of Harrah's and the Company's casino operations at the Maryland Heights Facility. Under the agreement governing the Maryland Heights Joint Venture (the "Maryland Heights Joint Venture Agreement"), each of Players and Harrah's (i) is entitled to 50% of all profits, and is responsible for 50% of all losses, from the Landside Properties (excluding profits and losses from each entity's separately operated specialty restaurant), (ii) was responsible for the fit-out, furnishings and equipment at its own specialty restaurant and casinos, and (iii) derives all profits, and is responsible for all losses, from its separately operated specialty restaurant and casinos. The Company expended approximately $26.5 million for the fit-out, furnishings and equipment of its separately operated specialty restaurant and casinos, including approximately $12.6 million for slot machines and other gaming equipment. The Company's share of the total project cost, excluding capitalized interest, approximates $141 million. The Maryland Heights Facility is strategically located to attract patrons from a local population base of approximately 2.3 million in the greater St. Louis metropolitan region. The site features easy accessibility, a high level of drive-by traffic, and is located adjacent to the Riverport Amphitheater, which currently attracts 500,000 visitors per year. Pursuant to a separate management agreement (the "Management Agreement"), an affiliate of Harrah's manages the Maryland Heights Hotel and the Maryland Heights Entertainment Facility, with the exception of the Company's specialty restaurant and retail space. The Management Agreement has a basic term that expires on December 31, 2005, with fourteen renewal terms of five years each. The Company maintains separate riverboat casino licenses for each of its two casinos that are issued by the Missouri Gaming Commission. Each license is for a one year term. Missouri Gaming regulations limit patron gaming to $500 per two hour cruise session. In addition, while the Company's two riverboat casinos are permanently moored, state law requires the Company to simulate two hour cruises. The Company is involved in certain litigation regarding the constitutionality of gaming facilities (such as the Maryland Heights Facility) located upon artificial basins fed by the Missouri River. See Part I, Item 3, W. Todd Akin, et al. v. Missouri Gaming Commission. Based on the outcome of the November referendum and subsequent court proceedings, the possibility exists that the Company could be forced either to remediate or close the Maryland Heights Facility. Players Bluegrass Downs Operations Players Bluegrass Downs, a racetrack located in Paducah, Kentucky, was acquired by the Company in November, 1993 and holds live racing meets each Fall as well as year-round simulcasting of horse racing events. During the year when live race meets are not scheduled, the racetrack facilities are leased for special events and activities. During the fourth quarter of fiscal 1997, the Company reevaluated Players Bluegrass Downs, determined that the investment was impaired, and wrote down the facility to a value of $475,000. During fiscal 1999, the Company plans to begin operating Players Bluegrass Downs as a harness racetrack and discontinue the thoroughbred racing that previously had been conducted. Discontinued Mesquite Operations On February 28, 1997, the Company entered into an Asset Purchase Agreement with RBG, LLC to sell substantially all of the assets constituting its unprofitable Mesquite Property for $29 million cash and a $1.5 million two-year promissory note. Following final consummation of the sale transaction, the Company ceased operating the Mesquite Property on June 30, 1997. Competition The casino gaming industry includes land-based casinos, dockside casinos, cruising riverboat casinos and land-based casinos on Indian reservations. The gaming industry is highly competitive and is composed of a large number of companies. Numerous states have legalized gaming and several other states are considering the legalization of gaming in designated areas. Indian gaming on tribal land also continues to expand. As a result of the proliferation of gaming, the Company's operations have been adversely affected. New gaming facilities that have opened in markets served by the Company's facilities have diluted the market by competing for existing patrons of the Company's facilities. The Company anticipates this trend will continue as new competition comes on line and existing competitors enhance their facilities. In addition, many of the Company's direct competitors have significantly greater resources as compared to those of the Company. Competitors with greater resources than the Company enjoy a competitive advantage since they have more flexibility in the manner in which they manage, operate and expand their facilities. The Metropolis facility's closest gaming competitor operates in Evansville, Indiana, approximately 110 miles away. Another competing riverboat casino operates in Caruthersville, Missouri, which is approximately 120 miles southwest of the Metropolis facility. A competitor plans to open a casino hotel resort in late-1998 in Corydon, Indiana, across from Louisville Kentucky, approximately 200 miles from Metropolis. While this facility should have limited direct impact on Metropolis, the introduction of additional capacity could intensify competition for all existing gaming operators in Southern Illinois and Indiana for patrons residing in common shared outer markets, specifically patrons residing in Tennessee. The Metropolis facility faces further competition as additional riverboats become licensed in Southern Indiana and Missouri. Metropolis also experiences significant competition for Tennessee patrons, as well as some Illinois and Missouri patrons, from dockside casinos in Tunica, Mississippi. Casinos operating in Tunica, Mississippi enjoy a competitive advantage over the Company's Metropolis facility since they offer permanently moored, dockside facilities while the Company's riverboat is required to cruise by state law. The Lake Charles facility faces direct competition from Isle of Capri, which opened with one Las Vegas style riverboat casino on July 29, 1995 in Westlake, Louisiana, approximately one mile from the Company's facility. In May 1996, the Isle of Capri opened a 105,000 square foot pavilion which offers a 489-seat buffet, a live entertainment facility, retail operations and a 1,400 space parking garage. In July, 1996, the Isle of Capri opened a second Las Vegas style riverboat casino. The first of the Isle of Capri's two riverboat casinos presently offers approximately 24,700 square feet of gaming space with 892 slot machines and 46 table games, while the other riverboat casino offers approximately 24,200 square feet of gaming space with 944 slot machines and 48 table games. A 241-room hotel and a restaurant constructed by Isle of Capri opened in September, 1997. Construction of another hotel has also been announced. Eastbound travelers from Texas and western Louisiana on Interstate 10 are able to access the Isle of Capri prior to reaching the Company's facility. The Lake Charles facility also faces direct competition from the land-based Coushatta Indian casino facility in Kinder, Louisiana. The Coushatta facility, which opened in January, 1995, and expanded in August, 1995, is a Las Vegas style casino that currently offers approximately 71,000 square feet of gaming space, 2,100 slot machines and 72 table games. Grand Casinos, Inc., which manages the facility, has also opened an upscale restaurant and a 200-pad RV park. Construction on a 650 room hotel is underway, and further expansion plans, which include an additional 27,000 square feet of gaming space, an additional restaurant, and a golf course have been announced. In addition to the Coushatta facility, the Lake Charles facility competes to a lesser degree with riverboat operators in Baton Rouge, approximately 125 miles east of Lake Charles, the New Orleans area, approximately 200 miles east of Lake Charles, and the Shreveport/Bossier City area, which is approximately 180 miles north of Lake Charles. In the 1997 Regular Session of the Louisiana Legislature, a law was passed authorizing the operation of slot machines at three horse racing tracks in Louisiana, including a racetrack situated in Calcasieu Parish (the same Parish as the Company's Lake Charles facility), Delta Downs. Under the law, before slot machines can be operated at Delta Downs (a) voter approval is required through a local referendum election in Calcasieu Parish and (b) companion legislation must be passed by the Louisiana Legislature to establish the tax rate to be levied on slot machine revenues. In the Fall of 1997, voters in Calcasieu Parish voted not to authorize the operation of slot machines at Delta Downs. In addition, the Louisiana Legislature, in its 1998 Fiscal Session, failed to pass such companion tax legislation. However, the law provides that another local referendum may be conducted every two years, and companion tax legislation may be considered in any future session of the Louisiana Legislature. The Company's Maryland Heights Casinos compete with all of the gaming operators in the greater St. Louis market, including the Company's joint venture partner, Harrah's, the nearby St. Charles Station in St. Charles, Missouri, the President Riverboat in downtown St. Louis, Missouri, the Alton Belle in Alton, Illinois and the Casino Queen in East St. Louis, Illinois. The Company's joint venture partner, Harrah's, has 1,395 slot machines and 60 table games for a total of approximately 1,755 gaming positions. The President facility operates a single gaming facility with 1,065 slot machines and 60 table games for a total of approximately 1,601 gaming positions. The St. Charles facility consists of two riverboat gaming facilities with a total of 1,792 slot machines and 90 table games for a total of approximately 2,387 gaming positions. Additionally, St. Charles has announced a $190 million expansion project, for which construction has been halted for at least a temporary basis. Casino Queen operates a single riverboat with 1,011 slots and 52 table games for a total of approximately 1,323 gaming positions. Alton Belle has a total of 684 slots and 35 table games for a total of approximately 894 gaming positions. As Illinois operators, neither the Casino Queen nor the Alton Belle are subject to the same loss limits per passenger imposed in Missouri. The Company's Maryland Heights Casinos may compete with additional riverboats in the St. Louis metropolitan area to the extent that additional licenses, if any, are granted by the Missouri Gaming Commission. Employees As of June 12, 1998, the Company had approximately 3,700 employees, including 850 employed in Metropolis, 1,781 employed in Lake Charles, 44 employed at Players Bluegrass Downs, 990 employed in Maryland Heights and 36 employed in the Company's corporate and administrative offices. The Company believes its relations with its employees are generally good. Gaming Regulation The Company is subject to state and Federal laws which regulate businesses generally and the gaming business specifically. Below is a brief description of some of the more significant regulations to which the Company is subject. All laws are subject to change and different interpretations. This is especially true with respect to current laws regulating the gaming industry, since in many cases these laws and the regulatory agencies applying them are relatively new. Changes in laws or their interpretation may result in the imposition of more stringent, burdensome and expensive requirements, or the outright prohibition of an activity. Illinois Gaming Regulation The Riverboat Gambling Act of Illinois (the "Illinois Riverboat Act") currently authorizes a five-member Illinois Gaming Board to issue up to ten riverboat gaming licenses. Eight additional licensees are currently operating in Illinois. A ninth license was not renewed by the Board. The status of this license renewal remains pending until final action by the Board after administrative procedures are completed. The Illinois General Assembly is currently entertaining legislation to expand the number of permitted riverboat gaming licenses beyond ten. Each owner's license entitles the licensee to own and operate up to two riverboats (with a combined maximum of 1,200 "gaming positions," as such term is defined under Illinois law) and equipment thereon from a specified dock site. The duration of the license initially runs for a period of three years. Thereafter, the license is subject to renewal on an annual basis upon, among other things, a determination by the Illinois Gaming Board that the licensee continues to meet all of the requirements of the Illinois Riverboat Act and the Illinois Gaming Board's Rules. The Illinois Gaming Board issued an owner's license to a wholly-owned subsidiary of the Company for its Metropolis facility in February, 1993. The Metropolis facility's license was most recently renewed in February, 1998. All licensees have a continuing duty to maintain suitability for licensure. The Illinois Riverboat Act and Illinois Gaming Board Rules grant the Illinois Gaming Board extensive jurisdiction and specific powers and duties for the purposes of administering, regulating and enforcing the system of riverboat gaming. These powers are far reaching and include the power to limit, proscribe or effectively rescind the payment of dividends or the repayment of indebtedness to the Company in certain circumstances, including any adverse financial condition, default, non- compliance or insolvency of any Subsidiary or the Company. The Illinois Gaming Board may revoke, suspend or place conditions on licenses or fine licensees, in any case as the Illinois Gaming Board may see fit and in compliance with applicable laws of the State of Illinois regarding administrative procedures and may suspend an owner's license, without notice or hearing, upon a determination that the safety or health of patrons or employees is jeopardized by continuing a riverboat's operation. The suspension may remain in effect until the Illinois Gaming Board determines that the cause for suspension has been abated. The Illinois Gaming Board may revoke the owner's license upon a determination that the owner has not made satisfactory progress toward abating the hazard. A holder of an owner's license is required to obtain all licenses from the Illinois Gaming Board necessary for the operation of a riverboat, including a liquor license, a license to prepare and serve food, and all other necessary licenses. All sales, use, occupation and excise taxes which apply to food and beverages apply to sales aboard riverboats. All riverboats must be accessible to disabled persons, must be either a replica of a 19th century Illinois riverboat or be of a casino cruise ship design, and must comply with applicable Federal and state laws, including U.S. Coast Guard regulations. A person employed at a riverboat gaming operation must hold an occupation license from the Illinois Gaming Board, which permits the holder to perform only activities included within such holder's level of occupation license or any lower level of occupation license. The Illinois Gaming Board also requires that officers, directors and other key persons of a gaming operation be licensed. In addition, a riverboat licensee can purchase or lease gaming equipment or supplies only from a supplier who has been issued a supplier's license by the Illinois Gaming Board. As a condition to maintaining an owner's license, the licensee must, among other things, submit detailed financial information and other information to the Illinois Gaming Board including an annual audit by an independent certified public accountant, selected by the Administrator of the Illinois Gaming Board, of the financial transactions and conditions of the total operations of a holder of an owner's license, including the condition of the licensee and its internal control system. The holder of an owner's license must prepare and send to the Administrator, and the independent certified public accountant selected by the Administrator, a written response to issues raised by such accountant's reports on: (i) the procedures required to be performed by such accountant on a quarterly basis with respect to certain aspects of the licensee's operations; and (ii) the annual audit referred to above. Among other continuing obligations, the holder of an owner's license has a duty to promptly disclose any material changes in the information it provides to the Illinois Gaming Board. The holder of an owner's license must report promptly to the Administrator of the Illinois Gaming Board any facts which the holder has reasonable grounds to believe indicate a violation of law (other than minor traffic violations), an Illinois Gaming Board Rule, or a holder's internal controls committed by suppliers or licensed employees including, without limitation, the performance of licensed activities different than those permitted under their license. The duty to disclose changes in information previously provided to the Illinois Gaming Board continues throughout the period of licensure. A duty exists to promptly disclose the identity of a compensated agent acting on behalf of the holder of an owner's license with regard to action by the Illinois Gaming Board. A holder of an owner's license is subject to the imposition of fines, suspension or revocation of its license for any act or failure to act on the part of the licensee or its agents or employees that is injurious to the public health, safety, morals, good order or general welfare of the people of the State of Illinois or that would discredit or tend to discredit the Illinois gaming industry or the State of Illinois, including, without limitation: (i) failing to comply with or make provision for compliance with applicable legal requirements including the Illinois Riverboat Act, the rules promulgated thereunder or any other applicable Federal, state or local law or regulation or order or failure by the holder of an owner's license to comply with or make provisions for complying with the holder's internal controls; (ii) failing to comply with any rule, order or ruling of the Illinois Gaming Board or its agents pertaining to gaming; (iii) receiving goods or services from a person or business entity which does not hold any required supplier's license; (iv) being suspended or ruled ineligible for a gaming license or having a gaming license revoked or suspended in any state or gaming jurisdiction; (v) associating with, either socially or in business affairs, or employing persons of notorious or unsavory reputation or who have extensive police records or who have failed to cooperate with any officially constituted investigatory or administrative body, if public confidence and trust in gaming would thereby be adversely affected; and (vi) employing in any Illinois riverboat gaming operation any person known to have been found guilty of cheating or using any improper device in connection with any game. Minimum and maximum wagers on games are not established by regulation but are left to the discretion of the licensee; however, wagering may not be conducted with money or other negotiable currency. Riverboat cruises are limited to a duration of four hours, and pursuant to the language of the Illinois Riverboat Act, no gaming may be conducted while the riverboat is docked. Illinois Gaming Board Rule, Section 3000.500, currently permits gaming during the 30-minute time periods at the beginning and end of a cruise while the passengers are embarking and disembarking (total gaming time per cruise is limited to four hours, however, including the pre- and post-docking periods). In addition, pursuant to Illinois Gaming Board Rule, Section 3000.510, dockside gaming is permitted if the captain of the riverboat reasonably determines that it is unsafe to cruise due to inclement weather, mechanical or structural problems or river icing. In such event, the riverboat must be cleared at least once every four hours, at which time a new gaming session may commence; patrons may leave the vessel at any time but may only board the vessel during the first 30 minutes of the gaming session. Pronouncements by the Illinois Gaming Board indicate that the explanations for failure to cruise pursuant to Illinois Gaming Board Rule, Section 3000.510 will be closely scrutinized and that any abuse of the rule will result in disciplinary actions, which may include, among other things, any of the following: cancellation of future cruises, penalties, fines and suspensions or revocation of license. No person under the age of 21 is permitted to wager, and wagers may only be taken from a person present on a licensed riverboat. With respect to electronic gaming devices, the payout percentage may not be less than 80% nor more than 100%. Effective January 1, 1998, the Illinois Riverboat Act enacted a graduated wagering tax, from 15% to 35% of adjusted gross receipts from gaming. The tax is calculated at the following rates per calendar year: 15% up to and including $25,000,000; 20% in excess of $25,000,000 but not exceeding $50,000,000; 25% in excess of $50,000,000 but not exceeding $75,000,000; 30% in excess of $75,000,000 but not exceeding $100,000,000; and 35% in excess of $100,000,000. The tax imposed is to be paid by the licensed owner to the Illinois Gaming Board on the day after the gaming day when the wagers were made. Prior to 1998, the wagering tax rate was a flat 20% of adjusted gross receipts from gaming. The Illinois legislation also requires that licensees pay a $2.00 admission tax for each person admitted to a gaming cruise. An ownership interest in a business entity (other than a publicly traded corporation) which has an interest in a holder of an owner's license may only be transferred or pledged as collateral with the permission of the Illinois Gaming Board. Any person or entity who or which, individually or in association with others, acquires directly or indirectly, beneficial ownership of more than 5% of any class of voting securities or non-voting securities convertible into voting securities of a publicly traded corporation which holds an ownership interest or a beneficial interest in the holder of an owner's license is required to file a Personal Disclosure Form 1. The Illinois Gaming Board, however, takes the position that it may require any individual or entity seeking a transfer of an ownership interest in an owner's license to file a Personal Disclosure Form 1. The Personal Disclosure Form 1 forms the basis of investigation by the Illinois Gaming Board to determine suitability of the person or entity seeking transfer of an ownership interest. If the Illinois Gaming Board denies an application for such a transfer, commencing as of the date the Illinois Gaming Board issues a notice that it denies such application, it will be unlawful for such applicant to receive any dividends or interest on his shares, to exercise, directly or indirectly, any right conferred by such shares, or to receive any remuneration from any person or entity holding any license under the Illinois Riverboat Act for services rendered. If the Illinois Gaming Board denies an application for such a transfer and if no hearing is requested or if the Illinois Gaming Board issues a final order of disqualification, the holder of an owner's license shall purchase all of the disqualified person's or entity's shares at the lesser of either the market price or the purchase price for such shares. A holder of an owner's license can only make distributions to stockholders to the extent such distributions would not impair the financial viability of the gaming operation. Factors to be considered should include, but not be limited to, the following: (i) working capital requirements; (ii) debt service requirements; (iii) repairs and maintenance requirements; and (iv) capital expenditure requirements. Holders of an owner's license must immediately inform the Illinois Gaming Board and obtain formal approval from the Illinois Gaming Board whenever a change is proposed in the following areas: key persons; type of entity; equity and debt capitalization of entity; investors and/or debt holders; sources of funds; applicant's economic development plan; riverboat capacity or significant design change; gaming positions; anticipated economic impact; or pro forma budgets and financial statements. Louisiana Gaming Regulation In July 1991, the Louisiana legislature adopted legislation permitting riverboat casinos on certain rivers and waterways in Louisiana (the "Riverboat Act"). In addition to riverboat casinos, there are many other forms of legalized gaming in Louisiana including the lottery, racetracks and video lottery terminals ("VLTs") at various types of facilities in the state, including bars, truckstops, racetracks and off-track betting parlors. The Riverboat Act authorizes the issuance of up to 15 licenses to conduct gaming activities on a riverboat of new construction in accordance with applicable law. However, no more than six licenses may be granted to riverboats operating from any one parish. Pursuant to legislation passed in a Special Session of the Louisiana Legislature in March, 1996, authority to supervise riverboat gaming activities is vested in the Louisiana Gaming Control Board, the successor regulatory agency to the Louisiana Riverboat Gaming Commission. The Louisiana Gaming Control Board, by regulation, has delegated certain responsibilities relating to investigations, issuance and renewal of certain licenses and permits, audits and enforcement of Louisiana riverboat gaming laws to the Riverboat Gaming Enforcement Division of the Louisiana State Police (the "Louisiana Enforcement Division"). The Louisiana Enforcement Division has broad powers over licensees and such powers, together with the provisions of the Riverboat Act could operate to limit, proscribe or effectively rescind the payment of dividends or the repayment of indebtedness to the Company in certain circumstances, including any adverse financial condition, default, non-compliance or insolvency of any Subsidiary or the Company. In issuing a license, the Louisiana Gaming Control Board must find that the applicant is a person of good character, honesty and integrity and a person whose prior activities, criminal record, if any, reputation, habits, and associations do not pose a threat to the public interest of the State of Louisiana or to the effective regulation and control of gaming, or create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of gaming or the carrying on of business and financial arrangements in connection therewith. The Louisiana Gaming Control Board cannot grant a license unless it finds that: (i) the applicant is capable of conducting gaming operations, which means that the applicant can demonstrate the capability, either through training, education, business experience, or a combination of the above, to operate a gaming casino; (ii) the proposed financing of the riverboat and the gaming operation is adequate for the nature of the proposed operation and from a source suitable and acceptable to the Louisiana Gaming Control Board; (iii) the applicant demonstrates a proven ability to operate a vessel of comparable size, capacity and complexity to the proposed riverboat so as to ensure the safety of its passengers; (iv) the applicant submits a detailed plan of design of the riverboat in its application for a license; (v) the applicant designates the docking facilities to be used by the riverboat; (vi) the applicant shows adequate financial ability to construct and maintain a riverboat; and (vii) the applicant has a good faith plan to recruit, train and upgrade minorities in all employment classifications. Certain persons affiliated with a riverboat gaming licensee, including directors and officers of the licensee, directors and officers of any holding company of the licensee involved in gaming operations, persons holding 5% or greater interests in the licensee, and persons exercising influence over a licensee ("Affiliated Gaming Persons"), are subject to the application and suitability requirements of the Louisiana gaming law. The Louisiana gaming law specifies certain restrictions and conditions relating to the operation of riverboat gaming, including the following: (i) gaming is not permitted while a riverboat is docked, other than the forty-five minutes between excursions, and during times when dangerous weather or water conditions exist; (ii) each round-trip riverboat cruise may not be less than three nor more than eight hours in duration, subject to specified exceptions; (iii) agents of the Louisiana Enforcement Division are permitted on board at any time during gaming operations; (iv) gaming devices, equipment and supplies may only be purchased or leased from permitted suppliers; (v) gaming may only take place in the designated gaming area while the riverboat is upon a designated river or waterway; (vi) gaming equipment may not be possessed, maintained or exhibited by any person on a riverboat except in the specifically designated gaming area, or a secure area used for inspection, repair or storage of such equipment; (vii) wagers may be received only from a person present on a licensed riverboat; (viii) persons under 21 are not permitted in designated gaming areas; (ix) except for slot machine play, wagers may be made only with tokens, chips or electronic cards purchased from the licensee aboard a riverboat; (x) licensees may only use docking facilities and routes for which they are licensed and may only board and discharge passengers at the riverboat's licensed berth; (xi) licensees must have adequate protection and indemnity insurance; (xii) licensees must have all necessary Federal and state licenses, certificates and other regulatory approvals prior to operating a riverboat; and (xiii) gaming may only be conducted in accordance with the terms of the license and the rules and regulations adopted by the Louisiana Enforcement Division. An initial license to conduct riverboat gaming operations is valid for a term of five years. A subsidiary of the Company was issued an initial operator's license by the Louisiana Enforcement Division for the Players Lake Charles Riverboat on December 6, 1993. Another subsidiary of the Company holds an operator's license for the Star Riverboat (which was acquired by the Company in 1995) which was issued on August 9, 1993 and is scheduled to expire in August, 1998. The Louisiana gaming law provides that a renewal application for each one year period succeeding the initial five year term of the operator's license must be made to the Louisiana Enforcement Division. The application for renewal consists of a statement under oath of any and all changes in information, including financial information, provided in the previous application. The Company recently filed the application for renewal of the Star Riverboat license. The transfer of a license or permit or an interest in a license or permit is prohibited. The sale, purchase, assignment, transfer, pledge or other hypothecation, lease, disposition or acquisition (a "Transfer") by any person of securities which represent 5% or more of the total outstanding shares issued by a corporation that holds a license is subject to Louisiana Enforcement Division approval. A security issued by a corporation that holds a license must generally disclose these restrictions. Prior approval of the Louisiana Enforcement Division is required for the Transfer of any ownership interest of 5% or more in any non-corporate licensee or for the Transfer of any "economic interest" of 5% or more in any licensee or Affiliated Gaming Person. An "economic interest" is defined for purposes of a Transfer as any interest whereby a person receives or is entitled to receive, by agreement or otherwise, a profit, gain, thing of value, loan, credit, security interest, ownership interest or other economic benefit. A licensee must notify the Louisiana Enforcement Division of any withdrawals of capital, loans, advances or distributions in excess of 5% of retained earnings for a corporate licensee, or of capital accounts for a partnership or limited liability company licensee, upon completion of any such transaction. No prior approval of any such withdrawal, loan, advance or distribution is required, but any such transaction is ineffective if disapproved by the Louisiana Enforcement Division within 120 days after the required notification. In addition, the Louisiana Enforcement Division may issue an emergency order for not more than 10 days prohibiting payment of profits, income or accruals by, or investments in, a licensee. Riverboat gaming licensees and their Affiliated Gaming Persons are required to notify the Louisiana Gaming Control Board 60 days prior to the receipt by any such persons of any loans or extensions of credit, or modifications thereof. The Louisiana Gaming Control Board is required to investigate the reported loan, extension of credit or modification thereof and to determine whether an exemption exists from the requirement of prior written approval and, if no exclusion applies, to either approve or disapprove the transaction. If disapproved, the transaction cannot be entered into by the licensee or Affiliated Gaming Person. The Company is an Affiliated Gaming Person of its Louisiana subsidiaries that are the licensees of the Players Lake Charles Riverboat and the Star Riverboat. Fees for conducting gaming activities on a riverboat include: (i) $50,000 per riverboat for the first year of operation and $100,000 per year per riverboat thereafter; plus (ii) 18-1/2% of net gaming proceeds. The Company also has paid since opening a $2.50 per passenger admission fee to the City of Lake Charles. The Company and the City of Lake Charles recently instituted litigation against each other (now settled) concerning the method of computing this admission fee. In 1995, Louisiana enacted legislation authorizing the governing authority of Calcasieu Parish to levy an additional admission fee of fifty cents per passenger, the proceeds of which are used primarily to fund education in the parish. This increase is applicable to the Company's two Lake Charles riverboats. The Company recently reached an agreement with the City of Lake Charles, both to settle such litigation with the City and to establish a permanent method of calculating the admission fee payable to the City on the Company's two Lake Charles Riverboats. Under the new agreement, which began as of March 1, 1998, the Company will pay the City both a percentage of gaming revenue in lieu of a per- passenger admission fee, and a fixed annual payment of approximately $544,000 per year for ten years. The percentage payment is subject to certain minimum payments, as specified in the agreement. In the 1996 Special Session of the Louisiana Legislature, legislation was enacted providing for local option elections in November, 1996, on a parish-by-parish basis which gave voters in communities across the state the opportunity to decide the fate of certain forms of gaming in their parishes. In Calcasieu Parish, where the Company's Lake Charles facility is located, the referendum determined whether VLTs and riverboat gaming would continue to be permitted. In November, 1996, voters in Calcasieu Parish voted favorably to permit the continuation of both forms of gaming. In the 1996 Special Session, legislation was also enacted placing a constitutional amendment on the October, 1996 election ballot to limit the expansion of gaming in Louisiana. In October, 1996, voters favorably passed the constitutional amendment. The constitutional amendment requires local option elections before new forms of gaming can be brought into a parish. The measure also requires a local option referendum before a riverboat can move into a parish that has not already authorized riverboat gaming. In the 1997 Regular Session of the Louisiana Legislature, a law was passed authorizing the operation of slot machines at three horse racing tracks in Louisiana, including a racetrack situated in Calcasieu Parish (the same Parish as the Company's Lake Charles facility), Delta Downs. Under the law, before slot machines can be operated at Delta Downs both voter approval is required through a local referendum election in Calcasieu Parish and the passage of companion legislation by the Louisiana Legislature to establish the tax rate to be levied on slot machine revenues. In the Fall of 1997, voters in Calcasieu Parish voted not to authorize the operation of slot machines at Delta Downs. In addition, the Louisiana Legislature, in its 1998 Fiscal Session, failed to pass such companion tax legislation. However, the law provides that another local referendum may be conducted every two years, and companion tax legislation may be considered in any future session of the Louisiana Legislature. Missouri Gaming Regulation In November, 1992, the voters of Missouri approved a referendum authorizing riverboat gaming in Missouri. In 1993, the Missouri Legislature enacted legislation which substantially revised the referendum legislation regarding riverboat gaming and its regulation (the "Missouri Gaming Act"). The Missouri Gaming Act established the Missouri Gaming Commission, which has broad jurisdiction over and supervisory powers concerning gaming operations conducted under the Missouri Gaming Act. These powers are far reaching and include the power to limit, proscribe or effectively rescind the payment of dividends or the repayment of indebtedness to the Company in certain circumstances, including any adverse financial condition, default, non-compliance or insolvency of any Subsidiary or the Company. Following a challenge to legislation authorizing riverboat casino gaming, a January, 1994, Missouri Supreme Court ruling created uncertainties regarding the extent to which casino gaming is constitutional in Missouri. In February, 1994, the Missouri Legislature passed legislation which permitted voters to amend the State Constitution to permit legislation reauthorizing riverboat casino gaming consistent with the State Constitution. The vote on the proposed State Constitutional amendment was held in April, 1994, to permit games of chance on riverboat casinos. In the April, 1994, vote, the State Constitutional amendment was narrowly defeated. As a result of the Missouri legislature's actions in February, 1994, several municipalities in Missouri which had previously approved local ordinances permitting gaming, including the City of Maryland Heights, resubmitted the local gaming activities ordinances to the voters in April, 1994, as well. The Maryland Heights ordinance was approved by municipal voters in the April, 1994, vote. Subsequently, at the statewide general election held November 8, 1994, a second proposal to amend the Missouri Constitution to permit games of chance on riverboats and floating facilities on the Missouri and Mississippi Rivers was adopted. As a result thereof, effective December 8, 1994, reel slot machines and other games of chance were authorized for use in Missouri casinos. The Missouri Gaming Act calls for licensure of owners (Class A license), operators (Class B license), suppliers and gaming-related occupations. On March 11, 1997, a subsidiary of the Company received two Class B licenses in Maryland Heights to operate its two permanently moored riverboat casinos. In addition, the Maryland Heights Joint Venture was issued four Class A licenses, one for each of the four riverboat casinos permanently moored at Maryland Heights, Missouri. The Missouri Gaming Act provides a maximum loss limit of $500 per individual player per gaming excursion. Gaming excursions are required by regulation to be no less than two hours and no more than four hours in duration. Excursion gaming boats are required to cruise, unless the Missouri Gaming Commission determines under applicable criteria to permit gaming at a continuously docked boat. Such criteria include, among other items, danger to the boat's passengers because of the location of the dock or excursion cruising conditions, disruption of interstate commerce, violation of another state's laws or Federal law, or possible interference with railway or barge transportation. On March 11, 1997 the Missouri Gaming Commission authorized the Company's Maryland Heights Casinos to remain continuously docked at its present Maryland Heights location. In accordance with Missouri gaming regulations, one of the Company's two casinos is open for patron boarding at different times than the other Company casino, so that only one Company casino is boarding at any given time. Harrah's casinos at the Maryland Heights Facility operate in a similar manner. Under the Missouri Gaming Act, gaming is permitted in Missouri only on the Missouri and Mississippi Rivers. In November 1997 the Missouri Supreme Court remanded a case involving the Company. W. Todd Akin et. al. v. Missouri Gaming Commission, to the trial court in Cole County, Missouri with respect to issues raised under the Missouri Gaming Act. While the Plaintiffs in this case have dismissed their claim without prejudice, the Missouri Gaming Commission and the Attorney General's Office of Missouri have notified the Company that they have issued Preliminary Orders for Disciplinary Action against the Company's Maryland Heights Facility. See Item 3 below for more detailed description. There is no statewide numerical limit to the number of licenses which may be granted to permit riverboat casino operations. As a result of the Missouri Legislature's May, 1994, amendments to the Missouri Gaming Act, prior uncertainty has been eliminated regarding whether any city or county outside of the two major metropolitan areas of Missouri (St. Louis/St. Louis County and the Kansas City metropolitan area) may be granted more than one license. Under the May, 1994, amendments to the Missouri Gaming Act, any city or county may be granted more than one license if the "home dock" city or county has authorized more than one excursion gaming boat. However, within all cities and counties in Missouri, the Missouri Gaming Commission has the ultimate responsibility for setting the number, location and type of licensed boats. Excursion gaming boats also must be authorized by the local home dock city or county. Licensees must establish financial responsibility sufficient to meet adequately the requirements of the proposed enterprise. Additionally, the Missouri Gaming Commission's regulations prohibit withdrawals of capital by, or the making of loans, advances, or distributions of any type of assets to its owner(s), in excess of 5% of such entity's accumulated earnings without Missouri Gaming Commission approval. The Missouri Gaming Act also requires that the excursion gaming boat resemble historic Missouri riverboats, encourages use of Missouri resources, goods and services in the operation of the boat, and requires that the boat provide for non-gaming areas, food service and a Missouri theme gift shop. Use of the space on any vessel and operating criteria are determined in accordance with rules and regulations of the U.S. Coast Guard. There is no size limit on Missouri gaming boats and no minimum or maximum space prescribed for gaming areas. The Missouri Gaming Act directly subjects the gaming enterprises to various Missouri taxes. An admission fee of $2.00 per ticket per excursion must be paid to the Missouri Gaming Commission. Licensees may charge any admission fee above the $2.00 amount that they desire. Gaming enterprises in Missouri are also subject to an "adjusted gross receipts tax" equal to 20% of the gross receipts from licensed gaming games and devices less winnings paid to wagerers. Owners/operators are subject to all other income taxes, sales taxes, earnings taxes, use taxes, property taxes or any other tax or fee levied by local, state or Federal governments. Transfer of a Class A or Class B gaming license (the type of licenses obtained in connection with the operation of the Maryland Heights Facility) is not permitted without approval of the Missouri Gaming Commission, nor may such interests be pledged as collateral without the approval of the Missouri Gaming Commission. No transfer of an interest of 5% or greater, directly or indirectly, in a publicly traded company holding a Class A or Class B license shall occur without the Missouri Gaming Commission's approval. Additionally, the Missouri Gaming Commission may require a licensee to maintain cash or cash equivalents, in an amount sufficient to protect patrons against defaults in gaming debts owed by the licensee. Application fees are based upon costs of investigation and approval of licenses. The minimum nonrefundable application fee is $50,000. Initial Class A and Class B licenses are granted for a term of one year. License renewal are granted for a term of two years. The annual fee for licensure is $25,000. Kentucky Gaming Regulation The Company presently owns and operates Players Bluegrass Downs. Pursuant to the Kentucky statutes governing horse racing, the Kentucky Racing Commission (the "Racing Commission") has plenary power to promulgate administrative regulations prescribing conditions under which all legitimate horse racing and wagering thereon is conducted. The Racing Commission issues race track licenses on an annual basis and awards racing dates subsequent to an annual application required to be filed with the Racing Commission. The Racing Commission may revoke or suspend a license if the Racing Commission has reason to believe that any provision of the Kentucky statutes, administrative regulations, or conditions established by the Racing Commission has not been satisfied. Proposed Texas Gaming Legislation Since the original Players Lake Charles Riverboat began operating on December 8, 1993, more than half of its patrons have come from Texas, with a significant portion coming from the metropolitan Houston area. Although casino gaming is not currently permitted in Texas, and the Attorney General of Texas has issued an opinion that gaming in Texas would require an amendment to the State's Constitution, the Texas legislature has considered various proposals to authorize casino gaming. To date, no bill authorizing casino gaming has passed. Bills may be introduced from time to time, however, whenever the legislature is in session. Since the Texas legislature (which meets every two years in odd-numbered years) did not pass legislation to amend the Texas State Constitution during the 1997 regular session, any such legislation will have to await the next regular session in 1999, or a special session of the legislature. Special sessions can only be called by the Governor for matters that were pending in the regular legislative session. Governor George Bush has taken a public position against legalized casino gaming in Texas. A constitutional amendment requires a two- thirds vote of those present and voting in each house of the Texas state legislature and approval by the electorate at a referendum. U.S. Coast Guard Each cruising riverboat also is regulated by the U.S. Coast Guard, whose regulations affect boat design and stipulate on-board facilities, equipment and personnel (including requirements that each vessel be operated by a minimum complement of licensed personnel) in addition to restricting the number of persons who can be aboard the boat at any one time. All vessels operated by the Company must hold a Certificate of Inspection. Loss of the Certificate of Inspection of a vessel would preclude its use as an operating riverboat. Cruising vessels such as those operated by the Company must be inspected every five years at a U.S. Coast Guard-approved dry-dock facility, which could cause a temporary loss of service that could last one month or longer, unless the U.S. Coast Guard determines that an alternative to drydocking is acceptable. The next such inspection is scheduled to occur in the Fall of 2000 for the Metropolis Riverboat, the Spring of 2000 for the Players Lake Charles Riverboat and the Fall of 1998 for the Lake Charles Star Riverboat. The Company is pursuing, as an alternative to drydocking, an underwater onsite inspection of the hull of the Lake Charles Star Riverboat, subject to U.S. Coast Guard approval. An underwater hull inspection would likely involve a minimal disruption in operations; however, no assurance can be given that drydocking and the related loss of service will not be required. Less stringent rules apply to permanently moored vessels such as the dockside barges used by the Company in Maryland Heights, Missouri. The Company believes that these regulations, and the requirements of operating and managing cruising gaming vessels generally, make it more difficult to conduct riverboat gaming than to operate land-based casinos. All shipboard employees of the Company employed on U.S. Coast Guard regulated vessels, even those who have nothing to do with the actual operation of the vessel, such as dealers, cocktail hostesses and security personnel, may be subject to the Jones Act which, among other things, exempts those employees from state limits on worker's compensation awards. The Company believes that it has adequate insurance to cover employee claims. Shipping Act of 1916 In order for the Company's vessels to have United States flag registry, the Company must maintain "United States citizenship" as defined in the Shipping Act of 1916, as amended (the "Shipping Act"), and other applicable statutes. A corporation operating any vessel in the coastwise trade, such as the Company, is not considered a United States citizen unless, among other things, United States citizens own 75% of its outstanding capital stock. Company Repurchase Rights with Respect to Company Securities There are various regulations on the ownership of the Company's Common Stock. The Company's Articles of Incorporation provide that if any governmental commission, regulatory authority, entity, agency or instrumentality (collectively, an "Authority") having jurisdiction over the Company or any affiliate of the Company or that has granted a license, certificate of authority, franchise or similar approval (collectively, a "License") to the Company or any affiliate of the Company orders or requires any stockholder to divest any or all of the shares of Common Stock (or options, convertible securities or warrants to purchase Common Stock, collectively, together with Common Stock ("Securities")) owned by such stockholder (a "Divestiture Order") and the stockholder fails to do so by the date required by the Divestiture Order (unless the Divestiture Order is stayed), the Company will have the right to acquire the securities from the stockholder that the stockholder failed to divest as required by such Divestiture Order. If, after reasonable notice and an opportunity for affected parties to be heard, any Authority determines that continued ownership of the Company's Securities by any stockholder shall be grounds for the revocation, cancellation, non-renewal, restriction or withholding of any License granted to or applied for by the Company or any affiliate of the Company, or shall be grounds for limiting the activities of such entity, such stockholder shall divest the Securities that provide the basis for such determination, and if such stockholder fails to divest Securities within 10 days after the date the Authority's determination becomes effective (unless the determination is stayed), the Company shall have the right to acquire such Securities from the stockholder. If the Company determines that persons who are not citizens of the United States as determined under the Shipping Act or other applicable statutes (the "Foreign Citizens") own more than 25% of the Company's outstanding Common Stock, the Company may require the Foreign Citizen(s) who most recently acquired the shares that bring total Foreign Citizen ownership to more than 25% of the outstanding Common Stock (the "Excess Shares") to divest the Excess Shares to persons who are United States citizens. If the Foreign Citizen(s) so directed fail to divest the Excess Shares to United States citizens within 30 days after the date on which the Company gives a written notice to the Foreign Citizen(s) to divest the Excess Shares, the Company shall have the right to acquire the shares that the Foreign Citizen(s) failed to divest as required by the Company's notice. Whenever the Company has the right to acquire Securities from a stockholder pursuant to the provisions described in the preceding paragraph, the Company will pay the stockholder $.10 per share or such higher price as may be required by applicable legal requirements. Some state gaming regulations require a purchase price equal to the fair market value of the Securities under certain circumstances described above. If there is no other applicable legal requirement, any amount payable to the stockholder in excess of $.10 per share will be paid in five equal annual installments with interest at the lower of the prime rate or the LIBOR rate, as published from time to time in the Wall Street Journal. When any Divestiture Order is entered or when the Company tenders the consideration for which it may acquire Securities, as described above, the Securities in question shall no longer be entitled to any voting, dividend or other rights until such time as they have been appropriately divested. The foregoing provisions of the Company's Articles of Incorporation relating to required divestiture are in addition to, and not in replacement of, any applicable legal requirements. The terms of the Company's Senior Notes feature certain analogous provisions which could give rise to the obligation of the holder to sell such Senior Notes or the right of the Company to repurchase the Senior Notes at a price equal to the lower of the holder's cost, the principal amount or the then current market prices. Paid Advertising and Marketing The Federal Communications Commission ("FCC") prohibits radio and television broadcasters from accepting advertising that actively promotes gaming, although the FCC does not ban all advertising for casino facilities. Federal regulation also restricts the circulation of certain materials related to gaming through the United States mail. The Company, together with the National Association of Broadcasters and several statewide associations of broadcasters (radio and television stations), brought suit against the FCC to invalidate the current restrictions on radio and television advertising of casinos on constitutional grounds. On December 16, 1997, the United States District Court for the District of New Jersey ruled in the Company's favor and declared the restrictions unconstitutional. The Company is now seeking to enjoin the FCC from enforcing the prohibitions nationwide. Discouragement of Share Accumulations Various state limits requiring approvals of shareholdings over certain thresholds may discourage accumulations over such limits and therefore may discourage changes in control of the Company. See "- Gaming Regulations." The Federal laws referred to above may also discourage ownership by stockholders who are not citizens of the United States. Forward-Looking Information Certain information included in this section and elsewhere in this Annual Report on Form 10-K contains, and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contain or will contain or include, forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements address, among other things, the effects of competition, the resolution of pending or threatened litigation or regulatory proceedings concerning the Company's alleged non- compliance with Missouri's gaming laws and Constitution, plans for future riverboat hull inspections, I-10 road construction in Lake Charles, future borrowing and capital costs, equity repurchases and future issuances, plans for projects currently under development, plans for future expansion and property enhancements, business development activities, capital expenditure programs and requirements, financing sources and the effects of legislation and regulation (including possible gaming legislation, gaming licensure and regulation, state and local regulation, tax regulation, and the potential for regulatory reform). Forward looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. See Item 7: "Management's Discussion and Analysis of Financial Condition and Results of Operation". Such forward-looking information is based upon management's current plans or expectations and is subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions, and the Company's future financial condition and results of operations. These uncertainties and risks include, but are not limited to, those relating to conducting operations in an increasingly competitive environment, conducting operations at a newly or recently developed site or in a jurisdiction for which gaming has recently been permitted, changes in state and local laws and regulations, development and construction activities, leverage and debt service requirements (including sensitivity to fluctuation in interest rates), general economic conditions, the U.S. Coast Guard's acceptance of underwater hull inspections as an alternative to dry docking and inspection, changes in federal and state tax laws, the disruption to Lake Charles operations caused by road construction, action taken under applications for licenses (including renewals) and approvals under applicable laws and regulations (including gaming laws and regulations), and the legalization of gaming in certain jurisdictions. As a consequence, current plans, anticipated actions, and future financial condition and results may differ from those expressed in any forward-looking statements made by or on behalf of the Company and no assurance can be given that such statements will prove to be correct. Item 2. Properties Metropolis, Illinois The Company leases its docking facilities in Metropolis, which cover 1,810 linear feet of riverfront, from the City of Metropolis pursuant to a 20-year lease with a 20-year renewal option at an annual rent of approximately $7,000. Under a separate 20-year lease with the City of Metropolis, the Company leases additional riverfront property immediately adjacent to its docking facilities for surface parking at an annual rate of $2,500. The Company also owns several parcels of land in Metropolis, some with buildings, aggregating approximately eight acres, and leases an additional two acres. The owned or leased area is used primarily for customer parking or as office space. Some of the land is being held for development, and some of the current parking area may be developed, in which event the Company believes suitable replacement parking space could be obtained. In March, 1996, the Company completed a two-story office facility which accommodates the administrative staff. The Ohio River occasionally overflows its banks at the Metropolis facility, most often during late winter and early spring. Such flooding may cover a portion of the Company's closest parking location, although the Company believes that it will still have adequate available parking within reasonable walking distance of its landing during typical flooding periods. If flooding is especially severe, it may be impractical for passengers to board the riverboat at its normal dock site. The Company has developed an emergency plan that would permit gaming activities to continue in such circumstances. Any use of an alternate landing because of flooding may result in some loss of service. Lake Charles, Louisiana On August 16, 1995, the Company entered into an agreement (the "Beeber Agreement") with The Beeber Corporation ("Beeber") to purchase Players Hotel and approximately 3 acres of real estate comprising the landside facility for the Players Lake Charles Riverboat and the Star Riverboat (collectively, the "Property"). Under this arrangement, as amended, the Company paid a total consideration of $6.7 million. As additional consideration, the Company is required to continue making certain payments to Beeber and a third party, which payments are related to a lease agreement dated May 19, 1993 between the Company and Beeber, as amended. Under this arrangement, the Company and such parties have entered into an agreement, dated July 27, 1995, whereby the Company is obligated to pay a total of $2.95 for each passenger who patronizes the Company's Lake Charles riverboats, subject to certain conditions. Maryland Heights, Missouri On November 2, 1995, the Company entered into the Maryland Heights Joint Venture Agreement with Harrah's to form a joint venture and co-develop the Maryland Heights Facility on an approximately 215 acre site in Maryland Heights, Missouri. An affiliate of Harrah's owns the property underlying the Maryland Heights Facility. The Maryland Heights Joint Venture Agreement provides for joint decision making with respect to major decisions for the Maryland Heights Joint Venture, such as matters relating to the approval of the annual operating budgets and annual plans, the incurrence of debt beyond amounts set forth in the operating budget and the construction of improvements to the Maryland Heights Joint Venture. Each of the Company and Harrah's have an eighty (80) year lease with the Harrah's affiliate for the property underlying their respective casinos. The leases for the Company and Harrah's are substantially identical, except that the Company pays rent and Harrah's does not pay rent. The Company's rent consists of a percentage rent equal to the following specified percentages multiplied by the relevant specified incremental levels of annual net gaming revenues at the Company's Maryland Heights Casinos: 2% of annual net gaming revenue up to $50 million, 3% of annual net gaming revenue between $50 million and $100 million, and 4% of annual net gaming revenue in excess of $100 million. Pursuant to the Management Agreement, a Harrah's affiliate manages the Maryland Heights Hotel and the Maryland Heights Entertainment Facility except for the Company's specialty restaurant and retail operations. See "Business-Maryland Heights Operations." Bluegrass Downs, Kentucky In November 1993, the Company acquired Players Bluegrass Downs located in Paducah, Kentucky, in anticipation that the Kentucky legislature would enact legislation to authorize casino- type gaming, such as slot machines and table games, at licensed racetracks. If any legislation is adopted permitting additional forms of gaming at racetracks, the Company currently plans to develop its track into a facility that would offer all permitted forms of gaming. The racetrack is approximately ten miles from the Company's Metropolis facility. The next closest Kentucky racetrack to the Metropolis facility is Ellis Park, which is approximately 100 miles from each of Paducah and Metropolis. Players Bluegrass Downs consists of approximately 69.6 acres. The Company owns 58.3 acres and leases the remaining 11.3 acres. Players Bluegrass Downs includes a 5/8 mile oval racetrack, an enclosed 17,000 square foot clubhouse housing dining and wagering facilities, administrative areas, barns and related buildings that can accommodate 725 horses, and a parking area for more than 1,400 cars. Item 3. Legal Proceedings Poulos, Ahern and Schreier Litigation The Company, certain suppliers and distributors of video poker and electronic slot machines and over forty other casino operators have been named as defendants in a class action suit filed April 26, 1994 in the United States District Court, Middle District of Florida, by William Ahern and William H. Poulos. The plaintiffs allege common law fraud and deceit, mail fraud, wire fraud and Racketeer Influenced and Corrupt Organizations Act violations in the marketing and operation of video poker games and electronic slot machines. The suit seeks unspecified damages and recovery of attorney's fees and costs. On December 9, 1994, an Order was entered by the District Court in Florida transferring the consolidated action to the United States District Court for the District of Nevada. The defendants filed various motions seeking dismissal of the action. On or about October 27, 1995 the Company was served with a purported class action captioned Schreier, et. al. v. Players International, et al. in the United States District Court for the District of Nevada, which is essentially identical to the Poulos and Ahern litigation, except for certain variations in the definition of the purported class. The matter has also been consolidated with the Poulos and Ahern litigation. On April 17, 1996, the Court dismissed plaintiffs' Complaint without prejudice for failure to plead their claims with specificity and dismissed defendants' remaining substantive motions as moot. The Court permitted plaintiffs to file an amended complaint. The matter is currently in the discovery stage, after which substantive motions for dismissal will be filed by the defendants. The Company believes that the plaintiffs claims are wholly without merit and does not expect that the lawsuit will have a material adverse effect on the Company's financial position or results of operations. J.A. Miller, et. al. v. Showboat Star Partnership, et al. Showboat Star Partnership, a subsidiary of the Company, was served with a petition captioned J.A. Miller, et. al. v. Showboat Star Partnership, et. al. on or about February 27, 1997, Docket No. 10-14544, in the 38th Judicial District Court, Parish of Cameron, State of Louisiana. The plaintiffs, a group of oyster fishermen, allege in the petition that on or about February 2, 1997, the Star Riverboat discharged raw sewage and other hazardous and toxic substances from the bilge of the vessel into Lake Charles. Plaintiffs further allege that, since 1994, the Star Riverboat and the Players Lake Charles Riverboat have discharged raw sewage and other hazardous and toxic substances into Lake Charles which is part of the Calcasieu Estuary. Plaintiffs claim that alleged acts of the Company have resulted in great damage to natural oyster beds forty-three (43) miles down river in Cameron Parish, resulting in oysters situated thereon to become dangerous and unfit for human consumption and or/preventing the oyster fishermen from harvesting oysters. The oyster fishermen are claiming both compensatory and punitive damages. The matter is in the early stages of litigation. The Company has filed several motions in response to the petition including motions to dismiss the action. The Company has also requested certain discovery in connection with the motions. The Company intends to vigorously defend this action. Ceola and Richard Morris v. Players Lake Charles, Inc.; et al. Players Lake Charles, Inc. has been named as a defendant in a claim in Louisiana State Court for personal injuries filed by Ceola and Richard Morris. The claim allegedly resulted when a piece of fret-work aboard the Players Lake Charles Riverboat fell from the wall and allegedly hit Ms. Morris on the head. The Company's primary insurer with respect to this claim, Anglo American Insurance Company Limited ("Anglo American") has been placed in liquidation, which liquidation proceedings are still ongoing. It is not known whether, at the conclusion of such proceedings, Anglo American will have sufficient assets remaining to satisfy any judgment that may be obtained against the Company in this case, which is currently set for trial on September 8, 1998. The Company continues to pursue its claim against Anglo American. W. Todd Akin, et. al. v. Missouri Gaming Commission W. Todd Akin et. al. v. Missouri Gaming Commission was filed in the Circuit Court of Cole County, Missouri, in August of 1996 in order to seek a judicial declaration that the Missouri Gaming Act is unconstitutional because, allegedly contrary to the Missouri Constitution, the Missouri Gaming Act permits gaming facilities (such as the Maryland Heights Facility) to be located upon artificial basins fed by the Missouri River. The Company and Harrah's, the Missouri Riverboat Gaming Association and the City of Maryland Heights intervened in order to protect their respective interests. The statute was found constitutional and the suit was dismissed without prejudice in its entirety on the merits by the trial court in December, 1996. That dismissal was appealed directly to the Missouri Supreme Court by the plaintiffs in January, 1997. On November 25, 1997, the Missouri Supreme Court ruled that gaming may occur only in artificial spaces that are contiguous to the surface stream of the Missouri and Mississippi Rivers. The case was remanded to the trial court for a factual determination as to whether those casino operators meet this requirement. The plaintiffs dismissed their case against the Company after this ruling but prior to a determination by the trial court on this issue. A number of Missouri gaming licensees conduct gaming operations directly on the Missouri and Mississippi rivers and thus these operators are not expected to be adversely affected by the implications of the Akin decision. In January, 1998, the Company was advised by the Missouri Gaming Commission that it intended to take disciplinary action against the licenses held by the Company in Maryland Heights for failure to comply with Missouri law, as modified and interpreted in the Akin decision, and to revoke the Company's licenses to conduct games of chance at the Maryland Heights Facility. In response to this, on January 9, 1998, the Company (and certain other casino companies) sought and obtained a Preliminary Writ of Prohibition from the Circuit Court of Cole County, prohibiting the Missouri Gaming Commission from taking disciplinary action against such companies. On January 29, 1998, following hearings on the Petition for Writ of Prohibition, the Circuit Court of Cole County made its Preliminary Writ of Prohibition permanent, holding that the companies had a constitutional right to due process which was violated by the proposed disciplinary actions of the Missouri Gaming Commission. The Missouri Gaming Commission appealed that decision granting a Writ of Prohibition to the Missouri Supreme Court. On May 28, 1998 the Missouri Supreme Court issued its decision in this case, reversing the decision of the Circuit Court and quashing the Writ of Prohibition issued against the Missouri Gaming Commission. The Court found that because the Missouri Gaming Commission presumptively had jurisdiction to take disciplinary action against gaming facilities for failing to comply with state law location requirements, a Writ of Prohibition was an inappropriate remedy. The Court held that the companies' objections to jurisdiction and other components of the proceedings should be addressed to the agency, and to the courts of appeal should the companies not prevail before the agency. The Court also held that the appeal was an effective alternative remedy at law because the Commission does have the authority to stay any adverse decision pending the outcome of all appeals, thus rendering prohibition an inappropriate remedy in the circumstances. On June 18, 1998, the Missouri Gaming Commission issued its Preliminary Orders for Disciplinary Action to the gaming companies affected by the Akin decision, including the Company. The Company has until July 18, 1998 to request a hearing on the Preliminary Orders for Disciplinary Action. The Company intends to request such a hearing, which stays the effect of the proposed Preliminary Orders indefinitely and entitles the Company to a full evidentiary hearing before the Missouri Gaming Commission's Hearing Officer. There are five gaming companies in separate locations which will be receiving Preliminary Orders for Disciplinary Action and for whom hearings must be conducted. The Missouri Gaming Commission has indicated that all hearings will be conducted prior to any recommended decision being submitted to the Commission by its Hearing Officer for a vote of the Commission on final discipline for any facility. Hearings are anticipated to take several weeks. Discovery is permitted and it is anticipated that hearings are unlikely to commence prior to September or October of 1998. Should a recommendation adverse to the Company be made and adopted by the Missouri Gaming Commission, the Company may obtain a stay of any discipline, in order to appeal to the Missouri Court of Appeals, Western District. Appeals of this type ordinarily take six months to one year from filing to decision. Further appeal from any adverse decision of the Missouri Court of Appeals may then be taken by transfer to the Missouri Supreme Court. Because of management's belief that the Company is entitled to clarification of the uncertainty caused by the Akin decision and the Missouri Gaming Commission's and Attorney General's interpretation of it, the Company and Harrah's filed suit for a declaratory judgment in Circuit Court on January 22, 1998. Such suit seeks a declaration that: (i) the Company's reasonable reliance upon the prior approval of the Missouri Gaming Commission of its location prohibits adverse action by the Commission or Attorney General against the Company on the basis of the subsequent Akin decision; (ii) the Company, if found not in compliance to any extent, must be permitted a period of time within which to remedy any deficiency in its facilities to bring them into compliance; and (iii) the Company is entitled to be justly compensated for any financial loss resulting from adverse actions of the Missouri Gaming Commission or the Attorney General in enforcing their interpretation of the Akin decision. On February 23, 1998 the Commission filed its Motion to Dismiss the Petition for Lack of Ripeness and Failure to Exhaust Administrative Remedies. On March 26, 1998 arguments were heard on the Commission's Motion by the Circuit Court. On April 13, 1998 the Circuit Court issued its Order denying the Motions to Dismiss and requiring an Answer to be filed. Defendants' Answer to the Petition was filed May 1, 1998 and Plaintiff's Discovery commenced with Interrogatories and Requests for Production of Documents on April 16, 1998. While this case involves no monetary sum, it will be diligently prosecuted by the Company in order to obtain relief from the uncertainty created by the Akin decision. Because of the questions raised, but not answered, in the Missouri Supreme Court's Akin decision, and because the Company has not yet had its hearing on the Missouri Gaming Commission's Preliminary Order for Disciplinary Action, the Company cannot predict what effect the Missouri Supreme Court's ruling, or any action of the Attorney General or Missouri Gaming Commission, will have on the operations at Maryland Heights. At this time, based on discussions with Missouri legal counsel, management believes that any potential problem could be remedied through (i) a public referendum at the November 1998 Missouri election in order to cure any ambiguity or uncertainty in the law or (ii) the defenses available to the Company if a lawsuit or administrative action based on this ruling were to be brought or (iii) remedial action to the property. The riverboat gaming industry in Missouri is currently circulating petitions for signatures of 8% of the qualified voters in two-thirds of the state's congressional districts for the purpose of placing on the November 1998 statewide general election ballot a constitutional amendment authorizing floating facilities within 1,000 feet of the main channel of the Missouri and Mississippi Rivers. Such initiative, if approved by the voters, would terminate all litigation and disciplinary action described herein. The staff of the Missouri Gaming Commission has suggested to counsel for the Company that no final decision of the Missouri Gaming Commission on disciplinary actions is anticipated prior to the November, 1998 election. Should the initiative fail, the Company shall pursue its state administrative remedies before the Missouri Gaming Commission, judicial review before the courts of appeal, and the Company's litigation for declaratory judgment, injunction and compensation for regulatory taking of property described above. If, subsequent to any judicial or administrative resolution of any of the foregoing issues, remediation of the Maryland Heights property were considered, management would, prior to undertaking any remediation, (i) consult with Harrah's concerning the alternative means by which to remediate the property and the terms thereof, including whether the Company in such circumstances would be contractually obligated to fund any remediation effort and (ii) individually evaluate whether the cost of remediation would be justified in light of the projected future results of the Company's Maryland Heights operations. Management cannot presently provide any assurance as to whether the Maryland Heights Facility would be permitted to modify the facility to comply with any such remediation order or whether the Company's legal defenses, legislative or electoral avenues or other means available would be successful to permit continued use of the facility without interruption. Further, it is unclear, in the event of a determination of non-compliance, what penalty or monetary obligation or sanction, if any, including a possible temporary or permanent closure, could be imposed on the Maryland Heights Facility or the Company. If the Company could not, or chose not to, remediate the property and it were closed, the Company would incur a substantial write-down in asset values related to the property in addition to the possibility of incurring substantial losses related to any potential shut-down or suspension of operations. Such negative impacts may be offset, in part, by certain tax benefits. Item 4. Submission of Matters to a Vote of Security Holders; Directors and Executive Officers of the Company During the fourth quarter ended March 31, 1998, no matter was submitted to a vote of the Company's stockholders. The directors and executive officers of the Company are as follows: PRESENT POSITION DIRECTOR NAME WITH THE COMPANY SINCE AGE Edward Fishman Chairman of the Board of 1985 55 Directors Howard President, Chief Executive 1986 53 Goldberg Officer and Director John Groom Executive Vice President, 1997 53 Chief Operating Officer and Director Marshall S. Director 1989 59 Geller Lee Seidler Director 1987 63 Charles Masson Director 1996 45 Earl Webb Director 1996 42 Lawrence Cohen Director 1996 40 Vincent J. Director 1997 59 Naimoli Alan R. Buggy Director 1997 49 Peter J. Executive Vice President -- 52 Aranow Finance, Chief Financial Officer, Treasurer and Secretary Patrick H. Vice President and General -- 36 Madamba, Jr. Counsel Edward Fishman has served as Chairman of the Board of the Company since 1985. He served as Chief Executive Officer from 1985 until December, 1995 and served as President during May, 1993. Prior to his retirement as an active Company employee in September, 1996, his principal activities for the Company related to marketing, long-range development and strategic planning. He has 18 years of marketing experience in the casino industry and he has served as a marketing and strategic planning consultant to casinos throughout the world. Howard Goldberg became President and Chief Operating Officer of the Company in May, 1993, and then became Chief Executive Officer in December, 1995. Prior to joining the Company as an officer, Mr. Goldberg was a director, and was the managing shareholder practicing law in the Atlantic City, New Jersey law firm of Horn, Goldberg, Gorny, Plackter, Weiss & Perskie ("Horn, Goldberg"), which has represented the Company since its inception. Since the advent of casino gaming in Atlantic City, Mr. Goldberg specialized in representing casinos in New Jersey and other jurisdictions for development and regulatory matters. Mr. Goldberg's name remains a part of the firm name of Horn, Goldberg, but he does not currently engage in any firm related activities or matters. The amount of any payments due him from the firm is not affected by or dependent upon fees paid by the Company to Horn, Goldberg. Mr. Goldberg currently serves as a director of iMall, Inc. John Groom joined the Company as Executive Vice President, Operations in January, 1996, and became Chief Operating Officer of the Company in September, 1996. From May, 1979 until January, 1995, Mr. Groom served in various executive management positions within the Caesars organization at Caesars Atlantic City and Caesars Palace Las Vegas. Marshall S. Geller is the Chairman and Chief Executive Officer of Geller & Friend Capital, a merchant banking investment company. He was formerly interim President and Chief Operating Officer of the Company from November, 1992, through April, 1993. From 1991 through 1995, Mr. Geller was the Senior Managing Partner and founder of Golenberg & Geller, Inc., a merchant banking investment company. Mr. Geller served as Vice Chairman of Gruntal & Co. Inc., an investment banking firm, from 1988 to 1990. From 1967 until 1988, he was a Senior Managing Director of Bear Stearns & Co. Inc., an investment banking firm ("Bear Stearns"). He is currently a director, and was formerly the interim Co-Chairman, of Hexcel Corporation. Mr. Geller is a director of Value Vision International, Inc. and serves as Chairman of its Investment Committee. He also serves on the Boards of Ballantyne of Omaha, Inc., iMall, Inc., DataLink Systems Corporation and Cabletel Communications Corporation. Lee Seidler is a private investor. He is affiliated with Bear Stearns as Managing Director Emeritus. From 1981 to 1989, he was a Senior Managing Director of Bear Stearns. He is a director of Synthetic Industries, Inc., The Shubert Organization, Inc. and The Shubert Foundation. Mr. Seidler was a Professor of Accounting and Price Waterhouse Professor of Auditing at New York University from 1965 to 1985. Charles M. Masson is an independent consultant and has been President of McCloud Partners, a private advisory firm in New York City since 1993. He served as the Chairman of the Board of Directors of Cadillac Fairview Corporation Limited, a real estate management and development company from September, 1994 through August, 1995, as a director of Salomon Brothers Inc. from 1991 through May, 1993, and as Vice President of Salomon Brothers Inc. from 1990 through 1993. Mr. Masson served as a director of Griffin Gaming & Entertainment, Inc. ("GG&E") (formerly Resorts International, Inc.) from November, 1993 until December, 1996. Mr. Masson served as a director of Color Tile, Inc. from August, 1996 until July, 1997. Earl E. Webb is the head of LaSalle Partners' Investment Banking Group, which provides real estate acquisition, disposition and financing services to clients that include domestic and foreign corporations, pension funds, developers and financial institutions. He serves on the Board of Directors of LaSalle Partners and as a member of its Management Committee. Lawrence Cohen has served as President and Chief Executive Officer of The Griffin Group since July 1, 1997. From 1988 to June, 1997, he served as Executive Vice President and Chief Financial Officer of The Griffin Group. From 1986 to 1988, he was Assistant Corporate Controller of Columbia Pictures Entertainment, Inc. Prior to 1986, Mr. Cohen was with the accounting firm of Paneth, Haber & Zimmerman. He also served as a director of Resorts International Hotel, Inc. from 1994 to December, 1996. From 1994 until July, 1996, Mr. Cohen served as a director of Liberty Broadcasting, Inc., a privately held broadcasting company. Vincent J. Naimoli has served as Chairman, President and Chief Executive Officer of Anchor Industries International, Inc., a multi-industry, operating, holding and financial services company since 1989 and as the Managing General Partner and Chief Executive Officer of the Tampa Bay Devil Rays since 1995. Mr. Naimoli served as a director of GG&E from May 1994 to December 1996, as Chairman, President and Chief Executive Officer of Doehler-Jarvis, Inc., a designer and manufacturer of precision aluminum castings, from 1991 to 1995, as Chairman, President and Chief Executive Officer of Harvard Industries, Inc., an automotive components company, from 1993 to 1997, and as Chairman, President and Chief Executive Officer of Ladish Company, Inc., a manufacturer of forged titanium and other metal components, from 1993 to 1995. He serves on the Board of Directors of Florida Progress Corporation, Russell-Stanley Corporation and Simplicity Pattern Company, Inc. Alan R. Buggy has served as President and Chief Executive Officer of The Chalfont Group, an investment company, since 1997. From 1994 to 1997, Mr. Buggy served as Managing Director of Price Waterhouse. From 1990 to 1993, Mr. Buggy served as Executive Chairman of ITC Entertainment Group. Mr. Buggy also served as Managing Director of Samuel Montagu, Inc., a merchant banking firm, from 1983 to 1990. From 1982 to 1983, he served as Senior Vice President of American Scandinavian Bank, managing the corporate finance and treasury divisions. Peter J. Aranow joined the Company as an Executive Vice President in May 1993, became Secretary in September 1993 and Treasurer in March 1996. Mr. Aranow also served as Chief Financial Officer of the Company from May 1993 until March 1996, and from August 1997 to the present. From 1977 to May 1993, he was a Senior Managing Director in the investment banking department of Bear Stearns specializing in the gaming industry. Patrick H. Madamba, Jr. was appointed Vice President and General Counsel to the Company on June 10, 1997. Mr. Madamba joined the Company in January 1995 as Vice President and Associate General Counsel. From May, 1988 through January, 1995, he was associated with the law firm of Horn, Goldberg. From 1985 through 1988, he held various positions at the Claridge Casino Hotel in Atlantic City, New Jersey, including the position of Regulatory Affairs Manager. Howard Goldberg and Lee Seidler are brothers-in-law. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The Company's Common Stock is traded on the Nasdaq National Market under the symbol "PLAY". The following table sets forth the high and low closing sale prices of the Company's Common Stock, as reported by the Nasdaq National Market, during the periods indicated. High Low Fiscal 1997 First Quarter 12-1/8 9-1/8 Second Quarter 10-1/4 6-1/16 Third Quarter 7-13/16 5-1/8 Fourth Quarter 6-1/8 4-5/8 Fiscal 1998 First Quarter 4-9/16 3 Second Quarter 4-7/16 2-3/8 Third Quarter 4-7/16 2-9/16 Fourth Quarter 5-1/8 3-1/8 Fiscal 1999 First Quarter (through June 5-37/64 4-1/2 25, 1998) The last reported sales price of the Common Stock on the Nasdaq National Market on June 25, 1998 was 4 1/2 per share. There were approximately 536 holders of record of the Company's Common Stock as of June 19, 1998. The Company has never declared or paid cash dividends on its Common Stock. Under the terms of the covenants of its Senior Notes and its Credit Line, the Company cannot pay cash dividends to the holders of its Common Stock. The Company presently intends to retain earnings to finance the operation and expansion of its business. See " Business Gaming Regulation" and "Company Repurchase Rights with Respect to Company Securities" with regard to certain regulations and provisions affecting the Company's securities. Item 6. Selected Financial Data Selected financial data for, and as of the end of, each of the years in the five-year period ended March 31, 1998, are presented below. 1998 1997 1996 1995 1994 (in thousands, except per share data) Operations Data: Total revenues $323,218 $291,210 $291,395 $223,695 $107,082 Net income (loss) 1,951 (46,298) 22,320 45,755 20,952 Earnings per Common Share Assuming Dilution: Net income (loss) $.06 $(1.56) $.70 $1.47 $.72 Balance Sheet Data: Cash, cash equivalents and marketable securities, net 17,223 20,567 23,247 50,332 77,546 Total assets 409,587 421,289 413,432 223,790 138,565 Long term debt, including 182,549 196,000 153,000 8,907 5,865 current portion Total stockholders' equity 157,914 155,881 193,627 176,143 115,844 Selected Quarterly Financial Information (Unaudited) Set forth below is selected financial information for the last eight fiscal quarters. In management's opinion, the results include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented when read in conjunction with the historical Consolidated Financial Statements and notes thereto contained elsewhere herein. First Second Third Fourth Quarter Quarter Quarter Quarter Total (in thousands, except per share data) Fiscal 1998 Casino Revenues: Lake Charles $37,337 $39,922 $36,056 $35,784 $149,099 Metropolis 18,725 21,032 19,118 21,350 80,225 Mesquite 4,438 - - - 4,438 Maryland Heights 15,287 17,425 17,050 18,813 68,575 $75,787 $78,379 $72,224 $75,947 $302,337 Loss on sale of Mesquite property(2) - - $ (400) (171) (571) Agreement with City of Lake Charles - - - 4,153 4,153 Adjusted EBITDA (1) 12,658 15,632 11,447 15,487 55,224 Income before other income (expense) and provision for income taxes 6,745 9,400 5,682 4,511 26,338 Net income (loss) 293 2,120 166 (628) 1,951 Earnings (loss) per common share- assuming dilution $.01 $.07 $.01 $(.02) $.06 Fiscal 1997 Casino Revenues: Lake Charles $47,348 $41,407 $33,341 $36,943 $159,039 Metropolis 19,152 20,385 18,976 17,860 76,373 Mesquite 5,752 5,468 5,788 6,364 23,372 Maryland Heights - - - 3,876 3,876 $72,252 $67,260 $58,105 $65,043 $262,660 Impairment and write-down of assets - - - $7,357 $7,357 Loss on sale of Mesquite property(2) - - - $57,397 $57,397 Restructuring charge - $9,007 - - $9,007 Adjusted EBITDA (1) $16,870 $12,292 $7,754 $8,923 $45,839 Income (loss) before other income (expense) and provision for income taxes $11,572 $(2,687) $(1,152) $(64,002)(56,269) Net income (loss) $ 4,762 $(3,843) $(3,105) $(44,112)(46,298) Earnings (loss) per common share- assuming dilution .15 (.13) (.11) (1.41) (1.56) (1) Represents earnings, before interest income (expense), provision for income taxes, depreciation and amortization (including joint venture depreciation and amortization), pre- opening expenses, impairment and write-down of assets, loss on sale of Mesquite property, restructuring charge, agreement with the City of Lake Charles and other income. Adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") is not intended to represent cash flows for any of the quarterly periods, nor has it been presented as an alternative to income from operations as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. EBITDA-based information is presented solely as supplemental disclosure because EBITDA is frequently used to analyze companies on the basis of operating performance, leverage and liquidity. (2) During 1997, the Company recorded a loss on the sale of the Mesquite property totaling $57,397,000. During 1998, the estimated remaining liabilities associated with the Mesquite facility were re-evaluated and reduced by $571,000. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the consolidated results of operation and financial condition of the Company and its subsidiaries. The Company owns and operates riverboat gaming and entertainment facilities. These include one riverboat casino in Metropolis, Illinois (the "Metropolis Facility"), two riverboat casinos in Lake Charles, Louisiana (the "Lake Charles Facility") and two contiguous, permanently moored, dockside riverboat casinos in Maryland Heights, Missouri (the "Maryland Heights Facility"). The Company operated a land-based casino resort in Mesquite, Nevada (the "Mesquite Facility") until June 30, 1997. The Company also owns and operates a thoroughbred racetrack in Paducah, Kentucky ("Bluegrass Downs"). Since the Company's fiscal year ends on March 31st, references to the years 1998, 1997, and 1996, mean the twelve month periods ended March 31, 1998, March 31, 1997, and March 31, 1996, respectively. Results of Operations Financial Highlights Years ended March 31, % Increase/ 1998 1997 1996 (Decrease) 98vs. 97vs. (Dollars in thousands, except per share amounts) 97 96 Casino Revenues Metropolis $80,225 $76,373 $82,191 5.0 (7.1) Lake Charles 149,099 159,039 170,678 (6.3) (6.8) Maryland Heights 68,575 3,876 - (c) - Mesquite 4,438 23,372 16,870 (d) 38.5 302,337 262,660 269,739 15.1 (2.6) Total Revenues Metropolis 83,430 79,501 85,902 4.9 (7.5) Lake Charles 157,102 167,107 176,061 (6.0) (5.1) Maryland Heights 73,127 4,383 - (c) - Mesquite 8,700 38,945 27,941 (d) 39.4 Other 859 1,274 1,491 (32.6) (14.6) 323,218 291,210 291,395 11.0 - Operating Income (Loss) Metropolis 21,659 21,580 29,139 - (25.9) Lake Charles 20,797 25,862 46,926 (19.6) (44.9) Maryland Heights (a) (4,317) (10,545) - (c) - Mesquite (528) (8,077) (10,629) (d) 24.0 Corporate, development, (11,844) (18,685) (21,565) 36.6 13.4 pre-opening & other Loss on sale of Mesquite 571 (57,397) - (e) - Restructuring charge - (9,007) - - - 26,338 (56,269) 43,871 146.8 (228.3) Depreciation and amortization (b) 20,806 21,806 17,236 (4.6) 26.5 Interest expense (net) 23,466 15,761 8,868 48.9 77.7 Net income (loss) 1,951 (46,298) 22,320 104.2 (307.4) Earnings (loss) per share assuming dilution 0.06 (1.56) 0.70 103.8 (322.9) Operating Margin (operating income/total revenues) Metropolis 26.0% 27.1% 33.9% (1.1) (6.8) pts pts Lake Charles 13.2% 15.5% 26.7% (2.3) (11.2) pts pts Maryland Heights (5.9%) (240.6%) - (c) - Mesquite (6.1%) (20.7%) (38.0%) (d) 17.3 pts Consolidated 8.1% (19.3%) 15.1% 27.4 (34.4) pts pts (a) Amount includes the Company's 50% share of both the Maryland Heights Joint Venture operating losses and the Maryland Heights Joint Venture depreciation and amortization. For 1998, Players share of the total loss from investment in the Maryland Heights Joint Venture was approximately $11.2 million which consisted of $6.7 million in operating losses and $4.5 million in depreciation and amortization. For 1997, Players share of the total loss from investment in the Maryland Heights Joint Venture was $1.9 million, including $400,000 of depreciation and amortization. (b) The 1998 and 1997 amounts do not include Player's share of the Maryland Heights Joint Venture depreciation and amortization of approximately $4.5 million and $400,000, respectively. (c) The Maryland Heights Facility opened on March 11, 1997, and was operational for less than one month in 1997. (d) The Mesquite Facility was sold on June 30, 1997. (e) The 1998 amount represents reversals of accruals taken with respect to the 1997 loss on sale of Mesquite. Results of Operations Revenues Increases in casino and total revenues in 1998 as compared to 1997 resulted primarily from the opening of the Company's Maryland Heights Facility on March 11, 1997. Revenues from this facility more than offset year to year decreases in revenues at the Company's Lake Charles Facility and the absence of any revenues from Mesquite after the facility's sale on June 30, 1997. The year over year increase in revenues at the Metropolis Facility was due to the new dining and entertainment complex which was placed in service during December, 1997, the mild winter experienced in Fiscal 1998, and the absence of flooding which adversely impacted Metropolis results in March, 1997. Increased competition and flooding in 1997 resulted in lower revenues as compared to 1996. In Lake Charles, the Company experienced year over year revenue decreases from 1998 as compared to 1997 and 1997 as compared to 1996 due to the opening of a second riverboat by its primary Lake Charles competitor in July, 1996, bringing the total number of riverboats in the Lake Charles market to four. In addition, the Company significantly curtailed its bus programs at the Lake Charles Facility in the last quarter of Fiscal 1998 to eliminate programs which were less accretive to operating income. Hotel revenues increased in the last quarter of Fiscal 1998 due to the Company's acquisition of the Lake Charles Holiday Inn. The Maryland Heights Facility opened on March 11, 1997, and contributed revenues for three weeks in 1997 versus an entire year in 1998. The mild winter in Fiscal 1998 and the continued growth of the St. Louis gaming market have resulted in sequential quarterly increases in revenues. The Mesquite Facility operated for three months in 1998 prior to its sale on June 30, 1997, versus an entire year in 1997. Operating Income (Loss) Increases in operating income in 1998 as compared to 1997, excluding the loss on the sale of Mesquite and restructuring charge, were primarily attributable to decreased losses for Maryland Heights, the absence of operating losses for Mesquite following the facility's sale on June 30, 1997, and a significant reduction in corporate, development, pre-opening and other expenses. The Metropolis Facility's operating income for 1998 as compared to 1997 remained stable. Although revenues increased during the comparable periods, increases in promotional and other expenses reduced operating margins in 1998 as compared to 1997. Operating income in Lake Charles was impacted by a $4.2 million one-time charge taken in March, 1998, related to a new tax agreement with the City of Lake Charles. The Company reached an agreement with the City of Lake Charles both to settle litigation and to establish a permanent method of calculating the City admission fee on Players' riverboats. Under the new agreement, which began March 1, 1998, the Company will pay the City both a percentage of gaming revenue in lieu of a passenger admission fee, and $544,000 per year for ten years. The present value of the fixed annual payments, including expenses, was accounted for as a one-time charge of $4.2 million in the fourth quarter of Fiscal 1998. Excluding the one-time charge taken in March, 1998, the Lake Charles Facility's operating income for 1998 was $25.0 million as compared to $25.9 million resulting in operating margins of 15.9% and 15.5% respectively. The year-over-year operating margin increase was the result of cost containment efforts and a focus on eliminating programs which were less accretive to earnings. The Maryland Heights operating loss for 1998 and 1997 includes the Company's casino operations, the Company's 50% share in the operations of the joint venture, pre-opening costs, and a write- down of contributed land. 1998 and 1997 comparative information is as follows: 1998 1997 Players, Maryland Heights: Operating (income) loss $(6,895) 496 Pre-opening costs - 4,099 Write-down of contributed land - 4,015 50% Share of Joint Venture: Operating loss 11,212 1,070 Write-off of deferred pre- opening costs - 1,590 Development period interest income - (725) Total Operating Loss (a) $4,317 $10,545 (a) The 1998 and 1997 amounts include Players Maryland Heights depreciation and amortization of approximately $3.9 million and $210,000, respectively, and Players share of the Maryland Heights Joint Venture depreciation and amortization of approximately $4.5 million and $411,000, respectively. Corporate, development, pre-opening & other expenses decreased substantially in 1998 as compared to 1997 principally due to the absence of development costs in 1998 (approximately $2.0 million in 1997), a $1.3 million decrease in corporate administrative expenses, the absence in 1998 of a $2.6 million write-down for the impairment of Bluegrass Downs, and a difference of $1.3 million in 1998 compared to 1997 in the amount of unamortized financing costs written off. The increase in depreciation and amortization expense in 1998 as compared to 1997 was due to depreciation from Maryland Heights and the Maryland Heights Joint Venture in 1998 which was partially offset by the absence of Mesquite depreciation in 1998 and a difference of $1.3 million in 1998 compared to 1997 in the amount of unamortized financing costs written off ($1.4 million write-off in 1998 versus $2.7 million write-off in 1997). Decreases in operating income in 1997 as compared to 1996, excluding the loss on the sale of Mesquite and the restructuring charge, were primarily attributable to decreased casino revenue coupled with additional spending on advertising, marketing, promotions, and entertainment at the Metropolis and Lake Charles Facilities, and the commencement of operations at the Maryland Heights Facility in the fourth quarter of 1997. The Maryland Heights Facility commenced operations in the last month of Fiscal 1997. The operating loss for 1997 included the first three weeks results of the Company's casino operations, the first three weeks results of the Company's 50% share in the operations of the joint venture, pre-opening costs, and the write- down of land contributed to the joint venture. Mesquite's operating loss was reduced in 1997 as compared to 1996. The facility operated for the entire year of 1997 versus nine months in 1996. Corporate, development, pre-opening & other expenses decreased in 1997 as compared to 1996 principally due to the curtailment of development activities with an accompanying decline in legal, consulting and other professional fees, travel, and personnel relocation expenses. This decline was partially offset by the write-off of the $2.7 million of unamortized financing costs related to the original Bank Credit Facility and the $2.6 million write-down for the impairment of Bluegrass Downs which were recorded in 1997. Effective April 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 121, ("SFAS 121") Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed. During the fourth quarter of Fiscal 1997, the Company reevaluated its investment in Bluegrass Downs and committed to a plan to remove from service and replace the Metropolis dining and entertainment barge. In accordance with SFAS 121, impairment losses for Bluegrass Downs and the Metropolis barge of $2.6 million and $700,000 respectively, were recorded in 1997. The increase in depreciation and amortization expense in 1997 as compared to 1996 was due to assets, including the Lake Charles "Island" dining and entertainment barge, the Lake Charles parking garage, and the Mesquite Facility, which all had a full year of depreciation expense in 1997 compared to partial year depreciation in 1996. In addition, the write-off of $2.7 million of unamortized financing costs related to the original Bank Credit Facility was recorded in 1997. Interest Expense (Net) Interest expense, net of interest income, increased in 1998 as compared to 1997 due to additional borrowings to complete the Maryland Heights Facility and to acquire the Lake Charles Holiday Inn, an increase in the Company's average borrowing rate, and a decrease in the amount of capitalized interest. The interest rate increase resulted from revisions to the Company's Bank Credit Agreement in December, 1996. Interest expense, net of interest income, increased in 1997 as compared to 1996 as a result of additional borrowings under the Bank Credit Agreement and liquidation of all remaining marketable securities to fund the capital investment in Maryland Heights. Capitalized interest totaled $381,000, $6.7 million, and $3.3 million in 1998, 1997, and 1996 respectively. Additional Factors Affecting Future Operating Income Effective January 1, 1998, the State of Illinois approved a new graduated tax schedule to replace the prior tax schedule for gaming win for all Illinois licensees. Previously, a flat tax rate of 20% was applied to all gaming win. Under the new structure, the following tax schedule applies: $0 to 25 million in gaming win - 15% $25 million to $50 million in gaming win - 20% $50 million to $75 million in gaming win - 25% $75 million to $100 million in gaming win - 30% Over $100 million in gaming win - 35% Road construction is tentatively scheduled to begin on U.S. Interstate 10 in front of the Company's Lake Charles Facility in September, 1998, and is scheduled to be completed in March, 1999. The construction will result in lanes of U.S. Interstate 10 being closed for periods of time, although the Company has been advised that one Eastbound lane and one Westbound lane will always remain open, permitting access to and from the casino. The Company cannot determine what effect any traffic delays caused by road construction may have on patronage to the facility, although significant delays may adversely impact patronage and revenues during the construction period. Investments and Capital Expenditures On January 9, 1998, the Company completed the acquisition of a 269 room hotel, formerly operated as the Lake Charles Holiday Inn, for a total purchase price of approximately $19.2 million. The purchase was funded with borrowings under the Company's Bank Credit Agreement. On December 15, 1997, the Company opened its new, expanded dining and entertainment barge at the Metropolis Facility. The total project cost, excluding capitalized interest, was approximately $9.6 million, of which $6.4 million was expended in 1998. On March 11, 1997, the Company opened its Maryland Heights Facility. The Company's share of the total project cost, excluding capitalized interest, approximated $141 million, all of which had been expended as of May 15, 1997. Capital Resources and Liquidity The Company's balance sheet at March 31, 1998, as compared to March 31, 1997, reflects changes from capital expenditures in Maryland Heights and Metropolis, the acquisition of the Lake Charles Holiday Inn, the associated increase in bank debt, and tax refunds received in 1998 related to the loss on the sale of Mesquite. The balance sheet at March 31, 1997, versus March 31, 1996, reflects changes principally from capital expenditures in Maryland Heights, additional investments in the Maryland Heights Joint Venture, the associated increase in bank debt, and the sale of Mesquite in March, 1997. During 1998, cash generated by operations, cash from the sale of Mesquite and the associated tax refund, net bank borrowings, and equipment financing were the sources of funds for investments in Maryland Heights, the construction of the new dining and entertainment facility in Metropolis, and the acquisition of the Lake Charles Holiday Inn. In July, 1997, the Company received approximately $7 million in cash from the completion of the sale of the Mesquite Facility and $23.8 million from a Federal income tax refund for the fiscal year ended March 31, 1997, which was used to reduce bank borrowings. The following table summarizes the sources and uses of capital for the past three fiscal years: Years ended March 31, 1998 1997 1996 (Dollars in thousands) Sources of capital: Cash provided by operations $53,265 $28,458 $20,748 Issuance of Senior Notes - - 150,000 Bank borrowings 48,000 65,500 3,000 Proceeds from sale of property and equipment 7,718 30,749 - Proceeds from sale of marketable securities - 4,401 196,886 Exercise of stock options and warrants 82 5,598 1,297 Total $109,065 $134,706 $371,931 Uses of capital: Purchases/construction of property and equipment $40,216 $46,499 $147,119 Purchases of marketable securities - - 170,806 Investment in joint venture 5,379 61,875 34,015 Repayments of long-term debt 65,356 22,500 8,907 Purchase of treasury stock - - 7,294 Debt issuance costs 1,458 2,051 8,890 Increase (decrease) in cash and cash equivalents (3,344) 1,781 (5,100) Total $109,065 $134,706 $371,931 The Company has had a revolving credit agreement (the "Credit Agreement") with a group of banks led by Wells Fargo since August, 1995. The Credit Agreement was revised in December, 1996, following a default under its then current minimum EBITDA covenant. The December, 1996 revisions permitted the Company to complete the construction of the Maryland Heights project, but eliminated the Company's ability to use borrowed funds for any other purposes and required repayment of the full amount of the loan by June 30, 1998. In July, 1997, following the completion of Maryland Heights and the paydown of the bank line with the proceeds of the Mesquite sale and the associated tax refund, the Company began discussions with Wells Fargo to revise the terms of the Credit Agreement. In March, 1998, the Company closed a new $80 million five year bank agreement with Wells Fargo and a group of participating banks. The new agreement reduced the Company's floating rate interest cost from 2 1/2% over the prime rate to 2 1/2% over LIBOR (from approximately 11% to 8 1/4% in the then current interest rate environment). At the Company's discretion, borrowings under the new bank agreement can be drawn at 1% over prime to provide additional flexibility. The new agreement contains covenants that, among other things, place restrictions on additional indebtedness, dividends, capital expenditures, and limit share repurchases to $10 million plus 50% of net income during the term of the agreement. The Company believes that expected cash flow from operations will be sufficient to meet working capital requirements for current operations and debt service through March 31, 1999. Cash requirements beyond what is available from operating cash flow, such as significant capital expenditure projects, if any, can be met through the Company's $80 million bank credit facility of which $30 million was outstanding as of March 31, 1998. The Company currently has no plans for significant capital expenditures beyond its normal maintenance capital expenditures. Contingencies The Company is involved in certain litigation regarding the constitutionality of gaming facilities (such as the Maryland Heights Facility) located upon artificial basins fed by the Missouri River. See Part I, Item 3, W. Todd Akin, et al. v. Missouri Gaming Commission. Based on the outcome of the November referendum and subsequent court proceedings, the possibility exists that the Company could be forced either to remediate or close the Maryland Heights Facility. If either of these events occur, the Company could incur substantial remediation costs or a substantial write-down in asset values. The amounts involved cannot be reasonably estimated at this time. Each cruising riverboat is regulated by the U.S. Coast Guard. U.S. Coast Guard regulations require that hulls of vessels of the type being operated by the Company in Lake Charles and Metropolis be inspected every five years at a U.S. Coast Guard approved dry docking facility which will cause a temporary loss of service that could last one month or longer, unless the U.S. Coast Guard determines that an alternative to dry docking is acceptable. The next inspection is scheduled to occur in the fall of calendar 1998 for the Lake Charles Star Riverboat, the fall of calendar 2000 for the Players III Lake Charles Riverboat, and the fall of calendar 2000 for the Metropolis Riverboat. Subject to U.S. Coast Guard approval, the Company is pursuing an underwater onsite inspection of the hull of the Lake Charles Star Riverboat as an alternative to dry docking. An underwater hull inspection would likely involve a minimal disruption in operations; however, no assurance can be given that dry docking and the related loss of service will not be required. Year 2000 The "Year 2000" problem refers to the inability of computers and software programs to recognize and properly process data fields containing a two digit year. A system which is not Year 2000 compliant would not be able to correctly process date-based information, and in extreme situations, could cause entire systems to be disabled. During Fiscal 1998, the Company began evaluating its various systems and applications to determine whether or not those systems and applications were Year 2000 compliant. The process involves system reviews, testing, and modification or replacement of date-sensitive hardware and software. To date, an inventory of systems has been completed. Based upon this review, the Company has identified the major systems which are not compliant and has implemented a plan of action to replace or update those systems. The plan calls for completion of any identified systems or application changes or upgrades connected with Year 2000 compliance before December 31, 1998. The total cost to the Company for its Year 2000 compliance activities has not been and is not anticipated to be material to its financial position or results from operations. Effects of Recent Accounting Pronouncements The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income, which is effective for fiscal years beginning after December 15, 1997. This statement requires businesses to disclose comprehensive income and its components in their financial statements. Management intends to comply with the disclosure requirements of this statement in the year ending March 31, 1999. The FASB issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which is effective for fiscal years beginning after December 15, 1997. This statement redefines how operating segments are determined and requires qualitative disclosure of certain financial and descriptive information about a company's operating segments. The Company will adopt SFAS No. 131 in the year ending March 31, 1999. Management has not finalized its analysis of which operating segments it will report on to comply with SFAS No. 131. Forward Looking Information Certain information included in this section and elsewhere in this Annual Report on Form 10-K contains, and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contain or will contain or include, forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements address, among other things, the effects of competition, the resolution of pending or threatened litigation or regulatory proceedings concerning the Company's alleged non- compliance with Missouri's gaming laws and Constitution, plans for future riverboat hull inspections, I-10 road construction in Lake Charles, future borrowing and capital costs, plans for future expansion and property enhancements, business development activities, capital expenditure programs and requirements, financing sources and the effects of legislation and regulation (including possible gaming legislation, gaming licensure and regulation, state and local regulation, tax regulation, and the potential for regulatory reform). Forward looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. Such forward-looking information is based upon management's current plans or expectations and is subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions, and the Company's future financial condition and results of operations. These uncertainties and risks include, but are not limited to, those relating to conducting operations in an increasingly competitive environment, conducting operations at a newly or recently developed site or in a jurisdiction for which gaming has recently been permitted, changes in state and local gaming laws and regulations, development and construction activities, leverage and debt service requirements (including sensitivity to fluctuation in interest rates), general economic conditions, the U.S. Coast Guard's acceptance of underwater hull inspections as an alternative to dry docking and inspection, changes in federal and state tax laws, the disruption to Lake Charles operations caused by road construction, action taken under applications for licenses (including renewals) and approvals under applicable laws and regulations (including gaming laws and regulations), and the legalization of gaming in certain jurisdictions. As a consequence, current plans, anticipated actions, and future financial condition and results may differ from those expressed in any forward-looking statements made by or on behalf of the Company and no assurance can be given that such statements will prove to be correct. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Not applicable. Item 8. Financial Statements and Supplementary Data The consolidated financial statements are as set forth in the Index to Consolidated Financial Statements on page 34. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. PART III Except for the information regarding executive officers called for by Item 401 of Regulation S-K, which is included in Part I, Item 4 hereof, Items 10, 11, 12 and 13 will be incorporated by reference to the Company's definitive proxy statement for its Annual Meeting of Stockholders or by reference to Form 10-K/A, which in either case will be filed not later than 120 days after the end of the Company's fiscal year, in accordance with General Instruction G(3) to Form 10-K. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) (1) and (2) Index to Financial Statements PAGE REPORT OF INDEPENDENT AUDITORS 35 CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1998 AND 1997 36 FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED MARCH 31, 1998: CONSOLIDATED STATEMENTS OF OPERATIONS 37 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 38 CONSOLIDATED STATEMENTS OF CASH FLOWS 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 41 All other schedules have been omitted because they are not applicable or not required or the required information is included in the Consolidated Financial Statements or Notes thereto. Exhibit Description Number 3.1(1) Articles of Incorporation, as amended, of Players International, Inc. (the "Company"). 3.2(11) By-laws of the Company, as amended. 4.1(11) Indenture among certain subsidiaries of the Company and First Fidelity Bank, National Association, as Trustee, including form of Note (the "Senior Note Indenture"). 4.2(1) Form of First Supplemental Indenture to the Senior Note Indenture. 4.3(1) Form of Second Supplemental Indenture to the Senior Note Indenture. Form of Third Supplemental Indenture to the Senior Note 4.4 Indenture. 10.1(3) The Company's 1985 Incentive Stock Option Plan. 10.2(4) Amendment No. 1 to the Company's 1985 Incentive Stock Option Plan. 10.3(5) The Company's 1990 Incentive Stock Option and Non- Qualified Stock Option Plan, as amended. 10.4(2) The Company's 1993 Stock Incentive Plan. 10.5(2) Form of Registration Rights Agreement dated as of June 23, 1992 by and among the Company, Southern Illinois Riverboat/Casino Cruises, Inc., and the purchasers named therein. 10.6(2) Agreement dated February 12, 1993 by and between Jebaco, Inc. and the Company with respect to the assignment of an option agreement relating to the Downtowner Hotel (now known as the Players Hotel). 10.7(2) Option Agreement dated December 24, 1991 by and among The Beeber Corporation and Elisabeth S. Woodward and Jebaco, Inc. with respect to the Downtowner Hotel (now known as the Players Hotel). 10.8(2) Amendment to Option Agreement dated March 9, 1993 by and among The Beeber Corporation and Elisabeth S. Woodward and Players Lake Charles, Inc., a subsidiary of the Company, with respect to the Downtowner Hotel (now known as the Players Hotel). 10.9(2) License and Services Agreement dated December 8, 1992 by and among The Griffin Group, Inc., the Company and Southern Illinois Riverboat/Casino Cruises, Inc., as amended. 10.10(2)Joint Venture Agreement dated May 1993 between Amerihost and a subsidiary of the Company with respect to a hotel in Metropolis, Illinois adjacent to the Company's Metropolis riverboat. 10.11(6)Lease dated March 19, 1993 by and among the Beeber Corporation and Players Lake Charles, Inc., a subsidiary of the Company. 10.12(7)Agreement of Purchase and Sale dated June 16, 1994, between Gem Mesquite, Ltd. and Players Nevada, Inc., a subsidiary of the Company (including form of letter Agreement from the Company to Gem Mesquite, Ltd. relating to registration rights). 10.13(7)Transfer of Data Agreement dated June 16, 1994, between Gem Gaming, Inc. and Players Nevada, Inc. (including form of Promissory Note). 10.14(7)Development Consulting Agreement dated June 16, 1994, between Gem Gaming, Inc. and Players Nevada, Inc. (including form of 1994 Series G Warrant). 10.15(7)Option Transfer Agreement dated June 16, 1994, between Gem Gaming, Inc., Gem Mesquite, Ltd. and Players Nevada, Inc. 10.16(8)The Company's 1994 Directors Stock Incentive Plan, as adopted April 14, 1994, and as amended July 14, 1994. 10.17(9)Agreement for Sale of Partnership Interests among the Company and certain of its subsidiaries and Showboat, Inc. and certain of its subsidiaries. 10.18(1)Asset Purchase Agreement dated August 16, 1995 among the Company, Players Lake Charles, Inc. and the Beeber Corporation. 10.19(1)Form of Credit Agreement ("Credit Agreement") among the Company, First Interstate Bank of Nevada, N.A., Bankers Trust Company, BT Securities Corporation, and certain other Lenders party thereto. 10.20(1)Form of Revolving Promissory Notes made by the Company in favor of the Lenders party to the Credit Agreement. 10.21(1)Form of Swing Line Promissory Note made by the Company in favor of First Interstate Bank of Nevada, N.A. 10.22(1)Form of Guaranty made by Players Lake Charles, Inc., Players Nevada, Inc., Southern Illinois Riverboat/Casino Cruises, Inc., Players Bluegrass Downs, Inc., Players Riverboat Management, Inc., Players Riverboat, Inc., Players Mesquite Golf Club, Inc., Players Indiana, Inc., Players Riverboat, LLC, Players Mesquite Land, Inc., Players Maryland Heights, Inc., River Bottom Inc. and Showboat Star Partnership in favor of First Interstate Bank of Nevada, N.A. 10.23(1)Form of Company Pledge Agreement between the Company and First Interstate Bank of Nevada, N.A. 10.24(1)Form of Company Pledge Agreement (Nevada) between the Company and First Interstate Bank of Nevada, N.A. 10.25(1)Form of First Amendment to Company Pledge Agreement (Nevada) between the Company and First Interstate Bank of Nevada, N.A. 10.26 Form of LLC Membership Interest Security Agreement (1) between the Company and First Interstate Bank of Nevada, N.A. 10.27 Form of Company Security Agreement between the Company (1) and First Interstate Bank of Nevada, N.A. 10.28 Form of Subsidiary Security Agreement (Nevada) among (1) Players Nevada, Inc., Players Mesquite Golf Club, Inc., Players Mesquite Land, Inc. and First Interstate Bank of Nevada, N.A. 10.29 Form of Subsidiary Security Agreement (Louisiana) among (1) Players Lake Charles, Inc., Showboat Star Partnership, Players Riverboat LLC and First Interstate Bank of Nevada, N.A. 10.30 Form of Subsidiary Security Agreement (Illinois) (1) between Southern Illinois Riverboat/Casino Cruises, Inc. and First Interstate Bank of Nevada, N.A. 10.31 Form of Partnership Interest Security Agreement between (1) Players Riverboat Management, Inc. and First Interstate Bank of Nevada, N.A. 10.32 Form of Collateral Account Agreement between the (1) Company and First Interstate Bank of Nevada, N.A. 10.33 Form of Nevada Deed of Trust, Fixture Filing and (1) Security Agreement with Assignment of Rents relating to the Credit Agreement. 10.34 Form of Louisiana Act of Mortgage, Fixture Filing and (1) Security Agreement between Players Lake Charles, Inc. and First Interstate Bank of Nevada, N.A. 10.35 Form of Illinois Mortgage Fixture Filing and Security (1) Agreement with Assignment of Rents relating to the Credit Agreement. 10.36 Form of First Preferred Ship Mortgage made by Showboat (1) Star Partnership (an entity owned, directly or indirectly, by the Company and its subsidiaries) to First Interstate Bank of Nevada, N.A. 10.37 Form of Environmental Indemnity made by the Company to (1) First Interstate Bank of Nevada, N.A. 10.38 Form of Master Vessel and Collateral Trust Agreement (1) between First Interstate Bank of Nevada, N.A. as Administrative Agent and First Interstate Bank of Nevada, N.A. as Trustee and acknowledged and accepted by the Company. 10.39 Partnership Agreement dated November 2, 1995, by and (10) between Harrah's Maryland Heights Corporation and Players MH, L.P. 10.40 Guaranty of Players International, Inc. dated November (10) 2, 1995. 10.41 Management Agreement dated November 2, 1995 by and (10) between Riverside Joint Venture and Harrah's Maryland Heights Operating Company. 10.42 License Agreement dated November 2, 1995 by and among (10) Players International, Inc., Riverside Joint Venture and Harrah's Maryland Heights Operating Company. 10.43 Ground Lease dated November 3, 1995 by and between (10) Harrah's Maryland Heights LLC and Riverside Joint Venture. 10.44 Lease Agreement dated as of November 3, 1995 by and (10) between Riverside Joint Venture and Players MH, L.P. 10.45 Parent Guaranty of Players International, Inc. dated (10) November 3, 1995. 10.46 Right of First Refusal to Purchase dated November 3, (10) 1995 by and between Harrah's Maryland Heights LLC and Players MH, L.P. 10.47 Option Agreement dated November 3, 1995 by and between (10) Riverside Joint Venture and Harrah's Maryland Heights, L.L.C. 10.48 Development of Agreement (Earth City Expressway (10) Extension) by and between the City of Maryland Heights and Riverside Joint Venture. 10.49 Form of Agreement between the Company and Lake Charles Construction Corporation dated November 15, 1995 for the Players Island-Entertainment Barge. 10.50 Agreement between the Company and Lake Charles Construction Corporation dated February 16, 1996 for the Players Island-Entertainment Barge. 10.51 Retirement Agreement and General Release dated (12) September 9, 1996 between the Company and Edward Fishman. 10.52 Retirement Agreement and General Release dated (12) September 9, 1996 between the Company and David Fishman. 10.53 Amended and Restated Credit Agreement, dated as of (13) December 16, 1996, among the Company and the Lenders party thereto, Wells Fargo Bank, N.A., Bankers Trust Company and BT Securities Corporation. 10.54 Purchase Agreement by and among Players Nevada, Inc., (14) Players Mesquite Land, Inc., Players Mesquite Golf Club, Inc. and RBG, LLC. 10.55 March 17, 1997 Letter Agreement to the Asset Purchase (15) Agreement Extending Closing Date. 10.56 March 18, 1997 Letter Agreement to the Asset Purchase (15) Agreement Regarding Application of Due of Due Diligence Fee. 10.57 March 18, 1997 Letter Agreement to the Asset Purchase (15) Agreement Regarding Certain Matters Incident to Closing. 10.58 Asset Purchase Agreement dated as of September 30, 1997 by and between Lakeshore Hotels, Ltd. and Players International, Inc. 10.59 November 13, 1997 Amendment No. 1 to Asset Purchase Agreement 10.60 December 17, 1997 Amendment No. 2 to Asset Purchase Agreement 10.61 Second Amended and Restated Credit Agreement, dated as of March 11, 1998, among the Company and the Lenders party thereto and Wells Fargo Bank, N.A. 10.62 March 24, 1998 Letter Agreement regarding execution of the Settlement and Admission Fee Agreement. 10.63 Settlement and Admission Fee Agreement dated May 15, 1998 among Players Lake Charles, L.L.C., Showboat Star Partnership and the City of Lake Charles 21 Subsidiaries of Players International, Inc. 27 Financial Data Schedule ____________ (1)Filed as an exhibit to the Company's Registration Statement on Form S-4, File No. 33-60085, and incorporated herein by reference. (2)Filed as an exhibit to the Company's Registration Statement on Form S-3, File No. 33-61026, and incorporated herein by reference. (3)Filed as an exhibit to the Company's Registration Statement on Form 10 filed on August 13, 1986, File No. 0-14897, as amended on Form 8 filed October 17, 1987, and incorporated herein by reference. (4)Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1988 and incorporated herein by reference. (5)Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1991 and incorporated herein by reference. (6)Filed as an exhibit to the Company's Registration Statement on Form S-3, as amended by Form S-3, File No. 33-75006, and incorporated herein by reference. (7)Filed as an exhibit to the Company's Current Report on Form 8-K filed on June 24, 1994, and incorporated herein by reference. (8)Filed as an exhibit to the Company's Registration Statement on Form S-3 filed on July 24, 1994, and incorporated herein by reference. (9)Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1995, and incorporated herein by reference. (10)Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995, and incorporated herein by reference. (11)Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, incorporated herein by reference. (12)Filed as an exhibit to the Company's Form 8-K dated for the period September 17, 1996, and incorporated by reference. (13)Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, and incorporated herein by reference. (14)Incorporated by reference to exhibit attached to Form 8- K/A. Filing dated March 18, 1997, and incorporated herein by reference. (15)Incorporated by reference to exhibit attached to Form 8-K. Filing dated March 18, 1997 and incorporated herein by reference. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. Players International, Inc. Date: June 26, 1998 By /s/ Edward Fishman Edward Fishman Chairman of the Board Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated below. This annual report may be signed in multiple identical counterparts all of which, taken together, shall constitute a single document. Dated: June 26, 1998 /s/ Edward Fishman Edward Fishman Chairman of the Board Dated: June 26, 1998 /s/ Howard Goldberg Howard Goldberg President, Chief Executive Officer and Director (Principal Executive Officer) Dated: June 26, 1998 /s/ Peter J. Aranow Peter J. Aranow Executive Vice President Finance, Chief Financial Officer,Treasurer and Secretary (Principal Financial Officer) Dated: June 26, 1998 /s/ John Groom John Groom Executive Vice President, Chief Operating Officer and Director Dated: June 26, 1998 /s/ Lydia Clement Lydia Clement Corporate Controller (Principal Accounting Officer) Dated: June 26, 1998 /s/ Vincent J. Naimoli Vincent J. Naimoli, Director Dated: June 26, 1998 /s/ Alan R. Buggy Alan R. Buggy, Director Dated: June 26, 1998 /s/ Lawrence Cohen Lawrence Cohen, Director Dated: June 26, 1998 /s/ Lee Seidler Lee Seidler, Director Dated: June 26, 1998 /s/ Marshall S. Geller Marshall S. Geller, Director Dated: June 26, 1998 /s/ Earl Webb Earl Webb, Director Dated: June 26, 1998 /s/ Charles Masson Charles Masson, Director INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Auditors 35 Consolidated Balance Sheets as of March 31, 1998 and 1997 36 Consolidated Statements of Operations for the Years Ended March 31, 1998, 1997 and 1996 37 Consolidated Statements of Stockholders' Equity for the 38 Years Ended March 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows for the Years Ended March 31, 1998, 1997 and 1996 39 Notes to Consolidated Financial Statements 41 All other schedules have been omitted because they are not applicable or not required or the required information is included in the Consolidated Financial Statements or Notes thereto. REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Players International, Inc. We have audited the accompanying consolidated balance sheets of Players International, Inc. and Subsidiaries as of March 31, 1998 and 1997, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Players International, Inc. and Subsidiaries at March 31, 1998 and 1997, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 1998, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Philadelphia, Pennsylvania May 18, 1998 PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands, except par value) ASSETS March 31, 1998 1997 CURRENT ASSETS: Cash and cash equivalents $17,223 $20,567 Accounts receivable, net of allowance for doubtful accounts of $786 at March 31, 1998 and $750 at March 31, 1997 3,559 3,142 Inventories 1,476 1,955 Deferred income tax 2,010 1,881 Income taxes refundable 6,580 27,534 Prepaid expenses and other current assets 2,285 3,997 Assets held for sale - 8,500 Total current assets 33,133 67,576 PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $44,405 at March 31, 1998 and $27,336 at March 31, 1997 237,478 210,442 DEFERRED INCOME TAX - long-term - 4,654 NOTES RECEIVABLE 1,500 - INTANGIBLES, net of accumulated amortization of $3,572 at March 31, 1998 and $2,593 at March 31, 1997 35,302 36,271 INVESTMENT IN JOINT VENTURE 96,587 95,401 OTHER ASSETS 5,587 6,945 $409,587 $421,289 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $2,008 $8,500 Accounts payable 4,590 6,466 Accrued liabilities 28,832 33,969 Other liabilities 3,775 2,921 Total current liabilities 39,205 51,856 DEFERRED INCOME TAX 2,930 - LONG-TERM DEBT, net of current portion 180,541 187,500 OTHER LONG-TERM LIABILITIES 28,997 26,052 COMMITMENTS AND CONTINGENCIES (Note 16) STOCKHOLDERS' EQUITY: Preferred stock, no par value, Authorized -- - - 10,000,000 shares, Issued - none Common stock, $.005 par value, Authorized -- 90,000,000 shares, Issued- 32,613,498 shares at March 31, 1998 and 32,563,348 shares at March 31, 1997 163 163 Additional paid-in capital 132,338 132,256 Treasury stock, at cost; 672,100 shares at March 31, 1998 and March 31, 1997 (7,294) (7,294) Retained earnings 32,707 30,756 Total stockholders' equity 157,914 155,881 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $409,587 $421,289 The accompanying notes are an integral part of these consolidated statements. PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share data) Years ended March 31, 1998 1997 1996 REVENUES: Casino $302,337 $262,660 $269,739 Food and beverage 11,978 14,139 11,825 Hotel 3,159 6,608 4,851 Other 5,744 7,803 4,980 323,218 291,210 291,395 COSTS AND EXPENSES: Casino 141,338 122,250 110,959 Food and beverage 10,654 14,185 12,601 Hotel 1,625 3,144 2,503 Other operating expenses 41,350 38,136 34,351 Selling, general and administrative 58,531 56,246 45,700 Corporate and other non-operating costs 7,782 9,102 10,387 Allocated amounts of joint venture 11,212 1,934 - City of Lake Charles agreement 4,153 - - Impairment and write-down of assets - 7,357 - Pre-opening and gaming development costs - 6,915 13,787 Depreciation and amortization 20,806 21,806 17,236 Loss on sale of Mesquite property (571) 57,397 - Restructuring charge - 9,007 - 296,880 347,479 247,524 Income (loss) before other income (expense) and provision (benefit) for income taxes 26,338 (56,269) 43,871 OTHER INCOME (EXPENSE): Interest income 651 237 5,850 Other income, net 274 241 1,587 Interest expense (24,117) (15,998) (14,718) (23,192) (15,520) (7,281) Income (loss) before provision (benefit) for income taxes 3,146 (71,789) 36,590 PROVISION (BENEFIT) FOR INCOME TAXES 1,195 (25,491) 14,270 NET INCOME (LOSS) $1,951 ($46,298) $22,320 EARNINGS (LOSS) PER COMMON SHARE: Basic $0.06 ($1.56) $0.75 Diluted $0.06 ($1.56) $0.70 The accompanying notes are an integral part of these consolidated statements. PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE YEARS ENDED MARCH 31, 1998 (dollars in thousands) Additional Common Stock Paid-In Unrealized Treasury Stock Retained Shares Amount Capital Loss Shares Amount Earnings BALANCE, March 31, 1995 29,672,400 148 $121,712 $(451) - - $54,734 Shares issued under stock option plans 187,180 1 1,296 - - - - Tax benefit from exercise of non-qualified options - - 713 - - - - Adjustment for number of shares as the result of the stock split - - (2) - - - - Purchase of common stock (672,100) - - - 672,100 7,294 - Change in unrealized loss on marketable securities, net of tax- - - 450 - - - Net income - - - - - - 22,320 BALANCE, March 31, 1996 29,187,480 149 123,719 (1) 672,100 7,294 77,054 Shares issued for warrants exercised 2,100,000 11 5,590 - - - - Shares issued pursuant to retirement agreement 603,768 3 2,996 - - - - Expired put options - - (49) - - - - Change in unrealized loss on marketable securities, net of tax - - - 1 - - - Net loss - - - - - - (46,298) BALANCE, March 31 1997 31,891,248 163 132,256 - 672,100 7,294 30,756 Shares issued under stock option plans 50,150 - 82 - - - - Net income - - - - - - 1,951 BALANCE, March 31, 1998 31,941,398 $163 $132,338 $- 672,100 $7,294 $32,707 The accompanying notes are an integral part of these consolidated statements. PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Years ended March 31, 1998 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $1,951 ($46,298) $22,320 Adjustment to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 20,806 21,806 17,236 Amortization of bond premium/(discount) - - (3,861) Loss (gain) on disposition of property and equipment (98) 60,321 - Impairment and write-down of assets - 7,357 - Equity in allocated amounts of joint venture 4,497 1,934 - City of Lake Charles agreement 4,000 - - Stock issued pursuant to retirement agreements - 3,000 - Deferred income taxes 7,455 1,332 (2,459) Other 1,059 924 468 Changes in assets and liabilities: Accounts and notes receivable (1,476) 3,551 (4,985) Inventories 479 (1,269) (1,856) Income taxes payable (refundable) 20,954 (27,462) 1,772 Prepaid expenses and other current assets 1,712 975 (2,484) Other assets 159 1,141 (1,812) Accounts payable (1,876) (270) (1,497) Accrued liabilities (5,137) 80 (918) Other liabilities (1,220) 1,336 (1,176) Net cash provided by operating activities 53,265 28,458 20,748 CASH FLOWS FROM INVESTING ACTIVITIES: Net purchases of property and equipment (40,216) (46,499)(147,119) Proceeds from disposal of property and equipment 7,718 30,749 - Purchases of marketable securities - - (170,806) Proceeds from sale of marketable securities - 4,401 196,886 Investment in joint venture (5,379) (61,875) (34,015) Net cash used in investing activities (37,877) (73,224) (155,054) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 48,000 65,500 153,000 Repayments of long-term debt (65,356) (22,500) (8,907) Purchase of common stock - - (7,294) Debt issuance cost (1,458) (2,051) (8,890) Proceeds from exercise of stock options and warrants 82 5,598 1,297 Net cash provided by (used in) financing activities (18,732) 46,547 129,206 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,344) 1,781 (5,100) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,567 18,786 23,886 CASH AND CASH EQUIVALENTS AT END OF PERIOD 17,223 20,567 18,786 PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) SUPPLEMENTAL CASH FLOW DISCLOSURE: Years ended March 31, 1998 1997 1996 Interest paid 24,507 22,637 10,124 Income taxes paid 9 4,159 15,201 Debt incurred to purchase land and equipment 3,905 - - Note receivable on sale of Mesquite property 1,500 - - Assets acquired through capital leases 715 - - Unrealized gain (loss) on marketable securities, net of tax - - (450) Accrued liabilities incurred to purchase property and equipment - - 31,910 Land, property and equipment contributed to joint venture - - 5,459 Tax benefit related to exercise of non- qualified stock options - - 713 The accompanying notes are an integral part of these consolidated statements. Note 1 - Summary of Significant Accounting Policies Fiscal Year The Company has a fiscal year that ends on March 31. Basis of Presentation The Company, through wholly owned subsidiaries, operates five riverboat casinos, a horse racetrack facility and, through a joint venture, a riverboat casino entertainment complex. All operations include food and beverage facilities and a retail gift shop. Two of the facilities include hotel operations. During the fiscal year ended March 31, 1997, the majority of the assets comprising the Mesquite, Nevada facility ("Mesquite") were sold. The remaining assets of that facility were sold in the first quarter of 1998. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. The investment in joint venture is accounted for by the equity method. Certain reclassifications have been made to the consolidated financial statements as previously presented to conform to the current classifications. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash includes the minimum cash balances required to be maintained by certain state gaming commissions, which totaled approximately $3,872,000 and $2,873,000 at March 31, 1998 and 1997, respectively. Cash equivalents are highly liquid investments with a maturity of less than three months and are stated at the lower of cost or market value which approximates fair value. Revenues and Promotional Allowances Casino revenues are the net of gaming wins less losses. Revenues exclude the retail value of complimentary admissions, food and beverage, hotel and other items furnished to customers, which totaled approximately $23,326,000, $27,238,000 and $21,336,000 for the years ended March 31, 1998, 1997 and 1996, respectively. The estimated costs of providing such complimentary services are included in casino costs and expenses through inter- department allocations from the department granting the services as follows: Years ended March 31, (dollars in thousands) 1998 1997 1996 Food and beverage $17,665 $20,736 $15,651 Admissions 106 157 1,725 Hotel 349 1,281 565 Other 670 1,370 1,177 $18,790 $23,544 $19,118 Pre-opening and Gaming Development Costs All pre-opening and gaming development costs are expensed as incurred except for the cost of property and equipment which is capitalized. Credit Risk Historically, credit losses have not been material to the results of operations. The financial instruments that subject the Company to credit risk consist principally of accounts receivable. Ongoing credit evaluations are performed and potential credit losses are expensed at the time a receivable is deemed to be uncollectable. Inventories Inventories consisting of food, beverage and retail items are stated at the lower of cost (first-in, first-out) or market. Property, Equipment, Depreciation and Amortization Property and equipment are stated at cost. Improvements and extraordinary repairs that extend the life of the asset are capitalized. Maintenance and repairs are expensed as incurred. Interest expense is capitalized on major construction projects. Capitalized interest amounted to $381,000, $6,714,000 and $3,329,000 in 1998, 1997 and 1996, respectively. The Company computes depreciation for property and equipment using primarily the straight-line method over the estimated useful life of the assets. Amortization of leasehold and land improvements is computed using the straight-line method over the lesser of the estimated useful life or lease term. The following estimated useful lives are used: Riverboats and barges 30 - 40 year Buildings 20 - 40 years Furniture, fixtures and equipment 5-7 years Leasehold and land improvements Lesser of useful life or lease term Effective October 1, 1995, the Company revised its estimate of the useful lives of certain property and equipment. These changes were made to better reflect industry practice and the estimated periods during which such assets will remain in service. This change increased net income by approximately $1,403,000 ($.04 per share on a diluted basis) for the year ended March 31, 1996. Depreciation expense of $17,181,000, $16,405,000 and $13,145,000 was recorded for the fiscal years ended March 31, 1998, 1997 and 1996 respectively. Amortization expense amounted to $3,625,000, $5,401,000 and $4,091,000 in 1998, 1997 and 1996 respectively. Intangibles Costs in excess of fair value of tangible assets acquired are recorded as intangibles on the accompanying consolidated balance sheets and are being amortized using the straight-line method. Effective October 1, 1995, the Company revised its estimate of the useful life of intangibles from 15 years to 40 years. This change was made to better reflect the estimated periods during which the related tangible assets will remain in service. This change increased net income by approximately $466,000 ($.01 per share on a diluted basis) for the year ended March 31, 1996. The Company periodically evaluates whether the remaining estimated useful life of intangibles may warrant revision or the remaining balance of intangibles may require adjustment generally based upon expectations of nondiscounted cash flows and operating income. At March 31, 1996, the Company recorded a $1,500,000 write-down of goodwill associated with its racetrack facility. Unamortized Loan Costs Costs incurred in connection with the issuance of debt are being amortized using the straight-line method over the term of the related debt issue or loan. Earnings Per Share In accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share, basic earnings per share is computed by dividing net income (loss) by the number of weighted average common shares outstanding during the year. Diluted earnings per share is computed by dividing net income (loss) by the number of weighted average common shares outstanding during the year, including common stock equivalents (see Note 14). All earnings per share amounts for all periods have been presented and, where appropriate, restated to conform to SFAS No. 128 requirements. Recently Issued Accounting Standards The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income, which is effective for fiscal years beginning after December 15, 1997. This statement requires businesses to disclose comprehensive income and its components in their financial statements. Management intends to comply with the disclosure requirements of this statement in the year ending March 31, 1999. The FASB issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which is effective for fiscal years beginning after December 15, 1997. This statement redefines how operating segments are determined and requires qualitative disclosure of certain financial and descriptive information about a company's operating segments. The Company will adopt SFAS No. 131 in the year ending March 31, 1999. Management has not finalized its analysis of which operating segments it will report on to comply with SFAS No. 131. Note 2 - Accrued Liabilities A summary of accrued liabilities is as follows: March 31, (dollars in thousands) 1998 1997 Insurance claims 1,404 1,638 Chip and token liability 702 558 Accrued payroll and related expenses 9,814 8,657 Accrued interest expense 7,476 7,477 Accrued bonus points 1,831 2,100 Accrued gaming taxes 2,142 1,062 Progressive jackpot liabilities 663 664 Other accruals 3,527 7,741 Current portion of liabilities related to the purchase of a riverboat and a hotel 1,273 4,072 $ 28,832 $ 33,969 Note 3 - Property and Equipment A summary of property and equipment is as follows: March 31, (dollars in thousands) 1998 1997 Land and buildings $85,794 $65,174 Riverboats and barges 124,277 113,281 Furniture, fixtures and equipment 60,143 46,379 Leasehold and land improvements 9,439 8,032 Construction in progress 2,230 4,912 Less -- accumulated depreciation (44,405) (27,336) $ 237,478 $ 210,442 Included in furniture, fixtures and equipment at March 31, 1998, is $715,000 of computer equipment relating to a capital lease obligation with accumulated depreciation of $121,000. Note 4 - City of Lake Charles Agreement In the fourth quarter of 1998, the Company reached an agreement with the City of Lake Charles, Louisiana both to settle litigation and to establish a permanent method of calculating the City admission fee on Players' riverboat casinos. Under the new agreement, beginning March 1, 1998, Players will pay the City both a percentage of gaming revenue in lieu of a passenger admission fee, and a fixed annual payment of $544,000 per year for ten years. The present value of the fixed annual payments, including expenses, was accounted for as a one-time charge of $4,153,000 in 1998. Note 5 - Sale of Mesquite Property On February 28, 1997, the Company entered into a definitive agreement to sell the assets comprising the Mesquite casino resort for a total purchase price of $30,500,000. The agreement was structured to take place in two closings. The initial closing was completed on March 18, 1997, in which the Company received $22,000,000 in cash for primarily the non-gaming property and equipment. On June 30, 1997, the second closing for the gaming and other furniture and equipment of the property was consummated. As a result of this closing, the Company received $7,000,000 in cash and a two-year promissory note for $1,500,000. The Company entered into a lease with the purchaser pursuant to which the Company leased the property for the period between the first and second closings and absorbed any income or loss related to the operation of the facility during such period. As of March 31, 1997, the Company recorded a loss on the sale of Mesquite totaling $57,397,000. Such loss included a write-down to fair value of the assets which were sold in the second closing. The loss is summarized as follows (dollars in thousands): Carrying value of property and equipment, net $ 84,232 Inventories and other assets 2,208 Expenses related to sale 1,457 Proceeds received at first closing (22,000) Receivable at second closing (8,500) $ 57,397 During 1998, the estimated remaining liabilities associated with the Mesquite facility were re-evaluated and reduced by $571,000. For the years ended March 31, 1998 and 1997, revenues for Mesquite were $8,700,000 and $38,945,000, respectively and income (losses) before other income (expense) were $43,000 and ($65,473,000), respectively, inclusive of the loss on sale. Note 6 - Impairment and Write-down of Assets During the fourth quarter of 1997, the Company re-evaluated its investment in its horse racetrack facility, committed to a plan to remove from service and replace a barge utilized by one of its riverboat facilities and wrote-down to fair value land that was contributed to a joint venture. Impairment losses and the write-down of assets totaling $7,357,000 were recorded in the year ended March 31, 1997, and are detailed below. The Company incurred losses operating the racetrack since its acquisition, and determined that due to flat or declining demand for both live and simulcast pari-mutuel race wagering that such operating losses would continue in the future in the absence of additional forms of gaming at the facility. Due to this and the continued lack of consensus within the State of Kentucky governing body relating to the expansion of legalized gaming, the Company determined that its investment in the racetrack was impaired. Prior to the impairment, the book value of the property and equipment of the racetrack was $3,142,000. Based on an April 1997 appraisal, the land was valued at $475,000. It is management's opinion that this represented the approximate fair value of the property. The barge at the Metropolis riverboat facility was removed from service and replaced in 1998. A replacement barge was purchased in 1997. The book value for the barge prior to the impairment was $676,000. It was estimated that, net of disposal costs, the fair value of the barge was zero. In 1995, Players contributed land with a carrying value of $4,944,000 to the joint venture. The land was originally purchased as the potential gaming site for the Company. In the fourth quarter of 1997, an audit of the joint venture was completed which included an appraisal of the land determining its fair market value to be $930,000. This value was used as the basis for recording the contribution of the land in the joint venture records. As a result, the Company reduced its investment in the joint venture by $4,014,000 in the fourth quarter of 1997. The reduction in value of the land by the joint venture did not affect the 50% interest the Company holds in the joint venture. Note 7 - Allocated Amounts of Joint Venture In November, 1995, the Company formed a joint venture to co- develop a riverboat casino complex with Harrah's in Maryland Heights, Missouri, which opened in March, 1997. The Company holds a 50% interest in the joint venture. The investment in the joint venture portion of the project is accounted for using the equity method of accounting. Summary condensed financial information for the joint venture is as follows (dollars in thousands): Years ended March 31, (unaudited) 1998 1997 Net revenues $ 18,520 $ 952 Depreciation and amortization 8,996 847 Net loss 22,424 3,869 March 31, (unaudited) 1998 1997 Current assets $ 10,481 $25,646 Current liabilities 5,948 19,864 Total assets 200,917 210,254 Partners' capital 194,960 190,390 Note 8 - Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows: Years ended March 31, (dollars in thousands) 1998 1997 Deferred tax assets: Excess capital loss over capital gain $ 10 $266 State tax net operating loss carryforwards 1,051 991 Excess intangible assets basis 447 542 Pre-opening, development and other costs 3,412 7,843 Accrued liabilities and prepaid expenses 5,107 7,230 Deferred revenue 215 244 Accrual of directors' option expense 428 475 Alternative minimum tax credits 2,133 - Total deferred tax assets 12,803 17,591 Valuation allowance (1,149) (1,536) Deferred tax assets, net valuation allowance 11,654 16,055 Deferred tax liabilities: Excess tax depreciation (11,262) (7,751) Prepaid expenses (1,312) (1,769) Total deferred tax liabilities (12,574) (9,520) Net deferred tax assets (liabilities) $ (920) $ 6,535 The valuation allowance on the deferred tax assets consists primarily of an allowance for state tax net operating loss carryforwards and deferred tax assets related to various states. The Company has state net operating losses available to offset future taxable income of approximately $31,800,000 for various states that will expire between the years 2004 and 2013. The Company has an Alternative Minimum Tax credit carryforward of approximately $2,133,000, which can be used to reduce future Federal tax liabilities. This tax credit does not have an expiration date. Significant components of the provision for (benefit of) income taxes attributable to operations are as follows: Years ended March 31, (dollars in thousands) 1998 1997 1996 Current: Federal $ (5,441) $ (25,777) $ 13,975 State (819) (1,045) 2,745 Total current (6,260) (26,822) 16,720 Deferred: Federal 6,776 624 (2,199) State 679 707 (251) Total deferred 7,455 1,331 (2,450) Total provision (benefit) $1,195 $(25,491) $ 14,270 The 1998 and 1997 net tax losses have been carried back to previous tax years and result in refunds of taxes previously paid. The reconciliation of income tax attributable to continuing operations computed at the Federal statutory rates to income tax expense is: Years ended March 31, 1998 1997 1996 Federal statutory rate (benefit) 35% (35%) 35% State taxes on income, net of (3%) (1%) 4% Federal income tax benefit Non-deductible expenses 2% - - Other 4% - - Financial statement provision rate (benefit) 38% (36%) 39% Note 9 - Restructuring Charge The restructuring charge in 1997 reflects the Company's decision to significantly reduce its pursuit of development opportunities in new or emerging jurisdictions and instead concentrate on improving its existing operations. The one-time charge consists principally of the net loss on the disposal of assets held for or used in development activities and the cost of employee severance arrangements. This resulted from the sale of the Players I riverboat, which was previously held for future deployment, and a corporate aircraft, the closure of two development offices and the retirement or termination of 21 senior management and staff. The affected employees included those specifically responsible for the Company's developmental activities and others affected by the Company's revised business plan. In 1998 and 1997, approximately $800,000 and $7,800,000, respectively, were charged against the reserve established by the restructuring. Note 10 - Other Long-Term Liabilities A summary of other long-term liabilities follows: March 31, (dollars in thousands) 1998 1997 Net present value of estimated future payments to purchase a hotel $ 24,990 $ 25,161 Long-term portion of agreement with the City of Lake Charles 3,696 - Long-term portion of liabilities related to purchase of a riverboat - 800 Capital lease related to the purchase of computer equipment 252 - Other 59 91 $ 28,997 $ 26,052 In August 1995, the Company acquired a hotel for $6,700,000 plus future payments based on the number of passengers boarding the riverboat casinos contiguous to it over the ensuing 28 years. The estimated future payments were discounted at 11% and recorded at their net present value. Actual payments in excess of the amortization of the net present value of estimated future payment are recorded as contingent payments (see Note 16). Note 11 - Long-Term Debt A summary of long-term debt is as follows: March 31, (dollars in thousands) 1998 1997 Senior Notes, interest at 10-7/8% payable semi- annually on April 15 and October 15, due 2005 (fair value based on quoted market price is approximately $163,500 and $155,250 for the years ended March 31, 1998 and 1997, respectively) $150,000 $150,000 Note payable under revolving bank credit agreement, weighted average interest rate of 10.98% and 9.10% for years ended March 31, 1998 and 1997, respectively (carrying amount approximates fair value) 30,000 46,000 Note payable, secured by slot machines, interest at 12% due June 23, 1999 (carrying amount approximates fair value) 2,549 - 182,549 196,000 Less current portion (2,008) (8,500) $180,541 $187,500 The Company has had a revolving credit agreement (the "Credit Agreement") with a group of banks led by Wells Fargo since August, 1995. The Credit Agreement was revised in December, 1996, following a default under its then current minimum EBITDA covenant. The December, 1996 revisions permitted the Company to complete the construction of the Maryland Heights project, but eliminated the Company's ability to use borrowed funds for any other purposes and required repayment of the full amount of the loan by June 30, 1998. In July, 1997, following the completion of Maryland Heights and the paydown of the bank line with the proceeds of the Mesquite sale and the associated tax refund, the Company began discussions with Wells Fargo to revise the terms of the Credit Agreement. In March, 1998, the Company closed a new $80,000,000 five year bank agreement with Wells Fargo and a group of participating banks. The new agreement reduced the Company's floating rate interest cost from 2 1/2% over the prime rate to 2 1/2% over LIBOR (from approximately 11% to 8 1/2% in the then current interest rate environment). At the Company's discretion, borrowings under the new bank agreement can be drawn at 1% over prime to provide additional flexibility. The new agreement contains covenants that, among other things, place restrictions on additional indebtedness, dividends, capital expenditures, and limit share repurchases to $10,000,000 plus 50% of net income during the term of the facility. The Company wrote-off loan costs related to its revolving credit agreement in the amount of $1,078,000 and $2,744,000 in the years ended March 31, 1998 and 1997, respectively. Note 12 - Stockholders' Equity During 1996, the Company repurchased a total of 672,100 shares of its common stock for a total cost of $7,294,000. On January 29, 1997, the Company announced that its Board of Directors had approved the adoption of a Stockholders' Rights Plan. The Plan is designed to ensure that all stockholders of the Company receive fair value for their Common Shares in the event of any proposed takeover and to guard against the use of partial tender offers or other coercive tactics to gain control of the Company without offering fair value to stockholders. Pursuant to the Plan, holders of record as of October 27, 1997 will receive one Right for each Common Share, with each Right representing the right to purchase one one-hundredth of a preferred share or, upon the happening of certain events, Common Shares or other securities and property. Note 13 - Common Stock Options and Warrants The Company has four stock option plans, the 1985 Incentive Stock Option Plan ("1985 Plan") for employees covering 600,000 shares of common stock, the 1990 Incentive Stock Option and Non- Qualified Option Plan covering 1,200,000 shares of common stock ("1990 Plan"), the 1993 Incentive Stock Option and Non-Qualified Option Plan covering 3,000,000 shares of common stock ("1993 Plan"), and the 1994 Directors Stock Incentive Plan ("1994 Plan") covering 900,000 shares of common stock. As of March 31, 1998, the Company had 352,149 shares under the 1990 Plan, 1,695,500 shares under the 1993 Plan and 216,250 shares under the 1994 Plan available for issuance in connection with future stock options that may be granted. The 1985 Plan expired on April 22, 1995, therefore, no additional grants may be made, although outstanding awards may be exercised. Options granted are generally exercisable between three and ten years from date of grant. In addition to the foregoing plans, 220,377 other options and 150,000 warrants were outstanding as of March 31, 1998. Summarized information for all stock options and warrants is as follows: 1998 1997 1996 Weighted- Weighted- Weighted- Average Average Average Options/ Exercise Options/ Exercise Options/ Exercise Warrants Price Warrants Price Warrants Price Outstanding at beginning of year 3,278,278 $9.58 6,335,502 $9.54 6,027,767 $ 9.16 Granted: Exercise price equals market price 709,000 $3.20 491,750 $ 7.65 528,250 $13.26 Exercise price exceeds market price - - 1,082,300 $ 8.17 - - Exercised (50,150) $1.63 (2,100,000) $ 2.67 (187,165) $6.94 Expired or canceled (990,326) $10.41 (2,531,274) $ 14.24 (33,350) $14.20 Outstanding at end of year 2,946,802 $7.90 3,278,278 $ 9.58 6,335,502 $ 9.54 Options exercisable at end of year 1,854,522 $9.07 2,076,351 $10.04 3,851,005 $6.48 Options granted and cancelled during 1997 include the activity resulting from a special program approved by the Company which enabled certain option holders to consent to the cancellation of certain outstanding options, whether vested or unvested, in exchange for a grant of new stock options with an option price based on a minimum of 110% of the current market price of the Company's stock. The new options vest in five equal annual installments commencing September 19, 1996. In total, 1,442,900 options with an average exercise price of $13.59 per share were cancelled in exchange for 842,300 new options with an average exercise price of $7.91 per share. The following table summarizes information regarding stock options and warrants outstanding at March 31, 1998. OPTIONS OUTSTANDING OPTIONS EXERCISABLE Weighted Average Weighted Weighted Range of Number Remaining Average Number Average Exercise Outstanding Contractual Exercise Exercis Exercise Prices Life Price able Price $2.25 - $6.25 918,752 7.15 $ 3.94 429,752 $ 4.82 $7.00 - $7.70 1,000,550 2.77 $ 7.57 629,970 $ 7.64 $8.47 - $11.83 759,500 1.97 $10.16 552,600 $10.68 $13.56 - $19.33 268,000 1.66 $16.36 242,200 $16.65 2,946,802 1,854,522 The Company applies APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its plans. Accordingly, no compensation expense has been recognized for its stock option plans. The following table discloses the Company's pro forma net income (loss) and net income (loss) per share assuming compensation cost for employee stock options had been determined using the fair value-based method prescribed by SFAS 123, Accounting for Stock Based Compensation. The table also discloses the weighted-average assumptions used in estimating the fair value of each option grant on the date of grant using the Black-Scholes option pricing model. The model assumes no expected future dividend payments on the Company's common stock for the options granted in fiscal years ended March 31, 1998, 1997 and 1996. Years ended March 31, (Dollars in thousands, except per share data) 1998 1997 1996 Net income (loss) As reported $1,951 $(46,298) $22,320 Pro forma $ 631 $(49,395) $21,572 Basic earnings (loss) per share As reported $0.06 $ (1.56) $ 0.75 Pro forma $0.02 $ (1.66) $ 0.72 Diluted earnings (loss) per share As reported $0.06 $ (1.56) $ 0.70 Pro forma $0.02 $ (1.66) $ 0.67 Weighted-average assumptions Expected stock price 60.20% 57.48% 55.27% volatility Risk-free interest rate 5.70% 6.38% 6.48% Expected option lives 6.6 years 3.4 years 4.7 years Because the provisions of SFAS No. 123 have not been applied to options granted prior to April 1, 1995, and due to the issuance in fiscal year 1997 of a large option grant under the special program discussed above, the resulting pro forma compensation cost for the years presented may not be representative of that to be expected in future years. The weighted average fair value of options granted is as follows: Years ended March 31, 1998 1997 1996 Options granted equal to market price $2.01 $3.82 $6.96 Options granted greater than market price - $2.75 - Note 14 - Earnings Per Share There are no adjustments required to be made to net income (loss) for purposes of computing basic and diluted earnings per share ("EPS"). The following is a reconciliation of basic weighted average shares outstanding to diluted weighted average shares outstanding: Years ended March 31, 1998 1997 1996 Weighted average common shares outstanding for basic EPS calculation 31,904,658 29,765,483 29,765,151 Dilutive effect of stock options and warrants 44,970 - 2,252,987 Weighted average common shares outstanding for diluted EPS 31,949,628 29,765,483 32,018,138 The calculation of diluted earnings per share excludes certain options to purchase common stock. These options have been excluded as they would be antidilutive to the diluted earnings per share calculation. The weighted average number of options excluded were 2,901,451, 5,302,425 and 1,637,555 for the years ended March 31, 1998, 1997 and 1996, respectively. Note 15 - Employee Benefit Plans The Company has a defined contribution plan that provides retirement benefits for participating employees. Eligible employees may elect to participate by contributing a percentage of their pre-tax earnings to the plan. Employee contributions to the plan, up to certain limits, are matched at 25% by the Company. The Company's contribution expense for the plan was $269,000, $385,000 and $321,000 for the years ended March 31, 1998, 1997 and 1996, respectively. Note 16 - Commitments and Contingencies The Company leases office space, land and equipment under operating and capital leases expiring at various dates through December 2015. The minimum annual payments under non-terminable lease agreements at March 31, 1998 are as follows (dollars in thousands): Capital Operating Leases Years ending March 31, Lease 1999 $ 285 $863 2000 277 558 2001 - 237 2002 - 100 2003 - 100 Thereafter 1,016 Total minimum lease payments 562 2,874 Less: Amount representing interest at 11% (58) Present value of minimum capital lease payments 504 Less: Current installments (252) Obligations under capital leases- less current liabilities $252 Rent expense for all operating leases was as follows: Years ended March 31, (dollars in thousands) 1998 1997 1996 Minimum rentals $ 4,569 $ 2,016 $ 4,227 Contingent payments 2,447 3,807 2,590 $ 7,016 $ 5,823 $ 6,817 For the fiscal years ended March 31, 1997 and 1996, $262,000 and $232,000, respectively, of rent expense is included in pre- opening and gaming development costs in the accompanying consolidated statements of operations. The Company is involved in certain litigation regarding the constitutionality of gaming facilities such as the Company's facility in Maryland Heights, Missouri (the "Maryland Heights Facility") located upon artificial basins fed by the Missouri River. An amendment to the State constitution has been proposed for the November 1998 ballot. Based on the outcome of the November referendum and subsequent court proceedings, the possibility exists that the Company could be forced either to remediate or close the Maryland Heights Facility. If either of these events occur, the Company could incur substantial remediation costs or a substantial write-down in asset values. The amounts involved cannot be reasonably estimated at this time. Each cruising riverboat is regulated by the U.S. Coast Guard. U.S. Coast Guard regulations require that hulls of vessels of the type being operated by the Company in Lake Charles and Metropolis be inspected every five years at a U.S. Coast Guard approved dry docking facility which will cause a temporary loss of service that could last one month or longer, unless the U.S. Coast Guard determines that an alternative to dry docking is acceptable. The next inspection is scheduled to occur in the fall of calendar 1998 for the Lake Charles Star Riverboat, the fall of calendar 2000 for the Players III Lake Charles Riverboat, and the fall of calendar 2000 for the Metropolis Riverboat. Subject to U.S. Coast Guard approval, the Company is pursuing an underwater onsite inspection of the hull of the Lake Charles Star Riverboat as an alternative to dry docking. An underwater hull inspection would likely involve a minimal disruption in operations; however, no assurance can be given that dry docking and the related loss of service will not be required. The Company and its subsidiaries are defendants in certain other litigation. In the opinion of management, based upon the advice of counsel, the aggregate liability, if any, arising from such other litigation will not have a material adverse effect on the accompanying consolidated financial statements. Note 17 - Transactions with Related Parties Marshall Geller, a member of the board of directors, was paid $50,000 during the year ending March 31, 1996, in consideration for consulting services rendered. The Company purchases promotional items from a company owned by Edward Fishman, Chairman of the Company. During the years ended March 31, 1997 and 1996, the Company paid $312,000 and $1,052,000 respectively, for such items. There were no purchases in 1998. The Company entered into a contract with Griffin Gaming & Entertainment, Inc. (GGEI) dated July 18, 1995 for the production of theater shows at its Mesquite property. Under the contract, which expired on March 7, 1996, the Company paid an aggregate of $396,000 to GGEI. During fiscal year 1997, the Company entered into an agreement with a company controlled by Merv Griffin, a major stockholder of the Company, to modify its license agreement, under which he acted as the public representative for all of the Company's riverboat and dockside casinos, to reflect the extension of its terms to the Company's second riverboat casino in Lake Charles and its land-based casino in Mesquite effective as of the opening of each facility. The fees that would have been payable with respect to these two additional facilities were replaced with one lump-sum payment of approximately $300,000 for services at these facilities through the period ending December 31, 1996, the expiration date of the agreement. EX-27 2
5 1,000 YEAR MAR-31-1998 MAR-31-1998 17223 0 4345 786 1476 33133 281883 44405 409587 39205 180541 0 0 163 157751 409587 0 323218 0 153617 143263 0 24117 3146 1195 1951 0 0 0 1951 .06 .06
EX-21 3 168483/2 52 EXHIBIT 21 PLAYERS INTERNATIONAL, INC. SUBSIDIARIES OF THE COMPANY Subsidiary State of Incorporation or Organization Metropolis, IL 1292 Limited Partnership Illinois PCI, Inc. Nevada Players Bluegrass Downs, Inc. Kentucky Players Development, Inc. Nevada Players Entertainment, Inc. Nevada Players Holding, Inc. Nevada Players International, Inc. Nevada Players Lake Charles, LLC Louisiana Players Lake Charles Riverboat, Inc. Louisiana Players LC, Inc. Nevada Players Maryland Heights, Inc. Missouri Players MH, L.P. Missouri Players Maryland Heights Nevada, Inc. Nevada Players Mesquite Golf Club, Inc. Nevada Players Mesquite Land, Inc. Nevada Players Nevada, Inc. Nevada Players Resources, Inc. Nevada Players Riverboat, LLC Louisiana Players Riverboat, Inc. Nevada Players Riverboat Management, Inc. Nevada Players Services, Inc. New Jersey Riverfront Realty Corporation Illinois Riverside Joint Venture Missouri Showboat Star Partnership Louisiana Southern Illinois Riverboat/Casino Cruises, Inc. Illinois EX-10 4 ASSET PURCHASE AGREEMENT THIS AGREEMENT is made as of September 30, 1997, between LAKESHORE HOTELS, LTD., a Louisiana limited partnership in commendam ("Seller"), and PLAYERS INTERNATIONAL, INC., a Nevada corporation, its designees or assignees ("Purchaser"). R E C I T A L S A. Seller owns and operates or causes to be operated on its behalf a hotel and related facilities and amenities in Lake Charles, Calcasieu Parish, Louisiana commonly known as the "Holiday Inn Lake Charles" (the "Hotel"). The business of Seller as described in the preceding sentence is referred to herein as the "Business." B. Seller desires to sell to Purchaser substantially all of Seller's assets, and Purchaser desires to purchase said assets, all on the terms and subject to the conditions contained in this Agreement. A G R E E M E N T S Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties agree as follows: ARTICLE I Purchase and Sale of Assets 1.1 Agreement to Purchase and Sell. On the terms and subject to the conditions contained in this Agreement, Purchaser agrees to purchase from Seller, and Seller agrees to sell to Purchaser, all of the assets, properties, rights and business as a going concern, of whatever kind or nature and wherever situated and located and whether reflected on Seller's books and records or previously written-off or otherwise not shown on Seller's books and records, of Seller (other than the items set forth in Section 1.3 (the "Excluded Assets")). All of said assets, properties, rights and business (other than the Excluded Assets) are collectively referred to in this Agreement as the "Purchased Assets." 1.2 Enumeration of Purchased Assets. The Purchased Assets include, without limitation, the following items: (a) all inventory, including, without limitation, raw materials, work in process, finished goods, service parts and supplies, as well as food and beverage stocks, gift shop inventory and other merchandise held for sale or use in the operation of the Business (collectively, the "Inventory"); (b) all furniture, furnishings, fixtures, systems, equipment (including office equipment), machinery, appliances, parts, computer hardware, tools, signs, motor vehicles, utensils, tableware, china, glassware, silverware, linens, uniforms, works of art, disposables, materials, supplies and all other tangible personal property (other than the Inventory), together with any and all warranties thereon (collectively, the "Equipment"); (c) that certain real property described in Schedule 1.2(c) hereof and all appurtenances, easements and other rights with respect thereto and buildings and other improvements thereon or relating thereto (the "Real Estate"); (d) all leasehold interests in personal property leased to Seller, to the extent (and only to the extent) the subject lease has been reviewed and accepted in writing by Purchaser, in its sole discretion, prior to Closing (as herein defined) (the "Leased Personalty"); (e) all claims and rights (and benefits arising therefrom) with or against all persons whomsoever, including, without limitation, all rights against manufacturers, distributors and/or suppliers under warranties covering any of the Purchased Assets and all licenses, permits and approvals relating to the Business and/or any of the Purchased Assets (the "Permits") and Environmental Permits (as herein defined), to the extent they are legally transferable by Seller; (f) all intellectual property rights, including, without limitation, patents and applications therefor, know-how, unpatented inventions, trade secrets, secret formulas, business and marketing plans, copyrights and applications therefor, trademarks and applications therefor, service marks and applications therefor, trade names and applications therefor, trade dress, and names and slogans used by Seller (including, without limitation, the names "Holiday Inn Lake Charles," "Charley's," "Bayou Cafe," "Levee Bar" and "Riverboat Magic"), and all goodwill associated with such intellectual property rights; (g) all contracts, leases and concession agreements, license agreements, distribution agreements, maintenance or other service agreements, supply agreements, computer software agreements and technical service agreements, to the extent (and only to the extent) copies of the same have been reviewed and accepted in writing by Purchaser, in its sole discretion, prior to Closing; (h) all customer lists, customer records and information; (i) all Seller's right, title and interest in and to any intangible personal property owned by Seller and used in the ownership or operation of the Business or any of the assets and properties described in this Section 1.2, except for those items specifically excepted or excluded therefrom; (j) all computer software, including all documentation and source codes with respect to such software, and licenses and leases of software to the extent (and only to the extent) such software license agreements and/or leases have been reviewed and accepted in writing by Purchaser, in its sole discretion, prior to Closing; (k) all sales and promotional materials, catalogues and advertising literature; (l) all telephone numbers of Seller; (m) all books and records, in whatever medium Seller uses, including, without limitation, blueprints, surveys, drawings and other technical papers, and other records, ledgers, and books of original entry, and all insurance records and OSHA and EPA files, relating to the Business or any of the assets described herein; (n) All conference, convention and banquet room advance reservations, bookings, contracts and deposits, and guest room reservations and deposits (the foregoing adjusted as provided in Section 3.7(f) hereof); (o) All leases, concessions and other agreements with tenants or operators for occupancy of any portion of the Real Estate, to the extent (and only to the extent) that such leases or agreements have been reviewed and accepted in writing by Purchaser, in its sole discretion, prior to Closing; and (p) All other properties and assets of Seller used or usable in the operation of the Business, except for those Excluded Assets described in Section 1.3 hereof. Purchaser's election to accept any of the leases, contracts, licenses, agreements or other items described in subsections (d), (g), (j) or (o) hereof shall be made, if at all, by written notice to Seller before the end of the Inspection Period (as herein defined); provided that Purchaser must have received a copy or (if copies are not available) detailed written description thereof at least thirty (30) days prior to such date. Purchaser shall not assume nor be deemed to have assumed any liability or obligation with respect to any such item not affirmatively accepted as provided above. If any of the Purchased Assets are subject to an agreement, lease or contract not disclosed to Purchaser either by delivery of a copy or detailed description, as listed in Section 4.3(k) of the Disclosure Schedule attached hereto, then Purchaser shall take such Purchased Asset(s) free and clear of the subject agreement(s), and Seller hereby indemnifies and agrees to hold Purchaser harmless from loss, cost, claim or expense under, as a result of, or in connection with the existence of, such undisclosed lease(s), contract(s) or agreement(s). The foregoing indemnity is in addition to and not in lieu of Seller's indemnity obligation under Section 8.2 hereof, but shall nonetheless be governed by the provisions of Sections 8.1, 8.4, 8.5 and 8.6 hereof. 1.3 Excluded Assets. Notwithstanding Sections 1.1 and 1.2, the Purchased Assets shall not include the following assets of Seller (the "Excluded Assets"): (a) all cash on hand and in banks, cash equivalents, and investments; (b) claims (and benefits to the extent they arise therefrom) and rights against third parties to the extent such claims and litigation are not in any way related to the Purchased Assets or the Assumed Liabilities (as herein defined), and claims (and benefits to the extent they arise therefrom) that relate to Excluded Liabilities (as herein defined); (c) Seller's organizational documents, income tax returns, checkbooks and canceled checks; (d) all leases, contracts, agreements and/or obligations not accepted by Purchaser as contemplated under Sections 1.2(d), (g), (j) and (o) hereof; (e) all guest ledger receivables, trade accounts receivable, notes receivable, negotiable instruments and chattel paper (collectively, the "Accounts Receivable"); (f) all insurance policies of Seller, and any rights to premium refunds due with respect to such policies, in each case unless otherwise specifically agreed in writing by Seller and Purchaser; and (g) the assets, if any, described on Schedule 1.3(g). 1.4 Quality of Title. (a) Good and marketable title to all of the Purchased Assets shall be sold to Purchaser free and clear of any liens, encumbrances or security interests for money owed, and free and clear of any other title claims, encumbrances, rights, restrictions, contract rights or interests whatsoever, except for those title matters specified in Schedule 1.4(a), attached hereto and by this reference made a part hereof ("Permitted Exceptions"). (b) With respect to the Real Estate, title shall be good and marketable and insurable at regular rates with no exceptions other than Permitted Exceptions by Purchaser's title insuror, on the current ALTA Owner's Title Policy. Title to all personal property comprising the Purchased Assets shall be free and clear of liens, restrictions and encumbrances other than Permitted Exceptions. (c) Seller shall take all reasonable steps to convey to Purchaser at Closing the quality of title required hereunder, including without limitation, use of the net proceeds of Closing to satisfy outstanding liens, interests or encumbrances, or to secure the termination of other title defects. Provided such title defects are so satisfied and discharged at Closing, the existence thereof immediately before Closing shall not constitute a title defect sufficient to entitle Purchaser to avoid Closing. Purchaser shall provide a copy of its title survey to Seller promptly after receipt thereof. If Seller reasonably believes that Purchaser's title survey is inaccurate, it may, by written notice to Seller within seven (7) days after receipt of such title survey from Purchaser, require Purchaser's surveyor to verify Purchaser's title survey. (d) If on the date of Closing the Real Estate or any portion shall have been affected by a municipal or other assessment or assessments, which have been assessed prior to the date of Closing, or of which the first installment is then a charge or lien, or has been paid, then for all purposes of this Agreement all unpaid installments of any such assessment, including those payable after Closing, shall be deemed to be due and payable and shall constitute liens upon the Real Estate as of Closing, and Seller shall pay, or provide for payment of, all such assessments and installments thereof, whether due and payable prior to or after the date of Closing. Seller shall, if necessary, employ the proceeds of Closing to satisfy any such assessment(s). (e) Title to the Purchased Assets shall be conveyed from Seller to Purchaser at Closing by general warranty deed for the Real Estate, general warranty bill of sale for any Purchased Assets which are tangible personal property and by general warranty assignment for any Purchased Assets which are intangibles, in each case in proper form for recording, if appropriate, and duly executed and acknowledged by Seller. If Purchaser causes a survey to be made, the description in such deed shall be based upon the survey. Actual possession of the Purchased Assets shall be delivered to Purchaser on the date of Closing, subject only to the rights of occupancy of transient guests holding advance reservations and tenants pursuant to written leases disclosed to and approved by Purchaser as provided herein. (f) Without limiting the generality or effect of the other provisions of this Section 1.4, Seller agrees specifically to obtain and deliver to Purchaser prior to Closing a valid release and termination of all rights of Jackpot Novelty, Inc. under all agreements between that entity and Seller or its Affiliate(s), including without limitation, that certain Coin Operated Machine and Space Lease dated January 22, 1992. 1.5 Right to Market. Purchaser acknowledges that, between the date hereof and the end of the Inspection Period (as hereinafter defined), Hodges Ward Elliott, Inc. ("Seller's Agent") will continue for Seller's benefit to market the Business and the Purchased Assets for sale to third parties. Unless Purchaser elects to terminate this Agreement during the Inspection Period (as hereinafter defined) as provided in Section 5.5 hereof, such right to market the Business and/or any of the Purchased Assets shall automatically terminate upon the expiration of the Inspection Period and be of no force or effect. Purchaser may, as a result of such marketing efforts, receive offers to purchase the Purchased Assets. However, notwithstanding the marketing right described in this Section 1.5, Seller shall have no right whatsoever, whether directly or through its agents or Affiliates (as herein defined), to negotiate such offers, or to enter into any agreement, contract, letter of intent or other arrangement for the sale of Seller's Business and/or any of the Purchased Assets, unless and until Purchaser terminates this Agreement or this Agreement is terminated as a result of Purchaser's default hereunder. 1.6 Affiliate Lease; Related Party Contracts. Seller currently leases certain of the Equipment and other assets from Ted W. Price, Jr., Ted W. Price, Sr., Robert W. Price, Sr. and Robert W. Price, Jr. , individuals who are also the sole general partners of the Seller (the "Individuals"), pursuant to a certain Furniture, Fixtures and Equipment Lease dated as of October 1, 1990 (the "Affiliate Lease"). At or prior to Closing hereunder, Seller and the Individuals shall cause the Affiliate Lease to be terminated, and all of the Equipment and other assets now subject to the Affiliate Lease to be conveyed to Seller, such that Seller can deliver to Purchaser good and marketable title thereto at Closing, as contemplated under this Agreement. The Individuals covenant, represent and warrant to Purchaser that the terms of such termination and conveyance shall not prohibit or impair Seller's ability to perform its obligations hereunder. The Individuals will cause any other contracts, leases or other agreements between Seller and its Affiliates to be terminated at or prior to Closing, such that Purchaser shall have no liability or obligation thereunder. The Individuals have joined in the execution of this Agreement to evidence their agreements hereunder. ARTICLE II Assumption of Liabilities 2.1 Agreement to Assume. At the Closing, Purchaser shall assume and agree to discharge and perform when due, and indemnify and defend Seller against loss or liability for, those liabilities of Seller (and only those liabilities of Seller) that are enumerated in Section 2.2 (the "Assumed Liabilities"). All claims against and liabilities and obligations of Seller not specifically assumed by Purchaser pursuant to Section 2.2, including, without limitation, the liabilities enumerated in Section 2.3, are collectively referred to herein as "Excluded Liabilities." Seller shall promptly pay and discharge when due, and indemnify and defend Purchaser against, all of the Excluded Liabilities. 2.2 Description of Assumed Liabilities. The Assumed Liabilities shall consist of the following, and only the following, liabilities of Seller: (a) liabilities of Seller under any written purchase order; sales order; lease; service, supply or other agreement or commitment of any kind by which Seller is bound on the Closing Date (as herein defined), which was made prior to Closing in the ordinary course of business and which Purchaser has reviewed and accepted in accordance with the provisions of Sections 1.2(d), (g), (j) and (o) hereof, in each case only to the extent such liabilities accrue and relate to performance after the Closing Date; (b) liabilities of Seller under any Permits or Environmental Permits with respect to the Business or any of the Purchased Assets, which were issued to Seller in the ordinary course of business prior to the Closing Date and which are assigned or transferred to Purchaser pursuant to the provisions hereof, to the extent such liabilities relate to performance after the Closing Date; and (c) liabilities and obligations of Seller under or with respect to any marketing and groups sales arrangements, and guest rooms, banquet, conference or convention reservations, bookings, contracts or similar commitments incurred or made in the ordinary course of Seller's business and existing as of the Closing Date, to the extent the same relate to performance or guests' presence at the Hotel after the Closing Date. 2.3 Excluded Liabilities. Without implication that Purchaser is assuming any liability not expressly excluded by this Section 2.3 and without implication that any of the following would constitute Assumed Liabilities but for the provisions of this Section 2.3, the following claims against and liabilities of Seller are excluded and shall not be assumed or discharged by Purchaser: (a) trade or other accounts payable as of the Closing Date, of any type or nature (the "Accounts Payable"); (b) any liabilities for legal, accounting, audit and investment banking fees, brokerage commissions, and any other expenses incurred by Seller in connection with the negotiation and preparation of this Agreement and the sale of the Purchased Assets to Purchaser; (c) any liabilities of Seller for Federal, state or local taxes; (d) any liability for or related to indebtedness of Seller to banks, financial institutions, securities- holders or other persons or entities (or their agents, trustees, or representatives) with respect to borrowed money; (e) any liabilities of Seller to the extent that their existence or magnitude constitutes or results in a breach of a representation, warranty or covenant made by Seller to Purchaser herein, or makes the information contained in any Schedule attached hereto, materially incorrect; (f) any liabilities of Seller under those leases, contracts, insurance policies, sales orders, purchase orders, service or supply agreements, commitments or other obligations, which are not accepted by and assigned to Purchaser in accordance with the provisions of Sections 1.2(d), (g), (j) and (o) of this Agreement; (g) any liabilities of Seller under collective bargaining agreements pertaining to employees of Seller; any liabilities of Seller to pay severance benefits to employees of Seller whose employment is terminated prior to the Closing Date or in connection with the sale of the Purchased Assets pursuant to the provisions hereof; or any liability under ERISA (as herein defined) or any Federal or state civil rights or similar law, resulting from the termination of employment of employees; (h) liabilities for returns, refunds or allowances arising out of or with respect to customer complaints or disputes which accrued (i.e., were based on goods or services provided) prior to the Closing Date, whether required by a governmental body or otherwise; (i) any claims against or liabilities of Seller for injury to or death of persons or damage to or destruction of property (including, without limitation, any worker's compensation claim) regardless of when said claim or liability is asserted, including, without limitation, any claim or liability for consequential or punitive damages in connection with the foregoing; (j) any liabilities under or for contributions to any employee benefit plans, including multi-employer pension plans (each as defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or under any other employee welfare or benefit plans to which Seller contributes on behalf of any employees, or with respect to any health, medical, dental, or disability benefits for any of Seller's employees; (k) any liabilities (whether asserted before or after Closing) for or arising in connection with any misfeasance or malfeasance of Seller or its agents in the conduct of the Business, or any breach of a representation, warranty, or covenant, or for any claim for indemnification, contained in any Permit or contract, agreement, lease or commitment referred to in Section 2.2 hereof to the extent that such liability, breach or claim arose out of or by virtue of Seller's performance or nonperformance thereunder on or prior to the Closing Date, it being understood that, as between Seller and Purchaser, this paragraph (k) shall apply notwithstanding any provisions which may be contained in any form of consent to the assignment of any such contract or document, or any novation agreement, which, by its terms, imposes such liabilities upon Purchaser and which assignment or novation agreement is accepted by Purchaser notwithstanding the presence of such a provision, and that Seller's failure to discharge any such liability shall entitle Purchaser to indemnification in accordance with the provisions of Article VIII hereof; (l) any liabilities of Seller incurred in connection with the transfer of the Purchased Assets hereunder, including without limitation, and Federal, state or local income, transfer or other tax; (m) any liabilities under any employment contracts with any of Seller's employees, or for salaries, wages, bonuses, vacation pay, incentive compensation, severance pay or other compensation which are otherwise owed to employees of Seller, accrued prior to the Closing Date; (n) any liabilities arising out of or in connection with any violation by Seller of a statute or governmental rule, regulation or directive; (o) any liability of Seller under or in connection with any litigation to which Seller is or may hereafter become a party; (p) any liabilities to any of Seller's Affiliates, including without limitation, any management agreement(s) with respect to the Business or any portion thereof; and (q) without limitation by the specific enumeration of the foregoing, any liabilities not expressly assumed by Purchaser pursuant to the provisions of Section 2.2. 2.4 No Expansion of Third Party Rights. The assumption by Purchaser of the Assumed Liabilities shall not expand the rights or remedies of any third party against Purchaser or Seller as compared to the rights and remedies which such third party would have had against Seller had Purchaser not assumed the Assumed Liabilities. Without limiting the generality of the preceding sentence, the assumption by Purchaser of the Assumed Liabilities shall not create any third party beneficiary rights. Purchaser does not assume any liability which may arise or be created in favor of any third party, by virtue of Seller's execution, delivery and/or performance of this Agreement. 2.5 No Liability Before Closing. Although certain of the Assumed Liabilities may have been created prior to Closing, Purchaser is not assuming any liability whatsoever that accrued or relates to periods prior to Closing hereunder. Specifically (but without limiting the foregoing), with respect to contracts, leases, agreements or other obligations accepted by and assigned to Purchaser under Sections 1.2(d), (g), (j) and (o) hereof, Purchaser shall assume only such liability thereunder as accrues or relates to periods after Closing hereunder. All liabilities accrued or relating to periods prior to Closing hereunder shall constitute Excluded Liabilities. Where needed, appropriate adjustments and apportionments shall be made under Section 3.7 hereof to effectuate the foregoing. ARTICLE III Purchase Price, Manner of Payment and Closing 3.1 Purchase Price. (a) The purchase price to be paid by Purchaser to Seller for the Purchased Assets (the "Purchase Price") shall be $18,500,000, plus or minus prorations and adjustments as provided herein. Purchaser shall also be liable for the Assumed Liabilities, and for certain "Holiday Inn Costs," as hereinafter defined. (b) At 11:00 p.m. on the day before the Closing (whether or not a business day), Purchaser and Seller shall jointly conduct a physical inventory count of Seller's Consumables On-Hand (as herein defined). The Consumables On-Hand so counted shall be valued, on an item-by-item basis, at the lower of the actual cost thereof (using the average cost method) or market value thereof, as of the date of such count. The aggregate total value so computed shall be referred to herein as the "Inventory Value". "Consumables On-Hand" shall mean Seller's entire inventory of unopened food and beverage stocks, and other items which are perishable, are consumed or are customarily disposed of after single use; provided, however, that opened perishables, obsolete inventories, and inventories which are unsalable or unusable in the ordinary course of business shall be valued at net realizable value. At Closing, Purchaser shall pay to Seller, in addition to the Purchase Price, an amount equal to the Inventory Value. 3.2 Time and Place of Closing. The transaction contemplated by this Agreement shall be consummated (the "Closing") at 10:00 a.m. at the offices of Stockwell, Sievert, Shaddock & Viccellio, One Lakeside Plaza, 4th Floor, Lake Charles, Louisiana 70601 on December 2, 1997 or on such other date, or at such other time or place, as shall be mutually agreed upon by Seller and Purchaser. Notwithstanding the foregoing, if either party is unable, despite such party's good faith efforts, to complete Closing by such date and time, then such party may extend the date for Closing to December 17, 1997, upon written notice to the other party hereunder, on or prior to the original date for Closing. The foregoing extension right is available only with respect to the originally scheduled Closing, and any further extension of the date for Closing may only be made upon the mutual agreement of the parties. The date (or extended date, if applicable) on which the Closing occurs in accordance with the preceding sentences, is referred to in this Agreement as the "Closing Date." The Closing shall be deemed to be effective as of 12:01 a.m. on the Closing Date at Lake Charles, Louisiana. 3.3 Manner of Payment of the Purchase Price. (a) At the Closing, Purchaser shall assume the Assumed Liabilities and shall pay the Purchase Price and the Inventory Value to Seller, by wire transfer to such account as Seller shall designate by written notice delivered to Purchaser not later than three (3) business days prior to the Closing Date. (b) Purchaser has previously deposited with Stockwell, Sievert, Shaddock & Viccellio, LLP, as Agent for Chicago Title Insurance Company (the "Escrow Holder"), to be held in an interest-bearing account: (i) the sum of $500,000 (the "Primary Deposit"); and (ii) the sum of $50,000 (the "Additional Deposit;" the Primary Deposit and the Additional Deposit are sometimes referred to collectively hereinafter as the "Deposit Monies"). The Deposit Monies shall be held in escrow pending Closing hereunder. The Primary Deposit shall be refunded to Purchaser, with interest thereon, at Purchaser's request at any time during the Inspection Period (as hereinafter defined) in connection with Purchaser's termination of this Agreement under Section 5.5 hereof, upon notice by Purchaser to the Escrow Holder given in Purchaser's sole and absolute discretion. After expiration of the Inspection Period, the Primary Deposit shall only be refunded to Purchaser on default by Seller hereunder or failure of any of the conditions to Purchaser's obligations under Section 6.2 hereof by the date specified therefor. The Additional Deposit shall only be refunded to Purchaser (x) on default by Seller, or (y) if the condition on Purchaser's obligations regarding Purchaser's ability to obtain financing is not satisfied as provided under Section 6.2(h) hereof, or (z) if the condition regarding Holiday Inn franchise matters under Section 6.2(i) hereof is not satisfied. All of the Deposit Monies, plus interest thereon, shall also be returned to Purchaser if this Agreement is terminated because of a casualty under Section 6.3(a) hereof, or a taking under Section 6.4 hereof. (c) Subject to refund in the case of Seller's default hereunder or failure of conditions on Purchaser's obligations as provided in subsection (b) hereof, after expiration of the Inspection Period, the Deposit Monies shall become non-refundable and shall serve as Seller's liquidated damages under Section 9.2 hereof, in the event of Purchaser's default. (d) At the Closing, Purchaser shall receive a credit against the Purchase Price in an amount equal to the amount of the Deposit Monies, plus interest accrued thereon. (e) Escrow Holder shall deposit the Deposit Monies in a federally-insured account (subject to the coverage limitations on such federal insurance). Seller and Purchaser agree that Escrow Holder is acting as a stakeholder only for the convenience and at the request of Purchaser and Seller, and Escrow Holder shall be responsible only for the safekeeping and proper disposition of the Deposit Monies in accordance with the terms of this Agreement. In taking any action hereunder, Escrow Holder shall be entitled to rely upon any written notice, paper, or other document from Seller or Purchaser, and Escrow Holder shall not be required to seek or obtain verification of the authenticity or proper authorization of such written notice, paper, or other document. In no event shall Escrow Holder be liable for any act performed or omitted to be performed by it hereunder in the absence of gross negligence or willful misconduct. In the event of a controversy between Seller and Purchaser as to the disposition of the Escrow Monies, Escrow Holder shall be entitled to deliver the Escrow Monies to the clerk of a court of competent jurisdiction in an interpleader action, whereupon Escrow Holder shall be relieved of any further duties or obligations regarding the Escrow Monies. Seller and Purchaser agree to indemnify, defend and hold Escrow Holder harmless from and against any loss, cost or expense arising out of or related to the Escrow Monies not resulting from Escrow Holder's gross negligence or willful misconduct. Seller acknowledges and agrees that Escrow Holder is and has been counsel to Purchaser in connection with the preparation of this Agreement and otherwise. Seller and Purchaser hereby agree that to the extent that Escrow Holder's serving as the holder of the Deposit Monies may create a conflict of interest or an appearance of a conflict of interest, any such conflict of interest is hereby waived. Seller also acknowledges and agrees that Escrow Holder serving as escrow holder shall in no manner whatsoever disqualify or be cause for disqualification of Escrow Holder with respect to the current or future representation of Purchaser arising out of or involving any matter or issue relating to the Deposit Monies or this Agreement or otherwise; it being hereby understood and agreed that Purchaser will continue to be represented by Escrow Holder in connection with the foregoing matters. 3.4 Closing Deliveries. At the Closing, the parties shall execute and deliver such bills of sale, assignments, documents of title, assumption agreements, closing certificates, searches, title insurance policies and other documents as are reasonably required in order to effectuate the consummation of the transaction contemplated hereby. All documents to be delivered by a party shall be in form and substance reasonably satisfactory to the other party. 3.5 Allocation of Purchase Price. The Purchase Price shall be allocated among the Purchased Assets by Purchaser, in the manner required by Section 1060 of the Internal Revenue Code of 1986, as amended, and in a manner approved by Seller, which approval shall not be unreasonably withheld. Purchaser shall submit its proposed allocation to Seller on or before November 17, 1997. 3.6 Franchise Matters. (a) The Hotel is operated under a franchise license agreement dated April 14, 1993 (the "Existing Agreement") between Seller and Holiday Inns Franchising, Inc. ("Holiday Inns"). Seller and Purchaser each hereby agrees to use its commercially reasonable good faith efforts to cause a new Holiday Inn franchise license agreement to be awarded to Purchaser for its operation of the Business, on terms acceptable to Purchaser, in its sole discretion (a "New License Agreement"). The parties acknowledge and understand that one of the conditions to obtaining a New License Agreement is an agreement with Holiday Inns for a program of physical improvements to the Real Estate or the other assets used in the Business, as determined by Holiday Inns after its inspection of the Purchased Assets and as designated by Holiday Inns as a "Product Improvement Plan" (hereinafter, "PIP"). Purchaser agrees that it shall be solely responsible for all costs of determining and implementing such PIP as determined by Holiday Inns, and for all other costs associated with the obtaining of a New License Agreement, including up-front fees, inspection costs, franchise fees, costs of termination of the Existing Agreement (and the associated release of Seller from liability thereunder) (collectively, the "Holiday Inn Costs"). Notwithstanding the foregoing, Purchaser's total liability for all Holiday Inn Costs shall not exceed, in the aggregate, the sum of One Million Five Hundred Thousand Dollars ($1,500,000.00). If such aggregate total of the actual or reasonably anticipated Holiday Inn Costs exceeds or is reasonably expected by Purchaser to exceed $1,500,000.00, then Purchaser may, in its sole discretion, elect to terminate this Agreement by written notice to Seller prior to Closing, in which event all Deposit Monies, together with any interest thereon, shall be immediately returned to Purchaser, and thereupon neither party shall have any obligation to the other hereunder. (b) Purchaser hereby acknowledges that the Existing Agreement is not, by its terms, assignable to Purchaser. Purchaser acknowledges further that the Existing Agreement provides for a termination fee of approximately $1,800,000.00 in the event the Existing Agreement is terminated without the awarding of a New License Agreement with respect to the Business (the "Termination Fee"). If Purchaser elects to complete Closing hereunder, but does not pursue the New License Agreement, Purchaser shall be solely responsible for the Termination Fee. The parties agree that Purchaser's obligation to pay the Termination Fee if it completes Closing hereunder but elects not to pursue a New License Agreement, shall not be taken into consideration in calculating the total Holiday Inn Costs under subsection (a) hereof, or Purchaser's costs of making Closing hereunder. Purchaser shall not be liable for payment of the Termination Fee if Purchaser does not complete Closing hereunder, unless: (i) Closing does not occur because of Purchaser's default hereunder; (ii) Seller has not defaulted hereunder; and (iii) the Termination Fee becomes payable (notwithstanding that Seller continues to own and operate the Business) because of an act of Purchaser. (c) Purchaser shall have the right, in its sole discretion, to contest such Termination Fee, or the amount thereof, so long as Purchaser posts as security for the ultimate payment thereof, to the extent necessary, for the benefit of Seller (and any other parties obligated under the Existing Agreement), cash or a letter of credit reasonably acceptable to Seller in an amount equal to the amount of the Termination Fee. So long as such security is provided, Seller shall cooperate with and not oppose Purchaser in the prosecution of any such contest. (d) Seller will cooperate with Purchaser and assist Purchaser as reasonably requested, in Purchaser's dealings with Holiday Inns as contemplated herein. 3.7 Adjustments and Prorations. The benefits and burdens of ownership and operation of the Business and the Purchased Assets shall transfer from Seller to Purchaser as of the Closing Date, such that, except as otherwise expressly set forth in this Agreement, Seller shall be liable for all costs and obligations relating to periods prior to Closing, and Purchaser shall only be liable for costs and obligations relating to periods after Closing. To accomplish such transfer, the following matters and items shall be apportioned between the parties hereto or, where appropriate, credited in total to a particular party, as of 12:01 am, CST on the Closing Date (the "Cut-off Time") as provided below: (a) Prior Night's Room Revenue; Deposits. Each party shall receive a credit equal to one-half of the amount of transient guest room rentals for the full night which begins on the day immediately preceding the Closing Date. Subject to the terms hereof, Purchaser will honor, for its account, the terms and rates of all pre-closing reservations made in the ordinary course of business and confirmed by Seller for dates on or after the Closing Date. Any pre-Closing down payments or advance payments made to Seller on confirmed guest room, banquet, conference or convention reservations for dates on or after the Closing Date will be credited to Purchaser at the Closing. Any post-Closing down payments made to Seller on confirmed guest room, banquet, conference or convention reservations for dates on or after the Closing Date will be forwarded to Purchaser upon receipt. (b) Taxes and Assessments. All real property and other ad valorem taxes, special or general assessments, personal property taxes, hotel room or bed taxes, water and sewer rents, rates and charges, vault charges, canopy permit fees, municipal permit fees and other municipal charges, shall be prorated as of the Cut-off Time. Any special assessments with respect to the Purchased Assets or Business existing at the Cut-off Time shall be paid by Seller and any special assessments thereafter arising shall be paid by Purchaser. All business license, occupation, sales, use, withholding or similar tax, or any other taxes of any kind relating to the Business or Purchased Assets and attributable to the period prior to the Cut-off Time shall be paid by Seller, and all such taxes attributable to the period after the Cut-off Time shall be paid by Purchaser. (c) Utility Contracts. Telephone and telex contracts and contracts for the supply of heat, steam, electric power, gas, lighting and any other utility service shall be prorated as of the Cut-off Time, with Seller receiving a credit for each deposit, if any, made by Seller as security under any such public service contracts if the same is transferable and provided such deposit remains on deposit for the benefit of Purchaser. Where possible, cut-off readings will be secured for all utilities on the Closing Date. (d) Contracts and Space Leases. Any amounts prepaid or payable under any contracts, agreements, leases of Equipment, other leases and occupancy agreements, and other obligations that Purchaser elects in its sole discretion to accept, all as provided under Sections 1.2 (d), (g), (j) and (o) hereof, shall be apportioned between the parties as of the Cut-off Time. All security deposits under such accepted leases or agreements shall be transferred to Purchaser and all obligations with respect to such security deposits shall be assumed by Purchaser. (e) License Fees. Fees paid or payable for or under any existing Permits shall be apportioned between the parties as of the Cut-off Time. (f) Employees; Employment Contracts. Seller shall be responsible for, and shall pay when due, all compensation of its employees, whether or not hired by Purchaser, through the Cut-off Time. Purchaser shall have no obligation or liability for pre-Closing compensation of, or other employment-related obligations to, Seller's employees. Purchaser assumes no obligations of Seller with respect to any employee benefits, including without limitation accrued vacation time, severance pay, personal time, unemployment and/or disability premiums or payments, and state, parish or federal withholdings, all of which shall be the responsibility of Seller only. Seller shall indemnify, defend and hold Purchaser harmless from the foregoing liabiities and obligations. Except as set forth in Section 10.10, below, Purchaser assumes no obligation to hire or to employ after Closing, any of Seller's employees. (g) Other. Such other items as are provided for in this Agreement or as are normally prorated and adjusted in the sale of a hotel, including, without limitation, all deposits and prepaid items which inure to the benefit of the Purchaser. (h) Leased Personalty. The Purchase Price was determined on the assumption that all Equipment is owned by Seller, free and clear of liens and other interests, and that no Leased Personalty exists. Therefore, to the extent any of the Purchased Assets are Leased Personalty, and to the extent Purchaser elects to accept the subject lease under Section 1.2(d) hereof, Purchaser shall receive a credit reflecting the present value of the remaining lease payment liability for each such item of Leased Personalty accepted by Purchaser hereunder. (i) Cash. All cash on hand and in registers as of the Cut-off Time shall be and remain the property of Seller, and Seller shall receive a credit for same at Closing. 3.8 Payment. Any net credit due to Seller as a result of the adjustments and prorations under Section 3.7 shall be paid to Seller in cash at the time of Closing. Any net credit due to Purchaser as a result of the adjustments and prorations under Section 3.7 shall be credited against the Purchase Price at the time of Closing. 3.9 Receivables and Payables. Purchaser is not purchasing any of the receivables of Seller, nor assuming any of its payables. Seller shall be solely responsible for the collection of all its accounts receivable, and timely payment of all its accounts payable. Therefore no adjustment or proration of same will be made. If Purchaser shall receive any payment made on any such accounts receivable, it shall promptly remit such payment to Seller. 3.10 Indeterminate Items. Items of revenue or expense which are not susceptible of calculation, allocation and/or proration at the Cut-off Time, shall be calculated, allocated and/or prorated as follows. Within five (5) days following the Closing Date, Seller and Purchaser shall undertake in good faith to mutually agree upon and execute and deliver to each other a statement setting forth the determination of the items to be prorated and accounted for hereunder, and the net amount due, if any, to either Purchaser or Seller, as the case may be, shall be paid within five (5) business days following the receipt of such statement. If, with respect to the Closing, Purchaser and Seller are unable within said five (5) day period to agree upon the appropriate proration of or payment due for an item of revenue or expense or other item pursuant to this paragraph, then Seller and Purchaser shall employ a nationally recognized accounting firm as may be mutually selected by Seller and Purchaser, as independent certified public accountants ("Accountant"), to determine the amount of the proration or payment consistent with the provisions of this Agreement. The Accountant shall make such determination as promptly as possible and in no event later than thirty (30) days following such engagement. The amount of the proration or payment as of the Cut-off Time as determined by the Accountant shall be final and binding upon Seller and Purchaser, each of whom hereby consents to the procedure herein set forth and waives any rights they may have or conflicting provisions of applicable law. Seller and Purchaser shall each pay one-half (1/2) of the Accountant's fees and expenses for making such determination. 3.11 Withheld Funds. Seller acknowledges and agrees that, at the Closing, there shall be withheld from the proceeds of sale otherwise payable to Seller at the Closing the sum of $85,000.00, as required under the provisions of Section 47:308 of the Louisiana Revised Statutes, and any equivalent parish requirements. To the extent any such funds are withheld at Closing, Purchaser and Seller shall open an escrow account with Escrow Holder, and Purchaser shall deposit such funds into Escrow, to be held by Escrow Holder until such time as Seller furnishes Escrow Holder the receipts or clearance certificates provided for in said statutes (or parish requirements) that the applicable obligations have been paid or discharged or that funds out of the Purchase Price sufficient for such purpose are held by Escrow Holder. If Seller does not produce such receipts, certificates or evidence within 120 days after Closing, or by such earlier date on which any lien or other claim therefor is asserted against Purchaser or the Purchased Assets (or any portion thereof), Escrow Holder may pay such sums to the appropriate authority as may be required to eliminate Purchaser's liability under such statutes, or any encumbrance on any of the Purchased Assets for payment thereof. Seller shall supply such records and tax returns as may be reasonably necessary for Escrow Holder to establish the amount of such required escrows. The foregoing escrow agreement shall be in addition to, and not in lieu of, Seller's indemnification obligations under Section 8.2 of this Agreement. ARTICLE IV Representations and Warranties 4.1 General Statement. The parties make the representations and warranties to each other which are set forth in this Article IV, each of which shall be correct and complete as of the date hereof and as of the Closing Date. All such representations and warranties and all representations and warranties which are set forth elsewhere in this Agreement and in any financial statement, exhibit or document delivered by a party hereto to the other party pursuant to this Agreement shall survive the Closing (and none shall merge into any instrument of conveyance), regardless of any investigation or lack of investigation by any of the parties to this Agreement. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. All representations and warranties of Seller are made subject to the exceptions which are noted in the schedule delivered by Seller to Purchaser concurrently herewith and identified by the parties as the "Disclosure Schedule." All exceptions noted in the Disclosure Schedule shall be numbered to correspond to the applicable paragraph of Section 4.3 to which such exception refers. 4.2 Purchaser's Representations and Warranties. Purchaser represents and warrants to Seller that, to the best of Purchaser's knowledge: (a) Purchaser is a corporation duly organized, validly existing and in good standing, under the laws of the State of Nevada. (b) Purchaser has full corporate power and authority to enter into and perform under (x) this Agreement and (y) all documents and instruments to be executed by Purchaser pursuant to this Agreement (collectively, "Purchaser's Ancillary Documents"). This Agreement has been, and Purchaser's Ancillary Documents will be, duly executed and delivered by duly authorized officers of Purchaser. This Agreement constitutes a valid and legally binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms (except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors' rights and by the availability of injunctive relief, specific performance and other equitable remedies). (c) Except for approvals of gaming authorities having jurisdiction, and approval by Purchaser's Board of Directors, primary bank lenders and holders of Purchaser's debt securities (or the trustee for such holders), or as otherwise contemplated under Section 6.2 hereof, no consent, authorization, order or approval of, or filing or registration with, any governmental authority or other person is required for the execution and delivery by Purchaser of this Agreement and Purchaser's Ancillary Agreements, and the consummation by Purchaser of the transactions contemplated by this Agreement and Purchaser's Ancillary Agreements. (d) Subject to the filings and/or consents noted in subsection (c), above, neither the execution and delivery of this Agreement and Purchaser's Ancillary Documents by Purchaser, nor the consummation by Purchaser of the transactions herein contemplated, will conflict with or result in a breach of any of the terms, conditions or provisions of Purchaser's Articles of Incorporation or By-laws, or of any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or governmental authority or of any arbitration award. (e) Subject to the filings and/or consents noted in subsection (c), above, Purchaser is not a party to any unexpired, undischarged or unsatisfied written or oral contract, agreement, indenture, mortgage, debenture, note or other instrument under the terms of which performance by Purchaser according to the terms of this Agreement will be a default, or whereby timely performance by Purchaser according to the terms of this Agreement may be prohibited, prevented or delayed. (f) Neither Purchaser, nor any of its Affiliates has dealt with any person or entity who is or may be entitled to a broker's commission, finder's fee, investment banker's fee or similar payment for arranging the transaction contemplated hereby or introducing the parties to each other. As used herein, an "Affiliate" is any person or entity which controls a party to this Agreement, which that party controls, or which is under common control with that party. In the case of Seller, an Affiliate shall include Ted W. Price, Sr., Ted W. Price, Jr., Robert W. Price, Sr., Robert W. Price, Jr., and any of their wives or children, and Hotel Management and Development, Inc.. "Control" means the power, direct or indirect, to direct or cause the direction of the management and policies of a person or entity through voting securities, contract or otherwise. (g) Except as contemplated under Section 6.2 hereof, there is no law, rule, regulation or ordinance of any governmental body or agency prohibiting Purchaser's execution, delivery and performance of the transactions contemplated by this Agreement. (h) Subject to the conditions described under Section 6.2 hereof (including without limitation, the financing contingency in Section 6.2(h) and the contingency for consent of existing lenders and any trustee for the holders of debt securities under Section 6.2(g)), as to which Purchaser makes no representation or warranty, Purchaser is financially capable of acquiring the Purchased Assets pursuant to the provisions of this Agreement. 4.3 Seller's Representations and Warranties. Seller represents and warrants to Purchaser that, to the best of Seller's knowledge and except as set forth in the Disclosure Schedule: (a) Seller is a limited partnership in commendam, duly organized, validly existing and in good standing, under the laws of the State of Louisiana. Seller has all necessary power and authority to conduct the Business as the Business is now being conducted. (b) Except as set forth in the Disclosure Schedule, Seller holds good and marketable title to the Purchased Assets, free and clear of all mortgages, options, liens, charges, easements, agreements, claims, rights, restrictions or other encumbrances of any kind or nature other than the Permitted Exceptions, and all items of Equipment, Inventory and other personal property have been fully paid for, to the extent that normal business practice permits, except those items identified on the Disclosure Schedule which are subject to installment payments or leases and with respect to which there are no installments due which are delinquent. (c) Seller has full partnership power and authority to enter into and perform under (x) this Agreement and (y) all documents and instruments to be executed by Seller pursuant to this Agreement (collectively, "Seller's Ancillary Documents"). This Agreement has been, and Seller's Ancillary Documents will be, duly authorized by all necessary partnership action(s), and duly executed and delivered by general partners of Seller so authorized. This Agreement constitutes a valid and legally binding obligation of Seller, enforceable against Seller in accordance with its terms (except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors' rights and by the availability of injunctive relief, specific performance and other equitable remedies). Except as contemplated under Section 6.1 hereof, there is no law, rule, regulation or ordinance of any governmental body or agency prohibiting Seller's execution, delivery and performance of the transactions contemplated by this Agreement. The sale transaction contemplated by this Agreement is being made in connection with the winding-up of Seller as contemplated under Section 13.02(f) of Seller's Articles of Partnership In Commendam dated as of May 1, 1980. (d) No consent, authorization, order or approval of, or filing or registration with, any governmental authority or other person is required for Seller's execution and delivery of this Agreement and Seller's Ancillary Documents and the consummation by Seller of the transactions contemplated by this Agreement and Seller's Ancillary Documents. (e) Neither the execution and delivery of this Agreement and Seller's Ancillary Documents by Seller, nor the consummation by Seller of the transactions herein contemplated, will conflict with or result in a breach of any of the terms, conditions or provisions of Seller's Articles of Partnership In Commendam or other organizational documents, or of any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or any governmental authority or of any arbitration award. (f) Seller's books, accounts and records are, and have been, maintained in Seller's usual, regular and ordinary manner, in accordance with prudent business practices and generally accepted accounting practices, and all material transactions to which Seller is or has been a party are properly reflected therein. (g) Complete and accurate copies of the audited balance sheets, statements of income and retained earnings, statements of cash flows, and notes to financial statements (together with any supplementary information thereto) of Seller, all as of and for the years ended December 31, 1993, 1994, 1995, and 1996, respectively, as audited by Seller's certified public accountants are contained in the Disclosure Schedule. All such financial statements are referred to herein collectively as the "Financial Statements." The Financial Statements present accurately and completely the financial position of Seller as of the respective dates thereof, and the results of operations and cash flows of Seller for the respective periods covered by said statements, in accordance with GAAP, consistently applied. The Disclosure Schedule contains complete and correct copies of all attorneys' responses to audit inquiry letters and all management letters from the Accountants with respect to Seller's last four (4) fiscal years. (h) Complete and accurate copies of the unaudited balance sheet, statement of income and retained earnings and statement of cash flows of Seller as of and for the seven (7)-month period ended July 31, 1997, are contained in the Disclosure Schedule. Such financial statements are herein referred to as the "Interim Financial Statements." The Interim Financial Statements present accurately and completely the financial position of Seller as of the date thereof, and the results of operations of Seller for the period covered by said statements, in accordance with GAAP, consistently applied. (i) (i) The Disclosure Schedule lists all existing Permits and such list is complete and correct in all material respects; (ii) such Permits constitute all of the Permits currently necessary for the ownership and operation of the Business, including but not limited to, the food and beverage licenses required to sell and serve food and liquor; (iii) no default has occurred in the due observance or performance of any requirements or condition of any Permit which has not been heretofore corrected; and (iv) no occupant under a lease or concession agreement has received any notice from any source to the effect that there is lacking any Permit needed in connection with the operation of the Business or any restaurant, bar, gift shop or other operation connected therewith. (j) Seller has not suffered or been threatened with any material adverse change in the business, operations, assets, liabilities, financial condition or prospects of the Business, including, without limiting the generality of the foregoing, the existence or threat of any labor dispute, or any material adverse change in, or loss of, any relationship between Seller and any of its customers, suppliers or key employees. (k) The Disclosure Schedule correctly and completed lists and describes all material contracts, leases, and agreements to which Seller is a party and which relate to the conduct of the Business, including, without limitation: employment and employment-related agreements; covenants not to compete; loan agreements, notes, and security agreements (other than notes, loan agreements and related security documents that are being satisfied at or prior to Closing); sales representative, distribution, franchise, advertising and similar agreements; concession or occupancy agreements; leases and subleases of realty or personalty; guest room, banquet, conference and convention contracts or bookings; license agreements; purchase orders and purchase contracts and sales orders and sales contracts. All contracts, leases and other arrangements or instruments referred to in this paragraph 4.3(k), and all other contracts or instruments to which Seller is a party, are in full force and binding upon the parties thereto. No default by Seller has occurred thereunder and, to the best of Seller's knowledge, no default by the other contracting parties has occurred thereunder. No event, occurrence or condition exists which, with the lapse of time, the giving of notice, or both, or the happening of any further event or condition, would become a default by Seller thereunder. Seller has given (or will give, during the Inspection Period) to Purchaser true and correct copies of all such agreements or leases, or a detailed description thereof, all as described in Section 4.3(k) of the Disclosure Schedule. Seller shall indemnify Purchaser as required under Section 1.2 hereof, against loss, cost or liability under any contract, lease or agreement not disclosed to Producer as required in this Section 4.3(k). (l) Seller is not a party to, or bound by, any unexpired, undischarged or unsatisfied written or oral contract, agreement, indenture, mortgage, debenture, note or other instrument under the terms of which performance by Seller according to the terms of this Agreement will be a default or an event of acceleration, or whereby timely performance by Seller according to the terms of this Agreement may be prohibited, prevented or delayed. If any such agreement exists, Seller shall terminate such agreement (other than those expressly assumed by Purchaser) at or prior to Closing. (m) Except as disclosed on the Disclosure Schedule, there are no commissions or referral fees relating to the Business currently outstanding, nor will there be any such commissions or referral fees outstanding, on or after the Closing Date. (n) With respect to employees of Seller: (i) there is no pending or threatened unfair labor practice charges or employee grievance charges; (ii) there is no request for union representation, labor strike, dispute, slowdown or stoppage actually pending or, to the best of Seller's knowledge, threatened against or directly affecting Seller; (iii) no grievance or arbitration proceeding arising out of or under collective bargaining agreements is pending and no claims therefor exist; (iv) the employment of each of the Seller's employees is terminable at will without cost to the Seller except for payments required under Seller's employee benefit plans, employee welfare plans and similar plans and payment of accrued salaries or wages and vacation pay (for which Purchaser shall have no liability as provided in Section 2.3, above). No employee or former employee has any right to be rehired by the Seller prior to the Seller's hiring a person not previously employed by the Seller. (v) The Disclosure Schedule contains a true and complete list of all employees who are employed by the Seller as of the date hereof, and said list correctly reflects their salaries, wages, other compensation (other than benefits under the employee welfare, benefit and similar plans), dates of employment and positions. (vi) As of the date of this Agreement, Seller has 136 full-time active employees in the operation of the Business, and 31 part-time employees. (vii) Seller has no retirement, pension, profit sharing, employee welfare or employee benefit plans for any of its employees. (o) Except as set forth on the Disclosure Schedule, there is no litigation or proceeding, in law or in equity, and there are no proceedings or governmental investigations before any commission or other administrative authority, pending, or, to the best of Seller's knowledge, threatened, against Seller or its Affiliates, or with respect to the consummation of the transaction contemplated hereby, or the use of the Purchased Assets (whether used by Purchaser after the Closing or by Seller prior thereto), or which would restrict or interfere with Seller's ability to perform its obligations hereunder. (p) There are no material claims pending or, to the best of Seller's knowledge, anticipated or threatened against Seller with respect to the quality of or absence of or defects in Seller's products or services. (q) Seller is not a party to, or bound by, any decree, order, judgment or arbitration award (or agreement entered into in any administrative, judicial or arbitration proceeding with any governmental authority) with respect to its properties, assets, personnel or business activities. (r) Seller is not in violation of, or delinquent in respect to, any decree, order or arbitration award or law, statute, or regulation of, or agreement with, or Permit from, any Federal, state or local governmental authority (or to which any of the Purchased Assets, any of Seller's personnel, or the Business are subject or to which it, itself, is subject), including, without limitation, laws, statutes and regulations relating to equal employment opportunities, fair employment practices, unfair labor practices, terms of employment, occupational health and safety, wages and hours and discrimination, and zoning ordinances and building codes. Copies of all notices of violation of any of the foregoing which Seller has received within the past three years are attached to the Disclosure Schedule. (s) Seller, the Purchased Assets and the Business are in compliance with all Environmental Laws (as herein defined) and any Environmental Permits (as herein defined). A copy of any notice, citation, inquiry or complaint which Seller has received in the past three years of any alleged violation of any Environmental Law or Environmental Permit is attached to the Disclosure Schedule. Seller possesses all Environmental Permits which are required for the operation of the Business, and is in compliance with the provisions of all such Environmental Permits. Copies of all Environmental Permits issued to Seller are attached to the Disclosure Schedule. As used in this Agreement, "Environmental Laws" means all federal, state and local statutes, regulations, ordinances, rules, regulations and policies, all court orders and decrees and arbitration awards, and the common law, which pertain to hazardous substances or materials, environmental matters or contamination of any type whatsoever; and "Environmental Permits" means licenses, permits, registrations, governmental approvals, agreements and consents which are required under or are issued pursuant to Environmental Laws. (t) The Real Estate is identified and legally described in Schedule 1.2(c) hereto. Seller holds fee simple title to the Real Estate, subject only to the Permitted Exceptions, none of which makes title to the Real Estate unmarketable and none of which are violated by Seller or will interfere with Purchaser's use thereof. (u) Intentionally Omitted. (v) There are no pending, or, to the knowledge of Seller, threatened, condemnation proceedings or condemnation actions against the Real Estate or any of the rights-of-way located adjacent thereto. (w) The Real Estate is currently zoned for its present use and does not rely on parking or other facilities or land not located on the Real Estate to satisfy any legal requirements. (x) Intentionally Omitted. (y) The Hotel's mechanical, electrical, plumbing and environmental systems are in good operating condition and repair. None of the general partners of Seller has any actual knowledge of any latent defects in or on the Real Estate. (z) Seller has not taken any actions which were calculated to dissuade any present employees, representatives or agents of Seller from becoming associated with Purchaser. (aa) The representations and warranties of Seller in this Agreement do not omit to state a material fact necessary in order to make the representations, warranties or statements contained herein not misleading. (bb) The copies of all documents furnished by Seller to Purchaser pursuant to the terms of this Agreement are complete and accurate. The Disclosure Schedule contains complete and accurate copies of all documents referred to therein. The information contained in the Disclosure Schedule is complete and accurate. (cc) Except for Seller's Agent, whose compensation is the responsibility of Seller only, neither Seller, nor any of its Affiliates, has dealt with any person or entity who is or may be entitled to a broker's commission, finder's fee, investment banker's fee or similar payment for arranging the transaction contemplated hereby or introducing the parties to each other. (dd) No governmental assessment for sewer, sidewalk, water, paving, electrical, power or other improvements is pending or threatened. (ee) All utility equipment and facilities required for the operation and use of the Real Estate and Equipment are located solely on the Real Estate and all agreements for providing utilities are with direct providers. (ff) (i) No materials designated as hazardous or toxic under any Environmental Laws have been located on the Real Estate, except for small amounts used in the ordinary course of the Business (and then only in compliance with all Environmental Laws) or have been released into the environment, or discharged, placed or disposed of at, on or under the Real Estate; (ii) no underground storage tanks have been located on the Real Estate; (iii) the Real Estate has never been used as a dump for waste material; and (iv) the Real Estate and its prior uses comply with, and at all times have complied with, any applicable Environmental Laws. The parties acknowledge that hydraulic fluid, absent specifically hazardous or toxic ingredients such as PCBs (hereinafter defined), shall not by itself constitute a hazardous or toxic material. (gg) Seller has received no written notice that the Real Estate, when used for the purposes and in the manner presently used, violates or fails to comply with the provisions of the Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et seq. (the "ADA") and all other legal requirements governing the use of the Property by persons with disabilities. (hh) None of Seller's officers, directors, employees or partners, or members of their families (or any entity in which any of them has a material financial interest, directly or indirectly), owns any assets which are used in the Business, except for assets being transferred by the Individuals to Purchaser in accordance with the provisions of Section 1.6 hereof. Except for the Affiliate Lease, and the management agreements between Seller and Hotel Management and Development, Inc., none of the contracts, leases or agreements shown in the Disclosure Schedule is between Seller and an Affiliate of Seller. 4.4 Limitation on Warranties. THE PURCHASED ASSETS ARE BEING SOLD "AS IS," "WHERE IS" AND IN THEIR PRESENT CONDITION, AND EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.3 OR ELSEWHERE IN THIS AGREEMENT, SELLER MAKES (AND HAS MADE) NO WARRANTY OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION AS TO PHYSICAL CONDITION OR VALUE OF ANY OF THE PURCHASED ASSETS, FITNESS FOR A PARTICULAR PURPOSE, EXISTENCE OF HIDDEN OR LATENT DEFECTS OR THE FUTURE PROFITABILITY OR FUTURE EARNINGS PERFORMANCE OF THE BUSINESS. Purchaser waives its right to redhibition for an existing latent defect under Art. 2520 of the La. Civil Code, but does not waive any right to recission as a general remedy under this Agreement for a breach, default or failure of warranty of Seller, as otherwise permitted under the laws of the State of Louisiana. The foregoing limitations may be incorporated into any deed or other conveyance delivered by Seller pursuant to Section 7.3 hereof, provided the same shall not limit or impair the warranties of title included or required to be included thereunder. ARTICLE V Conduct Prior to the Closing 5.1 General. Seller and Purchaser shall have the rights and obligations with respect to the period between the date hereof and the Closing Date which are set forth in the remainder of this Article V. 5.2 Seller's Obligations. The following are Seller's obligations: (a) Seller shall give to Purchaser's officers, employees, attorneys, consultants, accountants, inspectors and lenders reasonable access during normal business hours to all of the assets, properties, books, contracts, documents, records and personnel of Seller and shall furnish to Purchaser such information as Purchaser may at any time and from time to time reasonably request. (b) Seller shall use its best efforts and make every good faith attempt (and Purchaser shall cooperate with Seller) to obtain all consents to the assignment of, or alternate arrangements satisfactory to Purchaser with respect to, any contract, lease, agreement, purchase order, sales order, or other instrument accepted by Purchaser, or any Permit or Environmental Permit, which consents may be required for such assignment to be effective (collectively, the "Consents"). (c) Seller shall use its best efforts to preserve its business and the goodwill of its customers, suppliers and others having business relations with Seller and to retain its business organization intact, including keeping available the services of its present employees, representatives and agents, and shall maintain all of its properties in their current operating condition and repair, ordinary wear and tear excepted. (d) Seller shall conduct the Business in the usual and ordinary course and carry on all of its operations (including, without limitation, the purchase and sale of Inventory, the collection of Accounts Receivable and the payment of Accounts Payable and other obligations) in accordance with past practices. Without limiting the foregoing, Seller shall allow its inventories of Consumables On-Hand to be depleted to such levels as Purchaser may reasonably request, provided the requested depletion does not unreasonably interfere with Seller's operation of the Business, in Seller's reasonable determination. (e) Without the prior written consent of Purchaser, and without limiting the generality of any other provision of this Agreement, Seller shall not: (i) Intentionally Omitted. (ii) incur, assume or guarantee any long-term or short-term indebtedness that would prohibit or prevent Seller's performance of its obligations hereunder; (iii) directly or indirectly, enter into or assume any contract, agreement, obligation, lease, license or commitment other than in the usual and ordinary course of business in accordance with past practices; (iv) adopt or amend any employee welfare or benefit plan; (v) sell, transfer or otherwise dispose of any material asset or property except in the usual and ordinary course of business and except for cash applied in payment of Seller's liabilities in the usual and ordinary course of business; (vi) amend, terminate or give notice of termination with respect to any existing contract or agreement to which Seller is a party, or waive any material rights; (vii) directly or indirectly, enter into any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of services) with any Affiliate of Seller that would prohibit or prevent Seller's performance of its obligations hereunder; (viii) Intentionally Omitted. (ix) terminate the employment, except for cause, of any of its full time active employees (Seller shall give Purchaser prompt written notice of any such terminations for cause). (f) Seller shall assist and cooperate with Purchaser in the transfer of all Permits and Environmental Permits necessary for the operation of the Business by Purchaser. (g) Seller shall, at its own cost and expense, make all filings, deliver all notices, pay all fees and otherwise comply with the provisions of any applicable bulk transfer or similar law regarding Seller's sale of the Purchased Assets. (h) Seller shall complete any planned capital expenditures between now and Closing as they are currently scheduled. (i) Seller shall, at its own cost and expense prior to Closing, complete any clean-up or remediation as contemplated under Section 5.8 hereof. 5.3 Purchaser's Obligations. Subject to Purchaser's termination rights under Section 5.5 hereof, Purchaser shall use its good faith efforts to secure financing as contemplated under Section 6.2(h) hereof, agreements with Holiday Inns as contemplated under Section 6.2(i) hereof, as well as the consents and approvals of its primary lenders and of any trustee for the holders of its debt securities as contemplated under Section 6.2(g) hereof, and of any gaming regulatory authorities having jurisdiction as contemplated under Section 6.2(e) hereof. In its efforts to obtain mortgage financing as aforesaid, Purchaser may, in its sole discretion, at any time prior to Closing, substitute the lender so long as such substitution is not reasonably expected to impair Purchaser's ability to make Closing hereunder. 5.4 Joint Obligations. The following shall apply with equal force to Seller and Purchaser: (a) Seller and Purchaser shall use their respective good faith efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated hereby as soon as practicable. (b) Each of Seller and Purchaser shall cooperate with the efforts of the other in obtaining any Consents or any other approvals contemplated hereunder. (c) Each party shall promptly give the other party written notice of the existence or occurrence of any condition which would make any representation or warranty herein contained of either party untrue or which might reasonably be expected to prevent the consummation of the transactions contemplated hereby; but failure in good faith to provide such notice shall not itself constitute a default of such party, nor excuse nonperformance of the other party, hereunder. The party whose representation would be untrue, or whose performance hereunder may be prevented or impaired, as a result of such existence or occurrence, shall have an additional period of ten (10) business days to correct such condition, and if necessary Closing shall be extended to accommodate such cure period. (d) No party shall intentionally perform any act which, if performed, or omit to perform any act which, if omitted to be performed, would prevent or excuse the performance of this Agreement by any party hereto or which would result in any representation or warranty herein contained of said party being untrue in any material respect as if originally made on and as of the Closing Date. (e) [Intentionally Omitted] 5.5 Due Diligence Inspection. (a) Purchaser shall continue to be entitled to conduct its due diligence inspection with respect to the Business and its assets, from August 21, 1997 until 11:59 p.m. CST on October 6, 1997 (the "Inspection Period"). (b) Seller has, and shall continue to promptly provide to Purchaser, access to Seller's assets and Seller's books and records with respect to the Business and/or Seller's assets, on reasonable advance request of Purchaser. In addition, Seller shall promptly supply to Purchaser and its officers, directors, consultants, agents, inspectors, lenders and professionals, those documents, materials and information listed in Exhibit I to the Letter of Intent dated August 21, 1997 between Seller and Purchaser, and any other documentation or information reasonably requested by Purchaser. Seller shall cooperate fully with Purchaser or its officers, directors, consultants, agents, inspectors, lenders and professionals, in the course of Purchaser's due diligence review. Purchaser shall use its good faith efforts to conduct its due diligence review so as not to interfere unreasonably with the operation of the Business. (c) At any time prior to the expiration of the Inspection Period as aforesaid, Purchaser may, if it is not fully satisfied with any result(s) of its diligence review, in its sole and absolute discretion, terminate this Agreement by written notice to Seller. If Purchaser terminates this Agreement prior to the expiration of the Inspection Period, then, without the necessity of further documentation, this Agreement shall be deemed terminated, the Primary Deposit and all interest thereon shall be returned to Purchaser as provided in Section 3.3(b) hereof, and thereupon neither party shall have any further obligation or liability to the other hereunder. The Additional Deposit shall only be refunded as provided in Section 3.3(b) hereof. (d) The parties hereto acknowledge that Purchaser has incurred substantial costs in connection with the negotiation and execution of this Agreement, will incur additional substantial costs in conducting its due diligence review hereunder, and would not have entered into this Agreement without the availability of the Inspection Period. Therefore, the parties agree that adequate consideration exists to support the obligations of the parties hereunder, even before expiration of the Inspection Period. (e) Subject to Seller's performance under the terms of this Agreement, and to satisfaction of all of the conditions to Purchaser's obligations as set forth in Section 6.2 hereof, the Deposit Monies shall become non-refundable at the expiration of the Inspection Period, and shall serve as Seller's liquidated damages hereunder in the event of Purchaser's default, all as contemplated under Section 9.2 hereof. 5.6 Inventory of Purchased Assets. Within ten (10) days after the complete execution of this Agreement, representatives of Seller and Purchaser shall jointly conduct a physical inventory of the personal property included in the Purchased Assets (other than Consumables On- Hand), to the extent and with the detail determined by Purchaser, in its sole discretion (the "Personalty Inventory"). To the extent items were counted as part of the Personalty Inventory, then at Closing, Seller shall be obligated to convey to Purchaser such Purchased Assets substantially as described in the Personalty Inventory report. If at Closing items described in the Personalty Inventory report are missing or so damaged as to be unusable, Purchaser shall receive a credit at Closing for the market value thereof, to the extent the aggregate market value of such missing and/or damaged items exceeds $7,500.00. 5.7 Contact with Employees. Purchaser's contacts with Seller's employees in connection with this transaction shall be limited to such contact(s) as may be: (i) reasonably necessary in connection with Purchaser's due diligence review under Section 5.5 hereof; or (ii) permitted as contemplated under Section 10.10 hereof. 5.8 Environmental Matter. The Phase I Environmental Site Assessment prepared for Purchaser in connection with this transaction notes the fact that hydraulic fluid is stored near the elevator facilities of the Hotel, and that such hydraulic fluid may have been spilled or leaked. Such Site Assessment also raises the possibility that such hydraulic fluids may contain hazardous substances known as "PCBs", and suggests sampling and testing of same. Seller has, at its sole cost and expense, had certain of such hydraulic fluids sampled, and a laboratory analysis thereof conductedby the Meyers Group and Core Laboratories. No reports have yet been issued by such consultants. The environmental consultants of both Seller and Purchaser shall consult with each other promptly after the execution hereof, and determine which other areas and substances, if any, the Purchaser's environmental consultant requires to be sampled and analyzed, as noted in the aforesaid Phase I Environmental Site Assessment. Based on such consultation, Seller's environmental consultant shall conduct further sampling and analysis of such other areas and substances, if any. Seller shall obtain and deliver to Purchaser the written reports of such consultants, as to all areas and substances specified by Purchaser's environmental consultant as aforesaid, certified to both Purchaser and Seller, within twenty-one (21) days after the date of this Agreement. Each such consultant shall acknowledge in writing that Purchaser shall rely on, and is entitled to rely on, the aforesaid reports in completing the transactions described herein. If such sampling/testing discloses the presence of PCBs or other hazardous substances, Seller shall, at its sole cost and expense prior to Closing, have the same remediated in accordance with all applicable state and federal Environmental Laws. Such remediation shall be performed, and certified to both Seller and Purchaser, by an environmental contractor mutually acceptable to Seller and Purchaser, in their reasonable discretion. Notwithstanding the foregoing, if the cost of such remediation exceeds or is reasonably expected (based on written quotations from contractor(s) mutually acceptable to Seller and Purchaser) to cost Seller more than $100,000, Seller may terminate this Agreement by written notice to Purchaser, at which point all Deposit Monies shall be returned to Purchaser, with interest, and neither party shall have any further rights or obligations hereunder. ARTICLE VI Conditions to Closing 6.1 Conditions to Seller's Obligations. The obligation of Seller to consummate the transactions contemplated hereby is subject to the fulfillment of all of the following conditions on or prior to the Closing Date, upon the non-fulfillment of any of which this Agreement may, at Seller's option, be terminated pursuant to and with the effect set forth in Article IX: (a) Each and every representation and warranty made by Purchaser shall have been true and correct when made and shall be true and correct in all material respects as if originally made on and as of the Closing Date. (b) All obligations of Purchaser to be performed hereunder through, and including on, the Closing Date (including, without limitation, all obligations which Purchaser would be required to perform at the Closing if the transaction contemplated hereby were consummated) shall have been performed. 6.2 Conditions to Purchaser's Obligations. The obligation of Purchaser to consummate the transaction contemplated hereby is subject to the fulfillment of all of the following conditions on or prior to the Closing Date, upon the non-fulfillment of any of which this Agreement may, at Purchaser's option, be terminated pursuant to and with the effect set forth in Article IX: (a) Each and every representation and warranty made by Seller shall have been true and correct when made and shall be true and correct in all material respects as if originally made on and as of the Closing Date. (b) All obligations of Seller to be performed hereunder through, and including on, the Closing Date (including, without limitation, all obligations which Seller would be required to perform at the Closing if the transaction contemplated hereby were consummated) shall have been performed. (c) All of the Consents shall have been obtained. (d) No suit, proceeding or investigation shall have been commenced or threatened by any governmental authority or private person(s), against any party (including without limitation Seller and any of its affiliates, or any partners, shareholders, officers or members of any of them), on any grounds, the intent or likely effect of which (exclusively or among other things) is to restrain, enjoin or hinder, delay or to seek material damages on account of, the consummation of the transaction contemplated hereby, or to challenge any of the terms or provisions of this Agreement, or arising out of this Agreement or the transactions contemplated hereby. (e) On or prior to November 17, 1997, Purchaser shall have received all required consents, licenses and approvals of the transactions contemplated hereunder (including without limitation, Purchaser's financing thereof, and any changes to existing financing to permit same) from the gaming and other regulatory authorities having jurisdiction. (f) Intentionally Omitted. (g) On or prior to November 17, 1997, Purchaser shall have received the prior written approval of Wells Fargo Bank, N.A. and the Trustee for the holders of Purchaser's debt securities to the transactions contemplated hereby (including without limitation, Purchaser's financing thereof, and any changes to existing financing to permit same), all in form and substance satisfactory to Purchaser, in its sole discretion. (h) On or prior to November 17, 1997, Purchaser shall have obtained mortgage financing for the transactions contemplated hereby, on terms acceptable to Purchaser, in its sole discretion, in the amount of at least seventy percent (70%) of the aggregate total of the Purchase Price, Holiday Inn Costs, Purchaser's costs of making Closing hereunder and Purchaser's other expenses under the Letter of Intent and this Agreement. (i) On or prior to November 17, 1997, Purchaser shall have entered into a New License Agreement and all related agreements, or agreed with Holiday Inns upon the terms thereof, in either case on terms acceptable to Purchaser, in its sole discretion, as provided under Section 3.6 hereof and Purchaser shall not have terminated this Agreement based on the aggregate total amount of the Holiday Inn Costs, as provided under Section 3.6 hereof. (j) On or before October 16, 1997, Purchaser's Board of Directors shall have approved this Agreement and the transactions contemplated hereby. (k) Prior to Closing, Purchaser shall not have terminated this Agreement: (A) during the Inspection Period, as provided under Section 5.5 hereof; or (B) by virtue of a casualty, as provided under Section 6.3 hereof; or (C) by virtue of a taking, as provided under Section 6.4 hereof. If, despite Purchaser's good faith efforts, either of the conditions set forth in subsections (g) or (i) hereof has not been satisfied by November 17, 1997, the Purchaser may, at its option, extend the date for satisfaction thereof, as described above, to December 2, 1997, by written notice to Seller. If Purchaser so elects to extend such date for either or both of such conditions, then the Closing Date shall automatically be extended to December 17, 1997 for all purposes hereunder. 6.3 Casualties. Risk of loss with respect to the Purchased Assets shall remain with Seller until the Closing, and thereafter with Purchaser. Therefore, the parties agree as follows: (a) If any damage to any of the Purchased Assets shall occur prior to the Closing Date by reason of fire, windstorm, earthquake, hail, explosion or other casualty, and if, in Purchaser's reasonable judgment, the aggregate cost of repairing such damage will equal or exceed Five Hundred Thousand Dollars ($500,000.00), Purchaser may elect to (i) terminate this Agreement by giving written notice to Seller in which event the Deposit Monies and interest thereon will be returned to Purchaser, and thereupon neither party shall have any further obligations or liability whatsoever to the other hereunder or (ii) receive an assignment of all of Seller's rights to any insurance proceeds (including business interruption proceeds) relating to such damage (and a credit against the Purchase Price for any such proceeds received by Seller) and acquire the Purchased Assets without any adjustment in the Purchase Price in connection therewith provided that, in such latter event, Seller shall pay to Purchaser the amount of any deductible under applicable insurance policies and uninsured claims. (b) If, in Purchaser's reasonable judgment, the cost of repairing such damage will not exceed Five Hundred Thousand Dollars ($500,000.00), the transactions contemplated hereby shall close without any adjustment in the Purchase Price in connection therewith, Purchaser shall receive an assignment of all of Seller's rights to any insurance proceeds (including business interruption proceeds) (and a credit against the Purchase Price for any such proceeds received by Seller), and Seller shall pay to Purchaser the amount of any deductible under applicable insurance policies and uninsured claims. (c) If Purchaser does not terminate this Agreement as provided in subparagraph (a) hereof, then any insurance proceeds covering business interruption losses shall be apportioned between Seller and Purchaser to the Closing Date. 6.4 Takings. Risk of loss with respect to the Purchased Assets shall remain with Seller until the Closing, and thereafter with Purchaser. Therefore, the parties agree that in the event of the actual or threatened taking (either temporary or permanent) in any condemnation proceedings by exercise of right of eminent domain, of all or any part of the Real Estate, between the date hereof and the Closing Date, and if, in Purchaser's reasonable judgment, such taking will result in the inability to conduct the operations of the Business substantially in accordance with the present standards, Purchaser may elect to: (i) terminate this Agreement by giving written notice to Seller, in which event the Deposit Monies and interest thereon will be returned to Purchaser, and thereupon neither party shall have any further obligations or liability whatsoever to the other hereunder or (ii) receive an assignment of all of Seller's rights to any condemnation award relating to such taking and acquire the Purchased Assets without any adjustment in the Purchase Price in connection therewith. ARTICLE VII Closing 7.1 Form of Documents. At the Closing, the parties shall deliver the documents, and shall perform the acts, which are set forth in this Article VII. All documents which Seller shall deliver shall be in form and substance reasonably satisfactory to Purchaser and Purchaser's counsel. All documents which Purchaser shall deliver shall be in form and substance reasonably satisfactory to Seller and Seller's counsel. 7.2 Purchaser's Deliveries. Subject to the fulfillment or waiver of the conditions set forth in Sections 6.2, Purchaser shall execute and/or deliver to Seller all of the following: (i) Payment of the Purchase Price as required under Section 3.3(a) hereof. (ii) An assumption agreement, duly executed by Purchaser, under which Purchaser assumes those Assumed Liabilities described in Section 2.2 hereof. (iii) An incumbency and specimen signature certificate with respect to the officers of Purchaser executing this Agreement and Purchaser's Ancillary Documents on behalf of Purchaser. (iv) A certified copy of resolutions of Purchaser's Board of Directors, authorizing the execution, delivery and performance of this Agreement and Purchaser's Ancillary Documents (v) A closing certificate executed by an executive officer of Purchaser (or any other officer of Purchaser specifically authorized to do so), on behalf of Purchaser, pursuant to which Purchaser represents and warrants to Seller that Purchaser's representations and warranties to Seller are true and correct as of the Closing Date as if then originally made (or, if any such representation or warranty is untrue in any respect, specifying the respect in which the same is untrue), that all covenants required by the terms hereof to be performed by Purchaser on or before the Closing Date, to the extent not waived by Purchaser in writing, have been so performed (or, if any such covenant has not been performed, indicating that such covenant has not been performed), and that all documents to be executed and delivered by Purchaser at the Closing have been executed by duly authorized officers of Purchaser. (vi) Such other documents from Purchaser as may reasonably be required in order to effectuate the transactions contemplated (i) hereby and (ii) by the Purchaser's Ancillary Documents. 7.3 Seller's Deliveries. Subject to the fulfillment or waiver of the conditions set forth in Section 6.1, Seller shall execute (where applicable in recordable form) and/or deliver or cause to be executed and/or delivered to Purchaser all of the following: (i) A general warranty deed (subject only to Permitted Exceptions), an affidavit of title, a certificate in compliance with the Foreign Investment in Real Property Tax Act ("FIRPTA") certifying that Seller is not a person or entity subject to withholding under FIRPTA, an ALTA statement and all other documents required by Purchaser's title insurance company with respect to the Real Estate, in each case executed by Seller, together with any necessary transfer declarations. (ii) A general warranty bill of sale, executed by Seller, conveying all of the Inventory, Equipment and other tangible personal property included in the Purchased Assets to Purchaser, free and clear of all liens, claims, encumbrances and security interests other than Permitted Exceptions and containing the warranties of title set forth in this Agreement. (iii) An assignment to Purchaser, executed by Seller, of all of the Purchased Assets (other than the Inventory, Equipment, and the Real Estate), along with the original instruments (if any) representing, evidencing or constituting such Purchased Assets, free and clear of all liens, claims, encumbrances and security interests other than Permitted Exceptions and containing the warranties of title set forth in this Agreement. If necessary in the opinion of Purchaser's counsel, Seller shall also execute and deliver (in recordable form where required) separate assignments of any of the Purchased Assets, and where applicable, in the form required by the applicable governmental agencies, insurance companies, customers, lessors, and other parties with whom the assignments must be filed. (iv) Certificates of title or origin (or like documents) with respect to all vehicles included in the Purchased Assets and other Equipment, and any other items of Purchased Assets for which a certificate of title or origin is required in order for title thereto to be transferred to Purchaser. (v) Physical possession of the tangible items comprising the Purchased Assets, and of any certificates or documents representing intangible items of Purchased Assets. (vi) An incumbency and specimen signature certificate with respect to the general partner's officers of Seller executing this Agreement and Seller's Ancillary Documents on behalf of Seller. (vii) A closing certificate duly executed by the general partners of Seller (or any one of them specifically authorized in writing by partnership action to do so), on behalf of Seller, pursuant to which Seller represents and warrants to Purchaser that Seller's representations and warranties to Purchaser are true and correct as of the Closing Date as if then originally made (or, if any such representation or warranty is untrue in any respect, specifying the respect in which the same is untrue), that all covenants required by the terms hereof to be performed by Seller on or before the Closing Date, have been so performed (or, if any such covenant has not been so performed, indicating that such covenant has not been performed), and that all documents to be executed and delivered by Seller at the Closing have been executed by duly authorized officers of Seller. (viii) A pay-off letter, accompanied by wire transfer instructions from each secured lender of Seller and written instructions from Seller directing Purchaser to transfer funds, out of the Purchase Price, to each such secured lender of Seller as necessary to pay off Seller's indebtedness to each such lender. (ix) Releases of all liens and other encumbrances and security interests held by any lender of Seller in any of the Purchased Assets, including, without limitation, UCC-3 termination statements. (x) To the extent obtained, all necessary consents for the assignment of contracts, leases, purchase orders, sales orders, Permits and Environmental Permits which are to be assigned to Purchaser or alternate arrangements with respect thereto, all as reasonably acceptable to Purchaser. (xi) Such other documents as may reasonably be required in order to effectuate the provisions of Section 1.6 hereof. (xii) Such other documents as may reasonably be required from Seller in order to effectuate the transactions contemplated (i) hereby and (ii) by the Seller's Ancillary Documents. 7.4 No Merger. None of the covenants, representations, warranties and agreements of Purchaser and Seller, as the case may be, contained in this Agreement shall merge with any deed or conveyance, and such covenants, representations, warranties and agreements shall survive the Closing and shall continue in full force and effect until such time, if any, as provided in such covenant or agreement or otherwise limited by law. ARTICLE VIII Indemnification 8.1 General. From and after the Closing, the parties shall indemnify each other as provided in this Article VIII. For the purposes of this Article VIII, each party shall be deemed to have remade all of its representations and warranties contained in this Agreement at the Closing with the same effect as if originally made at the Closing. As used in this Agreement, the term "Damages" shall mean all liabilities, demands, claims, actions or causes of action, regulatory, legislative or judicial proceedings or investigations, assessments, levies, losses, fines, penalties, damages, costs and expenses, including, without limitation, reasonable attorneys', accountants', investigators', and experts' fees and expenses, sustained or incurred in connection with the defense or investigation of any such claim. As used in this Agreement, the term "Indemnified Party" shall mean a party hereto who is entitled to indemnification from the other party hereto pursuant to this Article VIII; "Indemnifying Party" shall mean a party hereto who is required to provide indemnification under this Article VIII to the other party hereto; and "Third Party Claims" shall mean any claims for Damages asserted or threatened by a party other than the parties hereto, their successors and permitted assigns, against any Indemnified Party or to which an Indemnified Party is subject. 8.2 Indemnification Obligations of Seller. Seller shall defend, indemnify, save and keep harmless Purchaser and its successors and permitted assigns against and from all Damages sustained or incurred by any of them resulting from or arising out of or by virtue of: (a) any inaccuracy in or breach of any representation and warranty made by Seller in this Agreement or in any closing document delivered to Purchaser in connection with this Agreement; (b) any breach by Seller of, or failure by Seller to comply with, any of its covenants or obligations under this Agreement (including, without limitation, its obligations under this Article VIII); (c) the failure to discharge when due (whether before or after Closing) any liability or obligation of Seller other than the Assumed Liabilities, or any claim against Purchaser or the Purchased Assets with respect to any such liability or obligation or alleged liability or obligation; (d) any claims by parties other than Purchaser to the extent caused by acts or omissions of Seller on or prior to the Closing Date, including, without limitation, claims for Damages which arise or arose out of Seller's operation of the Business or by virtue of Seller's ownership of the Purchased Assets on or prior to the Closing Date; (e) any employee pension benefit plan (as defined by Section 3(2) of ERISA) or any employee welfare benefit plan (as defined in Section 3(1) of ERISA) which Seller or an ERISA Affiliate has at any time maintained or administered or to which Seller or any ERISA Affiliate has at any time contributed (including, without limitation, any liability for health continuation requirements under Code Section 4980B or Part 6 of Subtitle B of Title I of ERISA and any liability arising pursuant to Title IV of ERISA for plan termination, withdrawal or partial withdrawal from any multi-employer plan, or any lien to enforce any Title IV liability); (f) any benefits accrued pursuant to any employee retirement plan, employee welfare plan or employee benefit plan at or prior to the Closing Date other than benefits payable under insurance policies constituting Purchased Assets; (g) any action or failure to act, in whole or in part, at or prior to the Closing Date with respect to any employee retirement plan, employee welfare plan or employee benefit plan; or (h) failure to deliver to Purchaser the quality of title required under this Agreement. 8.3 Purchaser's Indemnification Covenants. Purchaser shall defend, indemnify, save and keep harmless Seller and its successors and permitted assigns against and from all Damages sustained or incurred by any of them resulting from or arising out of or by virtue of: (a) any inaccuracy in or breach of any representation and warranty made by Purchaser in this Agreement or in any closing document delivered to Seller in connection with this Agreement; (b) any breach by Purchaser of, or failure by Purchaser to comply with, any of its covenants or obligations under this Agreement (including, without limitation, its obligations under this Article VIII); (c) Purchaser's failure to pay, discharge and perform any of the Assumed Liabilities; or (d) any claims by parties other than Seller to the extent caused by the acts or omissions of Purchaser after the Closing Date and not constituting an Excluded Liability, including, without limitation, claims for Damages which arise out of Purchaser's operation of the Business after the Closing Date. 8.4 Cooperation. Subject to the provisions of Section 8.5, the Indemnifying Party shall have the right, at its own expense, to participate in the defense of any Third Party Claim, and if said right is exercised, the parties shall cooperate in the investigation and defense of said Third Party Claim. 8.5 Third Party Claims. Forthwith following the receipt of notice of a Third Party Claim, the party receiving the notice of the Third Party Claim shall (i) notify the other party of its existence setting forth with reasonable specificity the facts and circumstances of which such party has received notice and (ii) if the party giving such notice is an Indemnified Party, specifying the basis hereunder upon which the Indemnified Party's claim for indemnification is asserted. The Indemnified Party may, upon reasonable notice, tender the defense of a Third Party Claim to the Indemnifying Party. If: (a) the defense of a Third Party Claim is so tendered and such tender is accepted without qualification by the Indemnifying Party; or (b) within thirty (30) days after the date on which written notice of a Third Party Claim has been given pursuant to this Section 8.5, the Indemnifying Party shall acknowledge with qualification its indemnification obligations as provided in this Article VIII in writing to the Indemnified Party, but shall commit to providing defense; then, except as hereinafter provided, the Indemnified Party shall not have the right to defend or settle such Third Party Claim. The Indemnified Party shall have the right to be represented by counsel at its own expense in any such contest, defense, litigation or settlement conducted by the Indemnifying Party provided that the Indemnified Party shall be entitled to reimbursement therefor if the Indemnifying Party shall lose its right to contest, defend, litigate and settle the Third Party Claim as herein provided. The Indemnifying Party shall lose its right to defend and settle the Third Party Claim if it shall fail to diligently contest the Third Party Claim. So long as the Indemnifying Party has not lost its right and/or obligation to defend and settle as herein provided, the Indemnifying Party shall have the exclusive right to contest, defend and litigate the Third Party Claim and shall have the exclusive right, in its discretion exercised in good faith, and upon the advice of counsel, to settle any such matter, either before or after the initiation of litigation, at such time and upon such terms as it deems fair and reasonable, provided that at least ten (10) days prior to any such settlement, written notice of its intention to settle shall be given to the Indemnified Party. All expenses (including without limitation attorneys' fees) incurred by the Indemnifying Party in connection with the foregoing shall be paid by the Indemnifying Party. Notwithstanding the foregoing, in connection with any settlement negotiated by an Indemnifying Party, no Indemnified Party shall be required by an Indemnifying Party to (x) enter into any settlement that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect of such claim or litigation, (y) enter into any settlement that attributes by its terms liability to the Indemnified Party or (z) consent to the entry of any judgment that does not include as a term thereof a full dismissal of the litigation or proceeding with prejudice. No failure by an Indemnifying Party to acknowledge in writing its indemnification obligations under this Article VIII shall relieve it of such obligations to the extent they exist. If an Indemnified Party is entitled to indemnification against a Third Party Claim, and the Indemnifying Party fails to accept the defense of a Third Party Claim tendered pursuant to this Section 8.5, or if, in accordance with the foregoing, the Indemnifying Party shall lose its right to contest, defend, litigate and settle such a Third Party Claim, the Indemnified Party shall have the right, without prejudice to its right of indemnification hereunder, in its discretion exercised in good faith and upon the advice of counsel, to contest, defend and litigate such Third Party Claim, and may settle such Third Party Claim, either before or after the initiation of litigation, at such time and upon such terms as the Indemnified Party deems fair and reasonable, provided that at least ten (10) days prior to any such settlement, written notice of its intention to settle is given to the Indemnifying Party. If, pursuant to this Section 8.5, the Indemnified Party so defends or settles a Third Party Claim, for which it is entitled to indemnification hereunder, as hereinabove provided, the Indemnified Party shall be reimbursed by the Indemnifying Party for the reasonable attorneys' fees and other expenses of defending the Third Party claim which is incurred from time to time, forthwith following the presentation to the Indemnifying Party of itemized bills for said attorneys' fees and other expenses. 8.6 Expiration. The liability of the parties to indemnify each other under this Article VIII shall terminate and expire thirty (30) months after the Closing Date, except for liability with respect to claims for indemnity submitted prior to the end of such 30-month period, as to which liability of the parties hereunder shall survive and continue without limit until final resolution thereof. ARTICLE IX Effect of Termination/Proceeding 9.1 Right to Terminate. This Agreement and the transaction contemplated hereby may be terminated at any time prior to the Closing by prompt notice given in accordance with Section 11.3: (a) by the mutual written consent of Purchaser and Seller; or (b) by either of such parties if the Closing shall not have occurred at or before 11:59 p.m. on the Closing Date; provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any party whose failure to fulfill any material obligation under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or prior to the aforesaid date. 9.2 Remedies. In the event of a breach of this Agreement, the non-breaching party shall not be limited to the remedy of termination of this Agreement, but shall be entitled to pursue all available legal and equitable rights and remedies, and shall be entitled to recover all of its reasonable costs and expenses incurred in pursuing them (including, without limitation, reasonable attorneys' fees); provided, however, that the parties agree that Seller's remedies for Purchaser's default hereunder would be difficult, if not impossible, to determine. Therefore, Seller's damages on Purchaser's default shall in all events be limited to Seller's retention of the Deposit Monies, which are agreed to be Seller's liquidated damages hereunder. 9.3 Injunctive Relief. Seller specifically recognizes that any breach of the provisions of this Agreement will cause irreparable injury to Purchaser and that actual damages may be difficult to ascertain, and in any event, may be inadequate. Accordingly (and without limiting the availability of legal or equitable, including injunctive, remedies under any other provisions of this Agreement), Seller agrees that in the event of any such breach, Purchaser shall be entitled to equitable relief, including the specific performance of Seller's obligations hereunder, and such other legal and equitable remedies that may be available. ARTICLE X Post Closing and Business Matters 10.1 Safes and Safe Deposit Boxes. Immediately after the Closing, Seller shall send written notice to guests or tenants or other persons who have valuables or other items in Seller's safe deposit boxes, advising of the sale of the Business to Purchaser and requesting immediate removal of the contents thereof or the removal thereof and concurrent re-deposit of such contents pursuant to new safe deposit agreements with Purchaser. Seller, at its own expense, shall have a representative present when the boxes are opened, in the presence of a representative of Purchaser. Purchaser shall not be liable or responsible for any items claimed to have been in such boxes unless such items are so removed and re-deposited, and Seller agrees to indemnify and hold harmless Purchaser and its Indemnitees from and against such Liabilities. 10.2 Inspection of Records. Seller and Purchaser shall each retain and make their respective books and records (including work papers in the possession of their respective accountants) available for inspection by the other party, or by its duly accredited representatives, for reasonable business purposes at all reasonable times during normal business hours, for a five year period after the Closing Date, with respect to all transactions occurring prior to and those relating to the Closing, the historical financial condition, assets, liabilities, results of operations and cash flows of Seller. As used in this Section 10.2, the right of inspection includes the right to make extracts or copies. The representatives of a party inspecting the records of the other party shall be reasonably satisfactory to the other party. 10.3 Certain Assignments. Any other provision of this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to transfer or assign, or a transfer or assignment of, any claim, contract, lease, Permit, Environmental Permit, commitment, sales order or purchase order, or any benefit arising thereunder or resulting therefrom, if an attempt at transfer or assignment thereof without the consent required or necessary for such assignment, would constitute a breach thereof or in any way adversely affect the rights of Purchaser or Seller thereunder. If such a consent or agreement to transfer or assign is not obtained for any reason, Purchaser and Seller shall cooperate in any arrangement Purchaser may reasonably request to provide for Purchaser the benefits under such claim, contract, lease, Permit, Environmental Permit, commitment or order. 10.4 Employees. Purchaser shall not be obligated to offer employment to any employee of Seller, but Purchaser shall have the right to employ employees of Seller as of the Closing Date, on terms and conditions established by Purchaser in its sole discretion. For a period of one year commencing on the Closing Date, Seller shall not take any actions which are calculated to persuade any salaried, technical or professional employees, representatives or agents of Purchaser to terminate their association with Purchaser. 10.5 Sales and Transfer Taxes and Fees. Seller shall pay when due from assets other than the Purchased Assets, all recording fees for documents necessary to clear title as required hereunder, personal property title application fees, real property transfer taxes and fees and all other taxes and fees on transfer of the Purchased Assets arising by virtue of the sale of the Purchased Assets to Purchaser, regardless of whether the liability for said taxes or fees is imposed by law upon Seller or upon Purchaser. Purchaser shall be responsible for any sales tax due as a result of the sale of the Purchased Assets hereunder. Seller shall nevertheless remain solely liable for all sales, income and other taxes incurred in the operation of the Business through the Cut-Off Time. 10.6 Further Assurances. The parties shall execute such further documents, and perform such further acts, as may be necessary to transfer and convey the Purchased Assets to Purchaser, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transactions contemplated hereby. 10.7 Regulatory Matters. Several of Purchaser's affiliates ("Players Entities") are licensed by and otherwise subject to the authority of various casino and gaming regulatory agencies including, but without limitation, gaming regulators in Illinois, Kentucky, Louisiana, Missouri, Nevada and New Jersey ("Gaming Regulators"). Purchaser has adopted a regulatory compliance policy, and Seller, for itself and its successors and permitted assigns, agrees to provide Purchaser with such documentation, information and assurances regarding Seller and its general partners as may be necessary in order for Purchaser to comply with Purchaser's regulatory compliance policy and with the request of any Gaming Regulators. The foregoing shall be a material obligation of Seller hereunder. 10.8 Brokerage Matters. Seller agrees that at the Closing it shall pay to Seller's Agent a commission with respect to the transaction contemplated hereby. Each of the parties hereto represents and warrants to the other that, except as provided in the immediately preceding sentence, neither such party nor any officer, director or agent of such party has entered into any agreement for the payment of any brokerage or finder's fees, commissions, compensation or expenses to any person, firm or corporation in connection with the transactions contemplated by this Agreement, and each agrees to indemnify and hold and save the other or others harmless from any such fees, commissions, compensation or expenses (including reasonable attorneys' fees and other expenses incurred in connection with any such claim which may be due or asserted by reason of any such agreement or purported agreement by the indemnifying party). 10.9 Costs of Parties. (a) Purchaser shall be responsible for the cost of Purchaser's title abstract, its commitment for title insurance and ALTA owner's title policy (provided that Seller shall promptly provide to Purchaser a copy of any previous title work on the Real Estate), the cost of any survey or environmental site assessment of the Real Estate, if any, and all recording fees and charges for the conveyance instruments contemplated under Article VII hereof. Purchaser shall be responsible for all direct costs of its due diligence review under Section 5.5 hereof. (b) Seller shall be solely responsible, at its own cost, for compliance with any applicable bulk transfer or similar law, with ERISA and any other employee welfare or protection laws, as well as any other employment laws. (c) Each party shall pay its own legal, accounting and consulting fees relating to this transaction as contemplated by Section 11.4 hereof. 10.10 Employees. (a) Seller hereby represents and warrants that Seller has 136 full-time active employees as of the date of this Agreement. Seller covenants and agrees that it will not terminate employment of any such full-time active employees between the date hereof and the Closing Date, except in the ordinary course of the Business, for cause. Purchaser acknowledges that some of Seller's employees may also quit their employment between the date of this Agreement and the Closing Date. Seller agrees to use its good faith efforts to retain its employees at the Hotel. Seller acknowledges that Purchaser shall have no liability or obligation relating to Seller's employer-employee relationship with the employees of the Business, and Seller agrees to take all appropriate and legally necessary actions in connection therewith. (b) Except as specifically provided under this Section 10.10, Purchaser shall have no obligation or liability to hire or employ, from and after the Closing Date, any employees of Seller. All compensation, obligations, liabilities and claims (including under the Fair Labor Standards Act or the WARN Act (as herein defined)) due to or claimed by an employee of Seller, arising or accruing prior to or by virtue of Closing (whether under an employment contract or otherwise; and including severance or other obligations), shall be the responsibility of Seller. Purchaser shall not be responsible for any such liability or obligations, and Seller agrees to indemnify and hold Purchaser and its Affiliates harmless from and against same. The foregoing indemnity shall include, without limitation, all required tax withholdings and contributions to or premiums for any other insurance or benefit programs or plans, to the extent arising or accruing prior to Closing. (c) Purchaser shall have the right, as part of its due diligence review under Section 5.5 hereof, to review all of Seller's employment records and personnel files. From and after November 17, 1997 (or December 2, 1997 if Purchaser elects to extend the date for satisfaction of the conditions in Section 6.2(g) and for 6.2(i) hereof) (the "Contact Date"), Purchaser shall also have the right to conduct a "jobs fair" at the Hotel, and to meet with and interview all of Seller's employees. Purchaser shall not contact Seller's employees in connection with this transaction prior to the Contact Date, except in connection with (and as necessary to perform) Purchaser's due diligence review under Section 5.5 hereof. (d) After the Contact Date but at least three (3) business days before the Closing Date, Purchaser shall identify to Seller those employees to whom it does not intend to offer employment at the Business. Such employees are referred to herein as "Non-hired Employees". All other employees are referred to herein as "Rehired Employees". (e) Purchaser agrees, based upon Seller's representation, warranty and covenant set forth in subsection (a) hereof, that the number of Non-hired Employees shall not exceed one-third of the total number of Seller's full-time active employees immediately prior to the Closing Date. Such representation, warranty and covenant of Seller are material obligations of Seller hereunder, and Purchaser has relied thereon in entering into this Agreement, specifically including, without limitation, this Section 10.10 hereof. Purchaser shall, from and after the closing Date, offer employment to the Rehired Employees at such pay and on such other terms not materially less favorable to such Rehired Employees than those provided by Seller immediately prior to Closing. The covenants of Purchaser in this subsection (e) are material obligations of Purchaser hereunder and Seller has relied thereon in entering into this Agreement, specifically including, without limitation, this Section 10.10 hereof. (f) In reliance on Seller's representation, warranty and covenant set forth in subsection (a) hereof, Purchaser shall be responsible for any liability under the Workers Adjustment and Retraining Notification Act, 29 U.S.C. 2100 et seq (the "WARN Act") that may be caused by terminations by Purchaser of Rehired Employees from and after the Closing Date, and Purchaser shall indemnify and hold Seller harmless from and against any liability under the WARN Act arising as a result thereof. 10.11 Other Matters. Unless otherwise agreed by Seller and Purchaser, Seller shall be solely responsible for all severance benefits, incentive pay and vacation pay, if any, for all employees, and shall provide all employees with severance benefits, and the vacation pay they may have earned, the pro rata part of the vacation pay they would have earned upon the anniversary date of their employment, if any, as of Closing. 10.12 Names and Marks. From and after Closing, Seller shall not use any of the names, marks or other intellectual property described in Section 1.2(f) hereof. ARTICLE XI Miscellaneous 11.1 Confidentiality. Purchaser and Seller hereby agree to maintain the confidentiality, other than to their (or their Affiliate's) officers, employees, advisors, agents, and consultants or as required by law, rule or regulation, of (a) all information that is exchanged that is not public information, (b) the fact that this Agreement has been entered into and the terms and conditions of this Agreement, and (c) the results of the inspections and tests that are done at the Hotel in connection with Purchaser's due diligence. "Public information" shall mean information that was in the public domain or independently received from a third party with the right to disclose such information, information that was previously known to a party before entering into this Agreement, or information that is required to be disclosed by law. 11.2 Publicity. Except as otherwise required by law, press releases concerning this transaction shall be made only with the prior agreement of the Seller and Purchaser, and no such press releases or other publicity shall state the amount of the Purchase Price. Purchaser agrees not to discuss the transaction contemplated by this Agreement with Seller's employees before the Contact Date unless Seller coordinates such discussion. 11.3 Notices. All notices required or permitted to be given hereunder shall be in writing and may be delivered by hand, by facsimile, by nationally recognized private courier, or by United States mail. Notices delivered by mail shall be deemed given three (3) business days after being deposited in the United States mail, postage prepaid, registered or certified mail. Notices delivered by hand or by nationally recognized private carrier shall be deemed given on the first business day following receipt; notices delivered by facsimile shall be deemed given on the day of receipt; provided, however, that a notice delivered by facsimile shall only be effective if such notice is also delivered by hand, or deposited in the United States mail, postage prepaid, registered or certified mail, on or before two (2) business days after its delivery by facsimile. All notices shall be addressed as follows: If to Seller Addressed to Lakeshore Hotels, Ltd. 505 N. Lakeshore Drive Lake Charles, LA 70601 Attention: Ted W. Price, Jr. Telecopier: 318-491-9938 with a copy to John R. Pohorelsky, Esq. Scofield, Gerard, Veron, Singletary & Pohorelsky P.O. Drawer 3028 Lake Charles, LA 70602 Telecopier: 318-436-0306 If to Purchaser Addressed to Players International, Inc. 1300 Atlantic Avenue Suite 800 Atlantic City, NJ 08401 Attention: Patrick Madamba, Jr., Vice President & General Counsel Telecopier: 609-449-7765 with a copy to Daniel S. Ojserkis, Esq. Horn, Goldberg, Gorny, Plackter, Weiss & Perskie, P.A. 1300 Atlantic Ave., Suite 500 Atlantic City, NJ 08401 Telecopier: 609-348-6834 with another copy to Charles D. Viccellio, Esquire Stockwell, Sievert, Viccellio, Clements & Shaddock L.L.P. One Lakeside Plaza, 4th Floor Lake Charles, Louisiana 70601 Telecopier: 318-493-7210 and/or to such other respective addresses and/or addressees as may be designated by notice given in accordance with the provisions of this Section 11.3. Counsel for either party may give notice as provided for hereunder on behalf of such party. 11.4 Expenses. Each party hereto shall bear all fees and expenses incurred by such party in connection with, relating to or arising out of the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, attorneys', accountants' and other professional fees and expenses. 11.5 Entire Agreement. This Agreement and the instruments to be delivered by the parties pursuant to the provisions hereof constitute the entire agreement between the parties. Each exhibit, and the Disclosure Schedule, shall be considered incorporated into this Agreement. Any amendments, or alternative or supplementary provisions to this Agreement, must be made in writing and duly executed by an authorized representative or agent of each of the parties hereto. 11.6 Survival; Non-Waiver. All representations and warranties shall survive the Closing regardless of any investigation or lack of investigation by any of the parties hereto. The failure in any one or more instances of a party to insist upon performance of any of the terms, covenants or conditions of this Agreement, to exercise any right or privilege in this Agreement conferred, or the waiver by said party of any breach of any of the terms, covenants or conditions of this Agreement, shall not be construed as a subsequent waiver of any such terms, covenants, conditions, right or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. 11.7 Applicable Law. This Agreement shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the internal laws of the State of Louisiana applicable to contracts made in that State. 11.8 Binding Effect; Benefit; Relationship. This Agreement shall inure to the benefit of and be binding upon the parties hereto, and their successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties hereto, and their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. The relationship of Seller and Purchaser is strictly that of vendor and vendee, and nothing in this Agreement, express or implied, shall be deemed or construed to make Seller and Purchaser partners, joint venturers, or principal and agent in the conduct of their respective businesses. 11.9 Assignability. This Agreement shall not be assignable by either party without the prior written consent of the other party, except that at or prior to the Closing Purchaser may assign its rights and delegate its duties under this Agreement to one or more Affiliate entities and may assign its rights under this Agreement to its lenders for collateral security purposes, and after the Closing Purchaser may assign its rights and delegate its duties under this Agreement to any third party. 11.10 Amendments. This Agreement shall not be modified or amended except pursuant to an instrument in writing executed and delivered on behalf of each of the parties hereto. 11.11 Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. 11.12 Construction. This Agreement shall not be construed more strictly against one party than against the other, merely by virtue of the fact that it may have been prepared primarily by counsel for one of the parties, it being recognized that both Purchaser and Seller have contributed substantially and materially to the preparation of this Agreement. 11.13 Letter of Intent. By their execution of this Asset Purchase Agreement, Seller and Purchaser hereby waive and release each other from any default or claim of default they may have against the other under the Letter of Intent between Seller and Purchaser dated August 21, 1997, as amended. SELLER: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Lake Charles, Louisiana on this 30th day of September, 1997. WITNESSES: LAKESHORE HOTELS, LTD., a Louisiana partnership in commendam By: Name: Title: _ NOTARY PUBLIC PURCHASER: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Lake Charles, Louisiana on this 30th day of September, 1997. WITNESSES: PLAYERS INTERNATIONAL, INC., a Nevada corporation By: Name: Title: NOTARY PUBLIC JOINDER The undersigned hereby join in the execution of this Agreement, simultaneously with Seller, to evidence their agreement to be bound by the provisions of Section 1.6 hereof: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Lake Charles, Louisiana on this 30th day of September, 1997. WITNESS (as to all signatures) ___________________________________ ______________________________ Ted W. Price, Sr. WITNESS (as to all signatures) ___________________________________ ______________________________ Ted W. Price, Jr. ______________________________ Robert W. Price, Sr. ______________________________ Robert W. Price, Jr. _ Notary Public SCHEDULE 1.2(c) Description of Real Estate That certain tract or parcel of land situated in Section 31, Township 9 South, Range 8 West, Calcasieu Parish, Louisiana and being more particularly described as follows to wit; For a point of commencement, begin at the Southeast corner of Block 30 of Thomas Bilbo and Ann Lawrence subdivision in the City of Lake Charles, Louisiana; Thence West along the North right-of-way line of Lawrence Street and along the West prolongation of the North right-of-way line of Lawrence Street 450.0 feet to a point in the West right-of-way line of U.S. Highway No. 90-business route and/or the West right- of-way line of Orange Street (abandoned) projected South; Thence West 60.0 feet along the agreement boundary line between the State of Louisiana and the J.A. Bel Estate; Thence North 57 50' 00" west 451.25 feet along the said agreement line to the point of beginning of the tract herein described: Thence North 31 56' 05" East 250.94 feet (Call - North 32 10' 00" East 249.49 feet) to a point 10 feet West of the West line of block 34 of Thomas Bilbo and Ann Lawrence subdivision; Thence North 00 10' 55" West 148.03 feet (Call - due North 148.03 feet); Thence North 89 49' 05" East 80.0 feet (Call - due East 80.0 feet); Thence North 00 10' 55" West 96.6 feet (Call - North 96.6 feet) more or less, to a point on the South right-of-way line; of U.S. Highway No. 90-business route; Thence Westerly on the said right-of-way line along the arc of a curve having a radius of 355.0 feet (the chord of which bears North 76 54' 55" West and measures 47.68 feet), (the chord of which has a call of North 76 44' 00" West), a distance of 47.72 feet; Thence North 83 45' 55" West 98.46 feet (Call - North 83 35' 00" West 98.46 feet) along said South right-of-way line; Thence North 80 34' 29" West 556.94 feet (Call - North 80 35' 00" West 560.4 feet) along said South right-of-way line; Thence South 06 13' 00" West 337.08 feet (Call - South 06 10' 00" West 337.00 feet) to the agreement boundary line between the State of Louisiana and the J.A. Bel Estate; Thence South 80 14' 37" East 201.0 feet (Call - South 80 35' 00" East 200.00 feet) along said agreement line; Thence South 57 50' 00" East 378.25 feet along said agreement line to the point of commencement. Containing 5.80 acres, more or less. SCHEDULE 1.3(g) Other Excluded Assets NONE. SCHEDULE 1.4(a) Permitted Exceptions 1. The effects of a Boundary Agreement between Earl K. Long, Governor of the State of Louisiana, et al and John Albert Bel, et al. filed July 26, 1951, recorded in Conveyance Book 498, Page 276. 2. Servitude from Lakeshore Hotels, Ltd. to Gulf States Utilities Company dated September 10, 1981, recorded in Conveyance Book 1643, Page 605. 3. Right of Way from Lake Charles Hilton to South Central Bell Telephone Company dated October 27, 1981, recorded in Conveyance Book 1656, Page 138. 4. Servitude from Lakeshore Hotels, Ltd. to the City of Lake Charles dated August 2, 1996, recorded in Conveyance Book 2571, Page 372. 5. Ad valorem property taxes for the current tax year, to the extent not yet due and payable. 6. Such encrouchments as may be reflected on Purchaser's title survey for the Real Estate, so long as the same do not interfere with Purchaser's intended use or occupancy of the Real Estate. DISCLOSURE SCHEDULE Attached to and Made Part of Asset Purchase Agreement between Lakeshore Hotels, Ltd., as Seller, and Players Internati onal, Inc., its assignee or designee, as Purchaser 4.3(b) Title Exceptions (other than Permitted Liens) - NONE - Equipment Leases & Installment Payment Agreements -NONE, except as disclosed in Schedule of Contracts attached hereto (referenced under Section 4.3(k) hereof) 4.3(g) Financial Statements of Seller (delivered separately) - Audited Financial Report of Lakeshore Hotels, Ltd. for 1996 and 1995 prepared by McElroy, Quirk and Birch - Audited Financial Report of Lakeshore Hotels, Ltd. for 1995 and 1994 prepared by McElroy, Quirk and Birch - Audited Financial Report of Lakeshore Hotels, Ltd. for 1994 and 1993 prepared by McElroy, Quirk and Birch - Audited Financial Report of Lakeshore Hotels, Ltd. for 1993 and 1992 prepared by McElroy, Quirk and Birch 4.3(h) Interim Financial Statements - Seller-prepared Profit and Loss Statement for 1/1/97 through 7/31/97 4.3(i) Permits 1. State Dept. of Revenue and Taxation, Office of Alcoholic Beverage Control Permit to Sell Alcoholic Beverages; expires November 30, 1997; Serial No. 226928, Permit No. 10000052 (Issued to: Hotel Management & Development, Inc.; Holiday Inn Lake Charles) 2. City of Lake Charles Permit to Sell Alcoholic Beverages; expires 12/31/97; No. 2881, Account No. 4426 Class A Retail Dealer Liquor (Issued to: Hotel Management & Development, Inc.; Holiday Inn Lake Charles) 3. City of Lake Charles Permit to Sell Alcoholic Beverages; expires 12/31/97; No. 2869 Account No. 4226 Class A Retail Dealer Beer (Issued to: Hotel Management & Development, Inc.; Holiday Inn Lake Charles) 4. State Department of Health and Hospitals, Office of Public Health Permit to Operate Any Permanent Bar/Lounge; expires 6/30/98; Permit No. 10-1522, Class 7, Operations Type 226 (Issued to: Lakeshore Hotels, Ltd. - Riverboat Magic) (Last Inspection Report 7/25/97) 5. State Department of Health and Hospitals, Office of Public Health Permit to Operate Any Permanent Food Service Establishment; expires 6/30/98; Permit No. 10-1522, Class 7, Operations Type 225 (Issued to Lakeshore Hotels, Ltd. - Riverboat Magic) (Last Inspection Report 7/25/97) 6. City of Lake Charles Occupational License Tax - proof of payment for Restaurant; Lic. Tax No. 2413 (Issued to: Hotel Management & Development, Inc.; Holiday Inn-Lake Charles) 7. City of Lake Charles Occupational License Tax - proof of payment for Motel; Lic. Tax No. 2789 (Issued to: Hotel Management & Development, Inc.; Holiday Inn-Lake Charles) 8. U.S. Army Corps of Engineers Permit; dated March 13, 1996 (Issued to: Lakeshore Hotels, Ltd.) 4.3(k) Contracts, Leases, and Agreements (Schedule attached hereto) 4.3(m) Commissions or Referral Fees -10% Travel Agent Commissions paid to Holiday Hospitality -Credit Card Commissions: American Express 2.8% Diners Club 2.8% Visa 1.5% MasterCard 1.6% Discover 1.7% 4.3(n) Employees (List and Payscale attached hereto) 4.3(o) Litigation, Proceedings, Governmental Investigations 1. Katherine T. Hoffman et al. v. Hotel Management & Development, Inc, Ted W. Price, Sr., Ted W. Price, Jr., Robert W. Price, Sr., and Robert W. Price, Jr., Case No. 87-52127 2. Rose Perkins - SETTLED BUT INSUROR IN RECEIVERSHIP 3. Ida Antoine - IN LITIGATION 4. Rose Gallien - IN LITIGATION 5. Additional General Liability, Workers Compensation and other Claims as Shown on the Attached Schedules. 4.3(r) Notices of Violation - NONE - 4.3(s) Notices of Violation (Environmental) - NONE - Environmental Permits - NONE - SCHEDULE OF CONTRACTS, LEASES, AGREEMENTS 1. (a) Franchise License Agreement dated 4/14/92 for Holiday Inns franchise (b) General Data Agreement dated 4/30/92 for Holidex 2000 Reservation System Each will terminate and be replaced in connection with execution of New License Agreement by Purchaser and Holiday Inns. 2. Furniture, Fixtures, and Equipment Lease - effective 10/1/90 between Seller and the Individuals _ Will terminate prior to Closing as provided under Section 1.6 hereof. 3. Westinghouse Elevator Co. Hydraulic Elevator Preventive Maintenance Agreement Terminable on at least 90 days' written notice prior to 12/1 of each year Assignable on consent of Westinghouse after notice 4. Auto-Chlor System Equipment Agreement (laundry) Dated 2/9/96 Lease of 3 pieces of equipment and agreement for provision of cleaning services Month to month Terminable on at least 30 days' written notice and must return equipment Assignable on prior written consent of Auto-Chlor 5. Auto-Chlor System Equipment Agreement (housekeeping) Dated 2/9/96 Lease of 1 piece of equipment, agreement for provision of cleaning agents Month to month Terminable on at least 30 days' written notice and must return equipment Assignable on prior written consent of Auto-Chlor 6. Auto-Chlor System Dishwashing Machine Lease Agreement Dated 2/30(?)/97 Terminable on at least 60 days' written notice prior to anniversary date. Valid termination if notice can be given by 12/31/97 Assignability not addressed 7. Coin Operated Machine and Space Lease dated 1/22/92 between Jackpot Novelty, Inc. and Hotel Management & Development, Inc. TERMINATED 11/8/96: month-to-month only To be fully terminated and release obtained prior to Closing 8. (a) Management Agreement dated _______ with Hotel Management & Development, Inc. (b) Agreement dated 8/18/93 between Lakeshore Hotels ("LSH") and Hotel Management and Development ("HMD") Contracts with Affiliate of Seller Each to be fully terminated and release obtained prior to Closing 9. Cellular One Mobile Telephone Agreement REVERSE SIDE NOT PROVIDED Billing activation date 6/29/94 - monthly billing Terminable if cancelled thirty (30) days before "contract renewal date" or automatically renews for one (1) year $200 cancellation fee if not cancelled properly 10. Waste Management of Lake Charles Service Agreement dated 6/1/92 Terminable on at least sixty (60) days prior written notice to 6/5/98 If not terminated properly, liquidated damages payable (max: monthly fee x 6) Trash bin must be returned Assignability not addressed 11. Communications Services, Inc. - Bulk Rate Agreement dated 2/1/97 (Cable TV) Cable TV for hotel Liquidated damages References "Access Agreement" but we do not have this Not signed by Communication Services Terminable only with cause - expires 1/1/99 Assignability not addressed 12. Communications Services, Inc. Service Agreement dated May 5, 1997 (Background Music) Expires after 36 mos. Terminable with at least ninety (90) days prior written notice to expiration date - will automatically renew if no notice Assignability not addressed Must return equipment 13. Satellite Programming License (HBO, Showtime) with World Cinema, Inc. Not terminable - appears to expire three (3) years after first day of Exhibition of programming (Unknown) Assignable with written consent of World Cinema 14. Plant Lease dated 6/30/96 with Kuntry's Interior Landscaping Terminable on 30 days written notice, but may have 1-year minimum Assignable on notice to and consent of Kuntry's 15. Tel-Comm Communications Consultants, Inc. (Telephone Traffic Aggregator; Contract dated 8/7/96) 36-month intial term No termination or assignment rights 16. XETA Corp. (Call accounting equipment/software; Contract dated 2/20/97) 1 year term No assignment or termination rights NO COPIES PROVIDED OF THE FOLLOWING: 17. Standard Coffee (Coffee urns; No written agreement exists) 18. Southwest Bar Needs, Inc. (Orange juice machine; No written agreement exists) 19. Waffles of Louisiana, Inc. (Waffle irons; No written agreement exists) 20. Eco-Lab (Pest Control; Terminable on 30 days written notice) 21. Travel Agent Commissions (10% commissions paid to Holiday Hospitality) 22. Mercury Cellular (Pagers; No written agreement exists) 23. Techtronics (Service Agreement for 5 copy machines; terminable on 90 days prior written notice) 24. CK & Associates (Engineering/Environmental Consultants for Grease Trap; No written agreement exists) 25. Brian Ezell Services (Telephone Maintenance Services; No written agreement exists) 26. Bell South, Inc. (Pay phones on premises; No written agreement exists) 27. General Vending & Sales, Inc. (7 vending machines; No written agreement exists) 28. Lake Charles Coca-Cola Bottling, Inc. (9 soft-drink machines; No written agreement exists) EX-10 5 AC-145324/1 11/13/9711/13/97 DSO/kg AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT is made as of November ___, 1997, between LAKESHORE HOTELS, LTD., a Louisiana limited partnership in commendam ("Seller"), and PLAYERS INTERNATIONAL, INC., a Nevada corporation, its designees or assignees ("Purchaser"). R E C I T A L S A. Seller and Purchaser are parties to a certain Asset Purchase Agreement dated as of September 30, 1997 (the "Original Agreement"); capitalized terms not defined herein are used as defined in the Original Agreement, unless the context clearly requires otherwise. B. Based upon the PIP prepared by Holiday Inns, Seller and Purchaser anticipate that the Holiday Inn Costs will far exceed $1,500,000. Notwithstanding the termination rights available to Purchaser under the provisions of Section 3.6(a) of the Original Agreement as a result thereof, Purchaser desires to complete the purchase of the Purchased Assets without performing the PIP required by Holiday Inns. Purchaser will not be able to obtain a New License Agreement without performing such PIP work as required by Holiday Inns; and without such New License Agreement, Purchaser cannot obtain the financing as originally intended. B. Purchaser has made arrangements for alternate financing, but such alternate financing will require renewed, supplemental or different consents and approvals before it can be implemented. C. In order to accommodate Purchaser's efforts to obtain such alternate financing, Seller and Purchaser desire to modify the Original Agreement as hereinafter set forth. A G R E E M E N T S Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties agree as follows: 1. Amendment re: Conditions. Section 6.2 of the Original Agreement is hereby deleted entirely, and replaced with the following: 6.2 Conditions to Purchaser's Obligations. The obligation of Purchaser to consummate the transaction contemplated hereby is subject to the fulfillment of all of the following conditions on or prior to the Closing Date, upon the non-fulfillment of any of which this Agreement may, at Purchaser's option, be terminated pursuant to and with the effect set forth in Article IX: (a) Each and every representation and warranty made by Seller shall have been true and correct when made and shall be true and correct in all material respects as if originally made on and as of the Closing Date. (b) All obligations of Seller to be performed hereunder through, and including on, the Closing Date (including, without limitation, all obligations which Seller would be required to perform at the Closing if the transaction contemplated hereby were consummated) shall have been performed. (c) All of the Consents shall have been obtained. (d) No suit, proceeding or investigation shall have been commenced or threatened by any governmental authority or private person(s), against any party (including without limitation Seller and any of its affiliates, or any partners, shareholders, officers or members of any of them), on any grounds, the intent or likely effect of which (exclusively or among other things) is to restrain, enjoin or hinder, delay or to seek material damages on account of, the consummation of the transaction contemplated hereby, or to challenge any of the terms or provisions of this Agreement, or arising out of this Agreement or the transactions contemplated hereby. (e) On or prior to December 15November 17, 1997, Purchaser shall have received all required consents, licenses and approvals of the transactions contemplated hereunder (including without limitation, Purchaser's financing thereof, and any changes to existing financing to permit same) from the gaming and other regulatory authorities having jurisdiction. (f) Intentionally Omitted. (g) On or prior to December 15November 17, 1997, Purchaser shall have received the prior written approval of Wells Fargo Bank, N.A. and the Trustee for the holders of Purchaser's debt securities to the transactions contemplated hereby (including without limitation, Purchaser's financing thereof, and any changes to existing financing to permit same), all in form and substance satisfactory to Purchaser, in its sole discretion. (h) On or prior to November 2017, 1997, Purchaser shall have obtained a commitment from Wells Fargo Bank, N.A. ("Wells Fargo") to modify Purchaser's existing line of credit with Wells Fargo to includemortgage financing for the transactions contemplated hereby, on terms acceptable to Purchaser, in its sole discretion, including without limitation total borrowing availability under such line of credit of Seventy Million Dollars ($70,000,000)in the amount of at least seventy percent (70%) of the aggregate total of the Purchase Price, Holiday Inn Costs, Purchaser's costs of making Closing hereunder and Purchaser's other expenses under the Letter of Intent and this Agreement. (i) Intentionally OmittedOn or prior to November 17, 1997, Purchaser shall have entered into a New License Agreement and all related agreements, or agreed with Holiday Inns upon the terms thereof, in either case on terms acceptable to Purchaser, in its sole discretion, as provided under Section 3.6 hereof and Purchaser shall not have terminated this Agreement based on the aggregate total amount of the Holiday Inn Costs, as provided under Section 3.6 hereof. (j) On or before November 20, 1997October 16, 1997, Purchaser's Board of Directors shall have approved this Agreement and the transactions contemplated hereby (including without limitation, Purchaser's financing thereof as described in subsection (h) hereof). (k) Prior to Closing, Purchaser shall not have terminated this Agreement: (A) during the Inspection Period, as provided under Section 5.5 hereof; or (B) by virtue of a casualty, as provided under Section 6.3 hereof; or (C) by virtue of a taking, as provided under Section 6.4 hereof. If, despite Purchaser's good faith efforts, either of the conditions set forth in subsections (g) or (i) hereof has not been satisfied by November 17, 1997, the Purchaser may, at its option, extend the date for satisfaction thereof, as described above, to December 2, 1997, by written notice to Seller. If Purchaser so elects to extend such date for either or both of such conditions, then the Closing Date shall automatically be extended to December 17, 1997 for all purposes hereunder. 2. Amendment re: Closing. Section 3.2 of the Original Agreement is hereby deleted in its entirety and replaced with the following: 3.2 Time and Place of Closing. The transaction contemplated by this Agreement shall be consummated (the "Closing") at 10:00 a.m. at the offices of Stockwell, Sievert, Shaddock & Viccellio, One Lakeside Plaza, 4th Floor, Lake Charles, Louisiana 70601 on December 18, 1997December 2, 1997 or on such other date, or at such other time or place, as shall be mutually agreed upon by Seller and Purchaser. Notwithstanding the foregoing, if Purchaser either party is unable, despite Purchaser'ssuch party's good faith efforts, to complete Closing by such date and time because a condition contained in Wells Fargo's financing commitment (as described in Section 6.2(h) hereof) has not yet been satisfied, and such financing cannot therefore be consummated, then Purchasersuch party may extend the date for Closing to January 6, 1998December 17, 1997, upon written notice to the other party hereunder, on or prior to the original date for Closing. The foregoing extension right is available only with respect to the originally scheduled Closing, and any further extension of the date for Closing may only be made upon the mutual agreement of the parties. The date (or extended date, if applicable) on which the Closing occurs in accordance with the preceding sentences, is referred to in this Agreement as the "Closing Date." The Closing shall be deemed to be effective as of 12:01 a.m. on the Closing Date at Lake Charles, Louisiana. 3. Amendment re: Allocation. The date for Purchaser to submit its proposed allocation of the Purchase Price to Seller under Section 3.5 of the Original Agreement is hereby reset and extended to December 2, 1997. 4. Amendment re: Franchise. (a) In consideration of Seller's agreements hereunder, Purchaser hereby waives its right under the final sentence of Section 3.6(a) of the Original Agreement, to terminate the Original Agreement based on the amount of the Holiday Inn Costs. (b) The final sentence of Section 3.6(b) of the Original Agreement is hereby amended to read as follows: Purchaser shall not be liable for payment of the Termination Fee if Purchaser does not complete Closing hereunder, unless: (i) Closing does not occur because of Purchaser's default hereunder; (ii) Seller has not defaulted hereunder; and (iii) the Termination Fee becomes payable (notwithstanding that Seller continues to own and operate the Business) because of an act of Purchaser, and through no act of Seller. 5. Amendment re: Return of Additional Deposit. The penultimate sentence of Section 3.3(b) of the Original Agreement is hereby deleted, and replaced with the following: The Additional Deposit shall only be refunded to Purchaser (x) on default by Seller, or (y) if the condition on Purchaser's obligations regarding Purchaser's ability to obtain financing is not satisfied as provided under Section 6.2(h) hereof, or (z) if the condition regarding Purchaser's Board of Directors approvalHoliday Inn franchise matters under Section 6.2(ji) hereof is not satisfied. 6. Amendment re: Employee Contact. Purchaser and Seller agree that the Contact Date under Section 10.10(c) of the Original Agreement shall in all events and for all purposes be: (i) for salaried employees, December 2, 1997; and (ii) for hourly employees, the earlier of December 15, 1997, or such earlier date by which Purchaser shall have satisfied or waived the conditions set forth in Sections 6.2(e) and 6.2(g) hereof. 7. Rooms; New Year's Arrangements. There is hereby inserted in the Original Agreement a new Section 5.9, as follows: 5.9 Rooms; New Year's Arrangements (a) Seller acknowledges Purchaser's need to have extensive availability of rooms and hotel services for Purchaser's gaming patrons for the New Year's Eve/New Year's Day holiday. Therefore, in consideration of Purchaser's agreements hereunder, Seller hereby agrees to reserve and set aside for the exclusive use and occupancy of Purchaser and its patrons: (i) that number of hotel rooms at the Hotel for the room nights shown on Exhibit "A" hereto (the "Reserved Rooms"); and (ii) all of Seller's banquet, ballroom and meeting rooms and areas (the "Banquet Facilities") for December 30 and 31, 1997, as shown on Exhibit "A" hereto. Purchaser agrees to pay the lump sum total price of $45,000 (including applicable taxes) for all such Banquet Facilities and Reserved Rooms as described in Exhibit "A", whether or not actually used or occupied for the dates specified in Exhibit "A"; such payment to be secured by a payment from Purchaser to Seller in the amount of $70,000 (the "Advance Deposit"), to be made, in full, on or before December 2, 1997. Seller agrees that the Advance Deposit made by Purchaser pursuant to this Section 5.9(a) shall be held by Seller as an advance deposit, and if Closing is not extended by Purchaser as provided in Section 3.2 hereof, Purchaser shall receive a credit at Closing for the full amount of such Advance Deposit as provided under Section 3.7(a) of the Original Agreement. If Closing is extended under Section 3.2 hereof, then at Closing, Purchaser shall receive a credit for $25,000 of the Advance Deposit (i.e., the portion not retained by Seller for the Reserved Rooms and Banquet Facilities) as provided under Section 3.7(a) of the Original Agreement. If the Closing is extended under Section 3.2 hereof, but Closing is not held because of Purchaser's default, Seller may retain the entire Advance Deposit as damages hereunder. (b) Incidental services such as set-up, security, decoration, clean-up, sound and lighting shall be provided by Seller at prices and on terms to be mutually agreed between Seller and Purchaser. Failing such mutual agreement, Purchaser may provide any of such incidental services without cost or expense to Seller. In addition, Seller shall provide alcoholic beverages to Purchaser for Purchaser's shows, parties and special events at the Hotel on the nights of December 30 and 31, 1997, at Seller's actual cost without markup or profit, on a method of calculation and payment terms to be mutually agreed between Seller and Purchaser. Purchaser shall have the right to have such beverages served by Purchaser's staff, provided that: (i) service of alcoholic beverages at the Hotel by Purchaser's staff complies with applicable law; and (ii) Purchaser has provided to Seller the certificates or other evidence of insurance as described in subsection (e) hereof . (c) During (or in preparation for) any of the special events to be held by Purchaser at the Hotel on December 30 or 31, 1997, Purchaser may locate members of Purchaser's staff in and at the Hotel to provide services and accommodations to Purchaser's patrons while present at the Hotel, including without limitation, welcome, patron- relations, gift delivery, event management and similar services for Purchaser's hotel guests and shows, parties and/or special events at the Hotel. (c) From and after the date hereof, Seller agrees not to accept any reservations or bookings of guest rooms or ballroom/conference/banquet facilities at the Hotel for any of the dates listed on Exhibit "A" hereto, which would interfere with the agreements of Seller described in this Section 7. (d) Seller agrees to cooperate in all reasonable ways with Purchaser's efforts to promote the New Year's Eve holiday (dates and room nights as specified in Exhibit "A" hereto) as a special event of Purchaser, including special decorations provided by Purchaser, permission to use the name of the Hotel in Purchaser's advertising and marketing efforts, use of the Hotel's pylon sign, and similar matters. (e) Purchaser hereby indemnifies and agrees to hold Seller harmless from and against all loss, cost, damage, claim or expense caused by or arising out of Purchaser's activities at the Hotel contemplated under this Section 5.9, including without limitation, the acts or omissions of Purchaser's staff present at the Hotel in connection with such activities. Prior to December 19, 1997, Purchaser shall provide to Seller certificates or other evidence of general liability, worker's compensation, and liquor liability insurance covering Purchaser's activities at the Hotel as contemplated under this Section 5.9. 8. Effect of Amendment. Except as specifically set forth herein, the Original Agreement shall remain unmodified and in full force and effect, binding upon the parties thereto. [Signatures on Following Page] SELLER: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Lake Charles, Louisiana on this ____ day of November, 1997. WITNESSES: LAKESHORE HOTELS, LTD., a Louisiana partnership in commendam __________________________ ___________________________ By: Name: Title: _ NOTARY PUBLIC PURCHASER: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at _____________________, ____________________ on this _____ day of November, 1997. WITNESSES: PLAYERS INTERNATIONAL, INC., a Nevada corporation _____________________________ _____________________________ By: Name: Title: NOTARY PUBLIC JOINDER The undersigned hereby join in the execution of this Amendment No. 1, simultaneously with Seller, to evidence their agreement to be bound by the provisions hereof: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Lake Charles, Louisiana on this ____ day of November, 1997. WITNESS (as to all signatures) ___________________________________ ______________________________ Ted W. Price, Sr. WITNESS (as to all signatures) ___________________________________ ______________________________ Ted W. Price, Jr. ______________________________ Robert W. Price, Sr. ______________________________ Robert W. Price, Jr. _ Notary Public EX-10 6 05/01/98 DSO/mja AC-158785/4 7 SETTLEMENT & ADMISSION FEE AGREEMENT STATE OF LOUISIANA PARISH OF CALCASIEU BE IT KNOWN, that on the dates hereinafter set forth, before the undersigned Notaries Public, duly commissioned and qualified in and for the state and parish aforesaid, and in the presence of the undersigned competent witnesses, personally came and appeared PLAYERS LAKE CHARLES, LLC, a Louisiana limited liability company ("PLC") and SHOWBOAT STAR PARTNERSHIP, a Louisiana general partnership ("SSP"; PLC and SSP are separate taxable entities, but are collectively referred to herein for convenience as the "Operators"), herein represented by Catherine A. Walker, the duly authorized officer of Players Lake Charles Riverboat, Inc., the Managing Member of PLC, and of Players Riverboat Management, Inc., the Managing Partner of SSP; and the CITY OF LAKE CHARLES, LOUISIANA, a body politic and corporate of the State of Louisiana (hereinafter called the "City"), herein represented by Willie L. Mount, its duly authorized Mayor, who declared that: PLC is the owner of a riverboat gaming vessel currently known as the "Players III Casino" (the "Players Casino"). SSP is the owner of a riverboat gaming vessel currently known as the "Star Casino" (the "Star Casino"; the Players Casino and the Star Casino are sometimes referred to collectively herein as the "Casinos"). The term "Casinos" shall include all replacement or successor riverboat gaming vessel(s) of either or both of the casinos named herein. Each of Operators currently holds a license to operate their respective Casinos in the State of Louisiana by the Louisiana Riverboat Gaming Enforcement Division of the Gaming Enforcement Section of the Office of State Police, Department of Public Safety and Corrections (the "Division"). Pursuant to the approval of the Louisiana Gaming Control Board, successor agency to the Louisiana Riverboat Gaming Commission (the "Commission") the berthing site for both of the Casinos is located at a common site in the City, known as 507 N. Lakeshore Drive, Lake Charles, Louisiana (the "Site"). PLC owns and operates certain hotel, dining and entertainment facilities at the Site, related to the Casinos, for the mutual benefit of both Operators, pursuant to agreements between the Operators. Operators and the City are parties to a certain Development Agreement dated as of January 27, 1995 (the "Existing Development Agreement"). Certain disputes have arisen among Operators, the City, McNeese State University, Sowela Technical Institute (a/k/a/ Louisiana Technical College), the Calcasieu Parish School Board and the Calcasieu Parish Police Jury, regarding the calculation and payment of certain admission fees ("Section 27:93A Fees") payable under an ordinance enacted by the City pursuant to the provisions now codified at La.R.S. 27:93A(1) and under a Resolution passed by the Calcasieu Parish Police Jury pursuant to the provisions now codified at La.R.S. 27:93A(6) of the Louisiana Riverboat Economic Development and Gaming Control Act (the "Act"). McNeese State University, Sowela Technical Institute (a/k/a/ Louisiana Technical College), and the Calcasieu Parish School Board are referred to hereinafter as the "Educational Institutions". As used herein, the term "Police Jury" refers to the Calcasieu Parish Police Jury. Operators have filed a certain action in the 19th Judicial District Court for the Parish of East Baton Rouge, State of Louisiana styled Players Lake Charles, LLC and Showboat Star Partnership vs. City of Lake Charles and the Louisiana Gaming Control Board, Case No. 447512-N; and the City has filed an action in the 14th Judicial District Court for the Parish of Calcasieu, State of Louisiana styled City of Lake Charles vs. Players Lake Charles, L.L.C. and Showboat Star Partnership, Case No. 98-1473 (together, the "Actions"). Operators, the City and the Educational Institutions desire, by this Agreement, to: (1) settle and resolve such disputes amicably, and dismiss the Actions with prejudice, by virtue of the specific agreements and as more particularly provided in Article III hereof; and (2) provide for a new arrangement, going forward, effective from and as of March 1, 1998 (the "Effective Date"), for calculation and payment of the Section 27:93A Fees, as more particularly provided in the other Articles hereof. NOW THEREFORE, for and in consideration of the mutual and dependent agreements of the City and the Operators hereinafter set forth, Operators and the City agree to the following: ARTICLE I SECTION 27:93A FEES Section 1.1. Legally Mandated Admission Fees. (a) From and after the Effective Date, in accordance with the Act, for so long as the provisions now codified at La.R.S. 27:93A(6) and La.R.S. 27:93A(1) of the Act apply to Operators, and for so long as the Casinos, or either of them, are located and operated at a site in the City of Lake Charles, Operators shall pay to the City a fee (the "Admission Fee"), which Admission Fee shall be equal to the greater of (i) $7,025,000 per annum (the "Guarantee Amount") or (ii) 4.20% (the "Applicable Percentage") of the Net Gaming Proceeds (as defined in the Act) of the Casinos. The Admission Fee shall be paid monthly on or before the 20th day of each calendar month (commencing April 20, 1998), based upon one-twelfth (1/12) of the Guarantee Amount (commencing with March, 1998). The Guarantee Amount shall be subject to proration, adjustment or credit as provided in this Agreement. Net Gaming Proceeds earned before the Effective Date shall not be included in computation of the Admission Fee. (b) Operators' obligation to pay the excess, if any, of the Applicable Percentage of the Operators' Net Gaming Proceeds, over the Guarantee Amount already paid, shall be determined on a calendar year basis, in arrears as of the end of each calendar year, commencing as of the end of calendar 1998. Such excess, if any, shall be paid by January 31 of the following calendar year. The Guarantee Amount for calendar year 1998 shall be prorated, based on the number of months remaining in calendar 1998 after the Effective Date. Therefore, Operators, the City and the Educational Institutions agree that the Guarantee Amount for calendar 1998 shall be $5,854,167.00. (c) At March 1, 2003, the Guarantee Amount shall be increased or decreased by the same percentage that the Consumer Price Index (as herein defined and specified, the "CPI") increases or decreases from March 1, 1998 to February 28, 2003, but in no event increased or decreased by more than ten percent (10%). At March 1, 2008 and each date which is a multiple of five (5) years thereafter (i.e., March 1, 2013, March 1, 2018, etc.) (each, an "Adjustment Date"), the then-current Guarantee Amount shall be increased or decreased by the same percentage that the CPI increases or decreases from the date which is five (5) years prior to that Adjustment Date (i.e., a five-year period), but in no event increased or decreased by more than ten (10%) percent on any such Adjustment Date. (d) As used herein, "CPI" shall mean the Consumer Price Index for All Urban Consumers (CPI-U) - South Census Region, All Items (1982-84 = 100) published by the Bureau of Labor Statistics of the U.S. Department of Labor. If this index is no longer published, the "CPI" shall mean the index of consumer prices in the U.S. most closely comparable to the discontinued index, after making such adjustments in items included for method of compensation as may be prescribed by the agency publishing the same or as otherwise may be required to compensate for changes affecting such replacement index subsequent to the Effective Date. (e) From and after the actual commencement of "hard" construction of the improvements to the eastbound lanes of Interstate 10 in Calcasieu Parish (the "Start Date") from the eastern foot of the I-10 bridge over the Calcasieu River to the Bilbo Street I-10 on-ramp (the "I-10 Construction"), the Guarantee Amount shall be subject to reduction as provided in this subsection (e). (i) The Net Gaming Proceeds of the Operators shall be computed as of the last day of the sixth (6th) full calendar month after the Start Date, or the date of completion of the I-10 Construction, whichever is earlier (the "Computation Date"), looking back on a 12 calendar month basis. (ii) If the Operators' Net Gaming Proceeds amount for such 12-month period is an amount less than One Hundred Fifty Million Dollars ($150,000,000)(such deficit being referred to herein as the "Revenue Shortfall"), then the Guarantee Amount for the calendar year in which the Computation Date falls shall be reduced by an amount equal to five percent (5%) of the Revenue Shortfall amount, up to a maximum reduction of Five Hundred Thousand Dollars ($500,000). (iii) The Revenue Shortfall shall be calculated on a 12-month basis as of the Computation Date, and the foregoing reduction (if any) to the Guarantee Amount shall be made, regardless of whether there is actually a Revenue Shortfall for the calendar year in which such computation is made. No further reductions to the Guarantee Amount shall be made under this subsection (e). (iv) The reduction in the Guarantee Amount, computed as provided herein, shall be applied against the monthly payment of the Guarantee Amount (under subsection (a) hereof) next coming due. Section 1.2. Education Fee. (a) Operators, the City, and the Educational Institutions acknowledge that for so long as the Casinos, or either of them, are located and operated at a site in the City of Lake Charles, and for so long as the Police Jury is legally authorized to levy a fee (the "Education Fee") pursuant to the provisions now codified at La.R.S. 27:93A(6), the Admission Fee amounts payable to the City hereunder shall include (and the City shall collect as part of the Admission Fee, and pay directly to the Educational Institutions pursuant to a separate agreement between the City and the Educational Institutions) an Education Fee equal to the greater of (i) $950,000.00 per annum (the "Education Guarantee Amount") or (ii) 0.57% (the "Education Applicable Percentage") of the Net Gaming Proceeds of the Casinos. The percentage-based Education Fee is in lieu of the per passenger admission fee of $.50 authorized by the provisions now codified at La.R.S. 27:93A(6). From and after the Effective Date, the Education Fee shall be paid by the City to the Educational Institutions monthly, upon receipt of Operators' payment of the Admission Fee as set forth in Sections 1.1(a) through (e) hereof. The Education Guarantee Amount shall be subject to proration, adjustment or credit as provided in this Agreement. (b) The City's obligation to pay the Educational Institutions the excess, if any, of the Education Fee based upon the Education Applicable Percentage of the Operators' Net Gaming Proceeds over the Education Guarantee Amount already paid, shall be determined on a calendar year basis, in arrears as of the end of each calendar year, commencing as of the end of calendar 1998. Such excess, if any, shall be paid by January 31 of the following calendar year. The Education Guarantee Amount for calendar year 1998 shall be prorated, based on the number of months remaining in calendar 1998 after the Effective Date. Therefore, the City and the Educational Institutions agree that the Education Guarantee Amount for calendar 1998 shall be $791,667.00. The City and the Educational Institutions agree further that the Education Guaranty Amount shall be subject to adjustment or credit in the same manner as the Guaranty Amount, pursuant to Sections 1.4 (c), (d) and (e) hereof, as if those provisions were fully set forth at this place. (c) The City and Educational Institutions acknowledge and agree that Operators' only payment obligation under this Article I is the payment of the Admission Fee to the City as specified in Section 1.1 hereof; and that so long as Operators satisfy such Admission Fee payment obligation, the Education Fee shall be the payment obligation of the City alone, and Operators shall have no separate liability for same. Section 1.3. Impact of Dockside; Other Events. Operators, the City and the Educational Institutions acknowledge and agree that, except as expressly provided herein, this Agreement represents their exclusive agreement and arrangement concerning admission or other similar fees, including those now codified under the provisions of La.R.S. 27:93A(1) and 27:93A(6), or payments in lieu thereof, for so long as such admission or other similar fees (including those now codified under the provisions of La.R.S. 27:93A(1) and 27:93A(6)) are authorized, and for so long as the Casinos, or either of them, shall be located and operated at a site in the City of Lake Charles. Therefore, this Agreement shall not be subject to termination, and the obligations of Operators under this Agreement (including without limitation, the obligations of Operators to make payments hereunder to the City or any other person or entity) shall not be subject to increase, decrease or renegotiation in the event that dockside gaming is authorized; nor in the event of any other beneficial legislation or other development for Operators or the City; nor in the event of the enactment of any additional admission fees (or similar taxes, fees or payments in lieu thereof) payable, directly or indirectly, to the City and/or the Educational Institutions; nor in the event of any increase in the authorized or permissible rate or amount of such admission fees (or similar taxes, fees or payments in lieu thereof), whether or not relating to any such development. This Agreement shall, however, be subject to termination and renegotiation as specifically provided in Article VII hereof. Section 1.4. Separate Obligation. Operators' obligation to pay the Admission Fee hereunder relates to the statutory obligations of the Operators to the City and the Educational Institutions, respectively, on a going forward basis from and after the Effective Date, and is an obligation separate and distinct from the Settlement Payments in settlement of the Actions under Article III hereof. Section 1.5. Nature of Agreement. Operators, the City and the Educational Institutions agree that this Agreement represents a contractual arrangement, binding upon all parties hereto, applicable in lieu of the statutory authority to levy admission fees given to the City and the Police Jury (and/or the Educational Institutions), including without limitation those provisions now codified in the Act at La.R.S. 27:93A(1) and 27:93A(6), respectively. Therefore, in consideration of the Admission Fees paid by the Operators to the City hereunder, the City and the Educational Institutions hereby waive, for so long as this Agreement remains in effect, any existing or future right that any of them may have to levy the fee currently authorized by the Act in La.R.S. 27:93A(1) or 27:93A(6), or any future substitute, increased or additional fee with respect thereto. ARTICLE II EXISTING DEVELOPMENT AGREEMENT The Existing Development Agreement is and shall remain in full force and effect, binding upon the parties thereto in accordance with its terms, notwithstanding the execution, delivery and performance of this Agreement. ARTICLE III EXISTING PAYMENT CLAIMS Section 3.1. Settlement of Actions. The existing disputes among the City, the Educational Institutions and the Operators, including those evidenced by the Actions, involve claims and counterclaims by the City, Educational Institutions and the Operators regarding calculation and payment of Section 27:93A Fees prior to the Effective Date (the "Payment Claims"). Section 3.2. Settlement Payments. Without admitting liability for any Payment Claims, Operators hereby agree to pay to the City, and the City hereby agrees to accept from Operators, in full and final settlement of the Payment Claims, the sum of Four Million Dollars ($4,000,000.00), together with interest thereon at the rate of six percent (6%) per annum, in ten (10) equal annual installments of combined principal and interest, each in the amount of $543,475.00, such payments (the "Settlement Payments"), totaling $5,434,750.00, commencing April 1, 1999 and continuing on each April 1 thereafter until April 1, 2008. Notwithstanding the foregoing, Operators shall have the right at any time to prepay the principal obligation described herein, without premium or penalty, provided that Operators shall also pay all interest accrued hereunder at the rate aforesaid through the date of such prepayment. Section 3.3. Release. The City and the Educational Institutions each hereby irrevocably and unconditionally RELEASE and FOREVER DISCHARGE the Operators, their parent, subsidiary and affiliated companies, and the present or former officers and directors of any of them, as well as their respective heirs, personal representatives, successors and assigns, from all claims, counterclaims, demands, actions, causes of actions, suits, debts, costs, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, expenses and liabilities whatsoever, known or unknown, at law or in equity, relating in any way to the Operators' obligations with respect to Section 27:93A Fees accrued prior to the Effective Date, the Actions or the subject matter thereof. Section 3.4. Dismissal of Actions. Immediately upon the full execution of this Agreement, the City, Educational Institutions, and Operators shall take all actions and execute all documents necessary to provide for the dismissal with prejudice of the Actions. Section 3.5. Separate Obligation; Survival. Operators' obligation to pay the Settlement Payments hereunder is a separate obligation, supported by separate consideration (as described in this Article III), and undertaken in full and final settlement of the Actions. As such, Operators' obligation to pay the Settlement Payments shall survive the termination of any or all of Operators' other obligations hereunder. Section 3.6. Educational Institutions Payment. The City, the Police Jury and the Educational Institutions acknowledge and agree that a portion of the Settlement Payments shall be paid to the Educational Institutions by the City pursuant to a separate agreement among them, and that such amounts shall constitute full and final settlement of any Payment Claims of the Police Jury, or any of the Educational Institutions. The Settlement Payments shall not be increased based on any separate claim or demand of the Police Jury, or any of the Educational Institutions. The Operators shall have no liability for any separate or additional payment obligations to the Police Jury, or any of the Educational Institutions, based on the Payment Claims, and Operators hereby admit no liability with respect to any such Payment Claims. If, as a result of such additional or separate Payment Claims of the Police Jury, or any of the Educational Institutions, Operators (or either of them) suffer any liability in addition to the amounts payable to the City for the Educational Institutions under Section 1.2 hereof, then Operators shall have the right to set-off the full amount of such additional liability, against the amounts (and only up to the amounts) otherwise payable to the City thereafter for the benefit of the Educational Institutions under Section 1.2 hereof. Section 3.7. No Admission. The payments made by Operators, and the releases given by the Educational Institutions and City, respectively, under this Article III, shall not be construed as an admission of liability by Operators, or either of them, or by City or the Educational Institutions, of any kind or nature whatsoever as to any matter. Section 3.8. Fees. Operators shall, in addition to making the Settlement Payments under the provisions of Section 3.2 hereof, reimburse the City for the City's audit analysis fees actually incurred in connection herewith, up to the aggregate maximum amount of $55,000.00. ARTICLE IV OBLIGATIONS OF CITY AND EDUCATIONAL INSTITUTIONS Section 4.1. Cooperation and Assistance. The City hereby agrees to cooperate with and assist Operators to the fullest possible extent and in an expeditious manner, without additional payment obligation to the City, in the Operators' respective efforts to develop, maintain and improve the Site and operate their Casinos; provided, however, such cooperation and assistance shall not interfere with or impair the City from setting or making City policy. The foregoing shall include, without limitation, an obligation on the part of the City to take no action inconsistent with its prior actions with respect to a dockside gaming initiative or similar legislative or administrative action applicable to the Casinos. Furthermore, the City shall assist Operators in the coordination of all applicable federal, state, parish and local authorities to resolve access, infrastructure and other issues arising during the course of Operators' improvement of the Site and/or maintenance or operation of the Casinos and related facilities. Section 4.2. Repeal of Existing Ordinances. Promptly after the execution and delivery of this Agreement, the City shall take all necessary actions to repeal or otherwise terminate any ordinances or other acts of the City inconsistent with the provisions of this Agreement, including without limitation, City Ordinance Nos. 9939, 10098 and the original 11236. Section 4.3. Repeal of Policy Jury Resolution. The parties agree that, in addition to the conditions specified in a certain letter agreement among Operators, the City and Educational Institutions dated March 24, 1998 (the "Letter Agreement"), this Agreement shall not become effective unless and until the Police Jury shall have taken, prior to May 1, 1998, all necessary actions to repeal or otherwise terminate any resolutions or other acts of the Police Jury inconsistent with the provisions of this Agreement, including without limitation, the Police Jury Resolution dated August 3, 1995 relating to the education fees payable by the Operators. The City and the Educational Institutions shall use their respective best efforts to secure from the Parish such acknowledgements of, and consents to, this Agreement, and such other actions (including, without limitation, repeal of the aforesaid Resolutions), as Operators shall in their sole discretion require, in order to ensure the enforcability hereof. Section 4.4. New Ordinance. The City hereby represents and warrants that the execution and delivery of this Agreement, and the performance by the City of its obligations hereunder, have been duly authorized by a validly adopted City Ordinance that is currently in full force and effect. Each of the Educational Institutions hereby represents and warrants that the execution and delivery of this Agreement, and the performance by them of their respective obligations hereunder, have been duly authorized by all necessary action. ARTICLE V GOVERNING LAW This Agreement shall be governed by the laws of the State of Louisiana. Any and all disputes or misunderstandings or disagreements hereunder shall be resolved, and this Agreement may be enforced, only in a District Court of the State of Louisiana, or in U.S. Federal District Court for the State of Louisiana. Each party hereto consents to such exclusive jurisdiction. ARTICLE VI BENEFIT - SUCCESSORS AND ASSIGNS This Agreement and the rights and obligations contained herein shall be binding upon, and inure to the benefit of, the respective successors and assigns of the parties hereto. PLC and SSP are separate taxable entities, and except with respect to the Settlement Payments under Article III hereof, the liability of Operators hereunder shall be individual and not joint and several. ARTICLE VII CHANGES IN COMPETITION Section 7.1. Operators, the Educational Institutions and the City acknowledge and agree that the obligations of Operators set forth in Article I hereof are based upon, and Operators, the City and the Educational Institutions have acted in reliance upon, the competitive and regulatory situation with respect to casino gaming in Calcasieu Parish. In recognition that such competitive and regulatory factors may change subsequent to the date hereof, Operators, the Educational Institutions and the City agree that the obligations of Operators set forth in Article I hereof shall terminate on forty-five (45) days' written notice to the City, and shall thereafter be subject to renegotiation by Operators, the City and the Educational Institutions, in the event of the occurrence of any of the following, provided that at the time of Operators' written notice as aforesaid, the Net Gaming Proceeds of the Casinos, after any such occurrence(s), is below $120,000,000 on an annual basis: (a) if a riverboat, barge, land-based or other casino including without limitation, slot machines at horse racetrack(s) (a "Competitive Casino") is allowed within a one hundred (100) mile radius of the City of Lake Charles, Louisiana, excepting only the two (2) riverboats operated on Lake Charles and the Calcasieu River by St. Charles Gaming Company, Inc. and Grand Palais Riverboat, Inc., and the land-based casino known as Grand Casino Coushatta in Kinder, Louisiana; or (b) if a Competitive Casino is allowed in the State of Texas that has a material adverse impact on Operators; or (c) if a change in law or regulation is passed by the State of Louisiana or any agency or political subdivision thereof is passed, that directly or indirectly prohibits or materially limits Operators from lawfully operating the Casinos at the Site. Section 7.2. Operators, the Educational Institutions and the City agree, in the event of the occurrence of any of the matters set forth in Section 7.1 hereof, so long as both Casinos are then operated from a site in Lake Charles, Louisiana, and provided that the Net Gaming Proceeds of the Casinos, after any such occurrence(s), is below $120,000,000 on an annual basis, to renegotiate in good faith the financial obligations of Operators (other than the Settlement Payments) set forth in Article I hereof. In the event this Agreement terminates as contemplated under this Article VII, each party hereto shall retain its rights available under the Act and other applicable law. Section 7.3. Effect of Article; Termination. If for any reason one of the Casinos is no longer operated from a site in Lake Charles, Louisiana, then from and after the date it ceases to operate in Lake Charles, the provisions of this Article VII shall no longer apply, but the remainder of this Agreement shall remain in effect, binding in accordance with its terms. ARTICLE VIII APPROVALS This Agreement is subject to approval of: (a) the Board of Directors of Players International, Inc. (the parent company of the Operators) on or before May 1, 1998; (b) the City Council of the City on or before March 24, 1998; and (c) the governing bodies of all the Educational Institutions; all as provided in the Letter Agreement. This Agreement shall not be effective or binding upon the Operators, the City or the Educational Institutions, unless and until such approval is timely obtained for all of the Operators, the City and the Educational Institutions in accordance with such letter agreement. If any such approvals are not timely obtained as aforesaid, this Agreement shall be of no force or effect, as if it had never been executed. In such event, each of the Operators, the City and the Educational Institutions shall have and enjoy their respective rights and remedies with respect to the subject matter hereof, as if this Agreement had never been executed. ARTICLE IX MODIFICATION AND AMENDMENT This Agreement shall not be amended or otherwise modified in any manner except by an instrument in writing executed by all parties hereto, and all parties joining in the execution hereof. In addition, each of the City and the Educational Institutions agrees that it shall not, from and after the date hereof, pass or enact any ordinances, resolutions or other municipal or corporate acts contrary to or inconsistent with the provisions hereof, and that if any such ordinances or acts are so passed or enacted, the proper officers of the City or the respective Educational Institutions, as applicable, shall take all actions reasonably necessary to repeal or otherwise terminate same. ARTICLE X UNDERSTANDINGS AND AGREEMENTS This Agreement, taken together with the other documents executed and delivered by the parties in connection herewith, contains the entire agreement among the Operators, the City and the Educational Institutions with respect to the matters contained herein and supersedes all prior agreements. ARTICLE XI NOTICES All notices, demands and requests which may be given or which are required to be given by any party to the others, shall be in writing and shall be deemed effective when either: (a) personally delivered to the intended recipient; (b) sent by certified or registered mail, return receipt requested, addressed to the intended recipient at the address specified below; (c) delivered in person to the address set forth below for the party to which the notice was given; (c) deposited into the custody of a nationally recognized overnight delivery service such as FedEx, Airborne, Emery or Purolator, addressed to such party at the address specified below; or (e) sent by facsimile, telegram or telex, provided that receipt for such facsimile, telegram or telex is verified by the sender and followed by a notice sent in accordance with one of the other provisions set forth above. Notices shall be effective on the date of delivery or receipt or, if delivery is not accepted, on the earlier of the date that deliver is refused or three (3) days after the date the notice is mailed. For purposes of this Section, the addresses of the parties for all notices are as follows (unless changes by similar notice in writing are given by the particular person whose address is to be changed): If to the City, to the City of Lake Charles, Louisiana, 326 Pujo Street, Lake Charles, Louisiana 70601, Attention: Hon. Willie L. Mount, Mayor (Fax: (318) 491- 1206); With a copy to: John DeRosier, Esquire, 125 West School Street, Lake Charles, Louisiana 70605 (Fax: (318) 478-6624); If to Operators, or either of them, to Players Lake Charles, LLC and/or Showboat Star Partnership, c/o Players International, Inc., 1300 Atlantic Avenue, Suite 800, Atlantic City, New Jersey 08401, Attention: Howard Goldberg, President (Fax: (609) 449- 7765); With a copy to: Patrick Madamba, Jr., Vice President and General Counsel, Players International, Inc. 1300 Atlantic Avenue, Suite 800, Atlantic City, New Jersey 08401 (Fax: (609) 449-7765); And a copy to: Cathy Walker, Vice President and General Manager, Players Lake Charles Riverboat, Inc. (if to PLC) and/or Players Riverboat Management, Inc. (if to SSP), 507 N. Lakeshore Drive, Lake Charles, Louisiana 70601 (Fax: (318) 437-1586); Any party hereto may designate a different address by notice given to the other party. Counsel for any party may give notice on behalf of its client. ARTICLE XII SEVERABILITY If any provision of this Agreement is held to be invalid, illegal or unenforceable, that shall not affect or impair, in any way, the validity, legality or enforceability of the remainder of this Agreement. ARTICLE XIII MISCELLANEOUS Section 13.1. Construction. Whenever the context hereof so requires, reference to the singular shall include the plural and the plural shall include the singular; words denoting gender shall be construed to mean the masculine, feminine or neuter, as appropriate; and specific enumeration shall not exclude the general, but shall be construed as cumulative of the general recitation. Section 13.2. Counterparts. To facilitate execution, this Agreement may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature and acknowledgment of, or on behalf of, each party, or that the signature and acknowledgment of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures and acknowledgments of each of the parties hereto. Section 13.3. Captions. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way affect, limit, amplify or modify the terms and provisions hereof. Section 13.4. Rule of Construction. Operators, the City and the Educational Institutions acknowledge that each of them, and their respective counsel, have reviewed and have had input in the drafting of this Agreement, and such parties hereby agree that normal rules of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or exhibits hereto. Section 13.5. No Third Party Beneficiaries. No person or entity not a party to (or joining in the execution of) this Agreement shall have any third party beneficiary claim or other right hereunder or with respect thereto. Section 13.6. Late Fees. Operators hereby agree that if any payment required to be made hereunder shall remain unpaid for ten (10) days after the date on which the same shall become due and payable, Operators shall pay to the City, in addition to the delinquent payment, a late fee in an amount equal to five percent (5%) of such delinquent payment. Notwithstanding the foregoing, the City and the Educational Institutions acknowledge and agree that certain audits of the Net Gaming Proceeds of the Operators will be made by the Operators' auditors, as well as auditors for the Division. Additional amounts disclosed by, and required to be paid solely as a result of, such audit(s) shall not be subject to the aforesaid late fee; unless Operators' failure to pay such amounts is willful, in which case the amounts unpaid shall bear interest in favor of the City at the rate of fifteen percent (15%) per annum, computed from the date the payment was originally due. {Signatures on Following Pages} PLC THUS DONE AND SIGNED in the presence of the undersigned competent witnesses, on this ________ day of , 1998. WITNESSES PLAYERS LAKE CHARLES, LLC By: PLAYERS LAKE CHARLES RIVERBOAT, INC., Managing Member By: Name: Title: NOTARY PUBLIC SSP THUS DONE AND SIGNED in the presence of the undersigned competent witnesses, on this ________ day of , 1998. WITNESSES SHOWBOAT STAR PARTNERSHIP By: PLAYERS RIVERBOAT MANAGEMENT, INC., Managing Partner By: Name: Title: NOTARY PUBLIC CITY THUS DONE AND SIGNED in Lake Charles, Louisiana, in the presence of the undersigned competent witnesses, on this ______ day of ____________, 1998. WITNESSES: CITY OF LAKE CHARLES, LOUISIANA By: Willie Mount, Mayor NOTARY PUBLIC JOINDER The undersigned hereby join in the execution of this Settlement and Admission Fee Agreement for the purpose of evidencing their consent to, and agreement to be bound by, the provisions hereof. THUS DONE AND SIGNED in Lake Charles, Louisiana, in the presence of the undersigned competent witnesses, on this ______ day of __________, 1998. WITNESSES: CALCASIEU PARISH SCHOOL BOARD By: ____________________, President NOTARY PUBLIC JOINDER (cont'd.) THUS DONE AND SIGNED in the presence of the undersigned competent witnesses, on this ________ day of , 1998. WITNESSES McNEESE STATE UNIVERSITY By: Name: Title: NOTARY PUBLIC THUS DONE AND SIGNED in the presence of the undersigned competent witnesses, on this ________ day of , 1998. WITNESSES SOWELA TECHNICAL INSTITUTE (a/k/a Louisiana Technical College) By: Name: Title: NOTARY PUBLIC EX-10 7 PLAYERS LAKE CHARLES, LLC SHOWBOAT STAR PARTNERSHIP 507 No. Lakeshore Drive Lake Charles, LA 70601 March 24, 1998 CITY OF LAKE CHARLES, LOUISIANA 326 Pujo Street Lake Charles, LA 70601 ATTN: Hon. Willie L. Mount, Mayor Re: Development & Admission Fee Agreement among Players Lake Charles, LLC, Showboat Star Partnership, and the City of Lake Charles, Louisiana Dear Mayor Mount: Please have this letter confirm certain aspects of our agreements concerning the authorization, execution and delivery of the captioned agreement (the "Admission Fee Agreement"), and regarding certain aspects of the Admission Fee Agreement. Capitalized terms not specifically defined herein are used as defined in the Admission Fee Agreement, unless the context clearly requires otherwise. This letter shall constitute a part of the Admission Fee Agreement, and shall not be merged into or superseded by the Admission Fee Agreement. Specifically, we have agreed as follows: 1. Education Fee Challenge. Effective when and if the Admission Fee Agreement becomes effective, Operators agree that they will not undertake, nor cause any other person or entity to undertake on their behalf, any judicial challenge to the statutory authority for the Education Fee. The City and Educational Institutions acknowledge and agree that, notwithstanding the foregoing, Operators shall retain (and Operators hereby reserve and do not waive) the benefit of any such judicial determination, or any rights with respect thereto. 2. Conditions to Effectiveness of Admission Fee Agreement. (a) The Operators, the City and each of the Educational Institutions acknowledge and agree that the Admission Fee Agreement shall not be effective for any purpose, nor binding on any party thereto (or joining in the execution thereof), unless and until the following conditions have been satisfied: (i) Prior to the April 23, 1998 (the "Date"), the form of Admission Fee Agreement presented to the City immediately prior to the meeting of the Lake Charles City Council on March 24, 1998 is revised to remove the Calcasieu Parish Police Jury as a signatory thereto (with appropriate corresponding changes to the text thereof); (ii) Prior to the Date, Operators and the Calcasieu Parish Police Jury shall have entered into arrangements, or the Calcasieu Parish Police Jury shall have taken actions, in either case satisfactory to Operators, as necessary in the sole determination of Operators to confirm and safeguard the benefits to Operators of the agreements among the City, the Operators and the Educational Institutions under the current form of the Admission Fee Agreement; (iii) Each of them has, prior to the Date: (A) obtained all necessary authorization(s) and approval(s) for the execution, delivery and performance of the Admission Fee Agreement from its Board of Directors, City Council or other governing body; and (2) actually executed and delivered the Admission Fee Agreement, as revised as contemplated under clause (i) hereof. (b) The Operators shall, prior to the Date, provide to the City a Certificate of Secretary regarding the approval, if any, of the Admission Fee Agreement by the Board of Directors of Players International, Inc. The City shall, prior to the Date, provide to the Operators a copy of the Ordinance or other approval of the Admission Fee Agreement by the Lake Charles City Council. Execution and delivery of the Admission Fee Agreement by each Educational Institution shall constitute a representation and warranty by it, on which each other signatory may rely, that such Educational Institution has obtained all necessary approvals for its valid execution, delivery and performance of the Admission Fee Agreement. On the satisfaction of the condition set forth in clause (a)(ii) hereof prior to the Date, the Operators shall provide written notice of such satisfaction to the City. 3. Interim Payments. (a) Notwithstanding that the Admission Fee Agreement shall not be effective unless and until the conditions set forth in Section 2 hereof have been satisfied, Operators hereby agree to make the payments of the Admission Fee (as described in Section 1.1 of the Admission Fee Agreement) from the Effective Date (which is March 1, 1998) until the earlier of: (i) the satisfaction of all conditions set forth in Section 2 hereof; or (ii) the Date, if all such conditions have not by then been satisfied (the "Interim Payments"). (b) If all the conditions set forth in Section 2 hereof have been satisfied prior to the Date, then Operators' obligation to make payments hereunder shall automatically terminate under this letter, but shall continue under the Admission Fee Agreement as if it had been fully executed and delivered, and fully effective, on and as of March 24, 1998. (c) If all the conditions set forth in Section 2 hereof have not been satisfied prior to the Date, then Operators' obligation to make payments hereunder shall automatically terminate and be of no further force or effect as of the Date, ; and thereupon, the Admission Fee Agreement will be and become void and of no force or effect, as if it had never been executed. (d) If the Admission Fee Agreement becomes void as provided in subsection (c) above, then each of the Operators, the City and the Educational Institutions shall have all rights and remedies with respect to the Actions, the Section 27:93A Fees and the other issues discussed in the Admission Fee Agreement, at law or in equity, as they may have had prior to the negotiation and drafting thereof. In addition, if the Admission Fee Agreement becomes void as provided in subsection (c), above, the Interim Payments already made by Operators shall be applied against any Section 27:93A Fees accrued between the date of this letter and the date the Admission Fee Agreement becomes void as aforesaid. The Operators, the City and the Educational Institutions acknowledge and agree that both the Admission Fee Agreement and this letter have been prepared, distributed and negotiated in an attempt to settle existing disputes and existing litigation. Therefore, if the Admission Fee Agreement becomes void as provided in subsection (c), above, neither the Admission Fee Agreement nor this letter shall be admissible as evidence in the Actions. (e) By executing this letter and making the Interim Payments, Operators do not admit any liability of any kind, and do not waive or release (and shall not be deemed or construed to have waived or released) any rights or remedies available to Operators, at law or in equity, with respect to the Actions, the Section 27:93A Fees and the other issues discussed in the Admission Fee Agreement, at law or in equity, as they may have had prior to the negotiation and drafting thereof. (f) Notwithstanding Section 3.4 of the Admission Fee Agreement, the Actions shall not be dismissed unless and until the Admission Fee Agreement becomes effective hereunder. 4. Counterpart Execution. To facilitate execution, this letter agreement may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature and acknowledgment of, or on behalf of, each party, or that the signature and acknowledgment of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures and acknowledgments of each of the parties hereto. If this letter accurately reflects our agreement concerning the Admission Fee Agreement and the subject matter thereof, kindly countersign it where indicated below and return the fully executed letter to the undersigned. Upon complete execution, this letter will be effective as of the date hereof, as set forth above. PLAYERS LAKE CHARLES, LLC _____________________________ SHOWBOAT STAR PARTNERSHIP _____________________________ AGREED TO AND ACCEPTED: CITY OF LAKE CHARLES, LOUISIANA _________________________________ McNEESE STATE UNIVERSITY _________________________________ SOWELA TECHNICAL INSTITUTE ________________________________ CALCASIEU PARISH SCHOOL BOARD _________________________________ AC 160594 EX-10 8 04/03/98 21 PLAYERS INTERNATIONAL, INC. SECOND AMENDED AND RESTATED CREDIT AGREEMENT This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as of March 11, 1998 and entered into by and among PLAYERS INTERNATIONAL, INC., a Nevada corporation, as the borrower ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender" and collectively as "Lenders"), WELLS FARGO BANK, NATIONAL ASSOCIATION, ("WFB," and, in its capacity as administrative agent for Lenders, "Administrative Agent" and, in its capacity as managing agent for Lenders, "Managing Agent"), as a Lender, the Administrative Agent, the Managing Agent and the Arranger. PRELIMINARY STATEMENTS A. Company, Lenders, Administrative Agent, Managing Agent and certain other financial institutions have heretofore entered into that certain Credit Agreement dated as of August 25, 1995, as amended by that certain First Amendment to Credit Agreement dated as of August 7, 1996 (as so amended, the "Original Credit Agreement"). B. The Original Credit Agreement was amended and restated by that certain Amended and Restated Credit Agreement dated as of December 16, 1996 (said Amended and Restated Credit Agreement, as amended by the First Amendment thereto dated as of February 14, 1997 and the Second Amendment thereto dated as of March 15, 1997, being the "Existing Credit Agreement"). C. Company, Lenders, Administrative Agent, Managing Agent and Arranger desire to amend and restate the Existing Credit Agreement in its entirety in order to provide, among other things, that (i) the Commitments under the Existing Credit Agreement, in the aggregate amount of $50,000,000, shall be increased to $80,000,000; (ii) the Company shall have the right to request that the Revolving Loans bear interest with respect to either the Base Rate or the Adjusted Eurodollar Rate; (iii) the Commitment Termination Date shall be extended to March 31, 2003; (iv) the interest rates and commitment fees shall be revised as set forth herein; (v) the covenants shall be revised as set forth herein; and (vi) the other terms and provisions of the Existing Credit Agreement shall otherwise be modified as set forth herein. D. On the Effective Date, concurrently with the first borrowing of Revolving Loans hereunder, the Company will repay Existing Revolving Loans outstanding on the Effective Date in an amount such that (i) all Existing Revolving Loans owed to each Noncontinuing Lender shall be repaid in full and (ii) the Revolving Loans owed to each Lender shall be in proportion to each such Lender's Pro Rata Share. Immediately following such repayment, each Noncontinuing Lender shall cease to be a Lender hereunder. E. Company agrees that its existing pledge and grant of a security interest in substantially all of its present and future real and personal property will continue as security for the payment and performance of the Obligations of Company. F. Company agrees that its existing pledge of all of its capital stock in each of its Subsidiaries, whether now existing or hereafter created or acquired, will continue as security for the payment and performance of the Obligations of Company. G. Company agrees to cause each of its Subsidiaries to confirm and agree that (i) its existing guaranty of the obligations of Company under the Existing Credit Agreement will continue as a guaranty of the Obligations hereunder and (ii) its existing grant of a security interest in substantially all of its assets to secure such guaranty will continue as security for the payment and performance of such guaranty. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Company, Lenders, Administrative Agent, Managing Agent and Arranger agree that the Existing Credit Agreement shall be amended and restated, without novation, as follows: SECTION 1. DEFINITIONS 1.1 Certain Defined Terms. The following terms used in this Agreement shall have the following meanings: "Acknowledgement and Confirmation" means an Acknowl edgement and Confirmation Agreement dated as of the Effective Date, substantially in the form of Exhibit X hereto, pursuant to which each Guarantor shall acknowledge and confirm that its obligations under the Guaranties and the Collateral Documents to which it is a party shall continue to guaranty or secure, as the case may be, the Obligations of Company hereunder, as such Acknowledgement and Confirmation Agreement may hereafter be amended, supplemented or otherwise modified from time to time. "Adjusted Eurodollar Rate" means, for any Interest Period, the arithmetic average of the rate of interest at which deposits (approximately equal to the amount of the requested Loan and for the same term as the requested Interest Period) are offered to WFB in the London interbank eurodollar market for delivery on the first day of the Interest Period, as adjusted for reserve requirements and rounded upwards, if necessary, to the next higher 1/16%. "Administrative Agent" means WFB. "Affected Lender" has the meaning assigned to that term in subsection 2.6C. "Affiliate", as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means (i) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise or (ii) the beneficial ownership of 10% or more of any class of voting capital stock of a Person (on a fully diluted basis) or of warrants or other rights to acquire such class of capital stock (whether or not presently exercisable). "Agreement" means this Second Amended and Restated Credit Agreement dated as of March 11, 1998, as it may be amended, supplemented or otherwise modified from time to time. "Allocated Costs of Internal Counsel" means, as of any date of determination, the internal costs imputed to in-house counsel employed by Administrative Agent for the review, negotiation, preparation, execution and administration of the Loan Documents, as based on the time records submitted to Company within 90 days of the services performed by such counsel at an hourly rate not to exceed the then prevailing market rate in Los Angeles, California for an attorney with a minimum of ten years experience in financing transactions. "Amendments to Missouri Pledge and Security Agreements" means (i) that certain Amendment to Company Pledge Agreement by and between Company, and Administrative Agent, as Secured Party, (ii) that certain Amendment to Players Holding Pledge Agreement between PHI and Administrative Agent, as Secured Party, (iii) that certain Amendment to Subsidiary Security Agreement (Missouri) by and among PMHN, PMH, PMHLP, and Administrative Agent, as Secured Party, (iv) that certain Amendment to Partner ship Interest Security Agreement by and between PMH and Administrative Agent, as Secured Party, (v) that certain Amend ment to Partnership Interest Security Agreement by and between PMHN and Administrative Agent, as Secured Party, and (vi) that certain Amendment to Joint Venture Interest Security Agreement by and between PMHLP and Administrative Agent, as Secured Party, each dated as of the date hereof, substantially in the forms of Exhibit XI-A, XI-B, XI-C, XI-D, XI-E, and XI-F hereto, respectively, as each such amendment may hereafter be amended, supplemented or otherwise modified from time to time. "Applicable Base Rate Margin" means, as of any date of determination, (i) a percentage per annum as shown below deter mined by the Leverage Ratio on the date of the most recent Pricing Determination Certificate delivered by Company pursuant to Subsection 4.1T or Subsection 6.1(xvii) and the average daily Total Utilization of Commitments for the 30 day period ending on the date of such Pricing Determination Certificate; provided that the Applicable Base Rate Margin shall not be adjusted upon receipt of a Pricing Determination Certificate until the first Business Day of the first calendar month following the date on which such Pricing Determination Certificate is due or (ii) if Company has failed to provide such certificate within the time period set forth for such delivery in Subsection 6.1(xvii), the Applicable Base Rate Margin shall be 1.00% on and after the first Business Day following the date on which delivery of such Pricing Determination Certificate was due until the first Business Day of the month following the date that such past due certificate is actually received by Administrative Agent; provided further that on the first Business Day of the month following receipt of a past due certificate by Administrative Agent, the Applicable Base Rate Margin shall be determined as set forth in clause (i) above: Leverage Ratio Applicable Base Rate Margin less than or equal to 2.50 0.00% greater than 2.50 0.75% but less than or equal to 3.00 greater than 3.00 1.00% If on any date of determination, the average daily Total Utilization of Commitments for the 30 day period ended on the date of the most recent Pricing Determination Certificate delivered by Company pursuant to Subsection 4.1T or Subsection 6.1(xvii) date is less than $30,000,000, then, subject to clauses (i) and (ii) above, the Applicable Base Rate Margins listed above shall be reduced by 15 basis points (0.15%) for such date of determination; provided, however, such Applicable Base Rate Margins shall never be less than zero. "Applicable Commitment Fee Percentage" means, as of any date of determination, (i) a percentage per annum as shown below determined by the Leverage Ratio on the date of the most recent Pricing Determination Certificate delivered by Company pursuant to Subsection 4.1T or Subsection 6.1(xvii) and the average daily Total Utilization of Commitments for the 30 day period ending on the date of such Pricing Determination Certificate; provided that the Applicable Commitment Fee Percentage shall not be adjusted upon receipt of a Pricing Determination Certificate until the first Business Day of the first calendar month following the date on which such Pricing Determination Certificate is due or (ii) if Company has failed to provide such certificate within the time period set forth for such delivery in Subsection 6.1(xvii), the Applicable Commitment Fee Percentage shall be 0.50% on and after the first Business Day following the date on which delivery of such Pricing Determination Certificate was due until the first Business Day of the month following the date that such past due certificate is actually received by Administrative Agent; provided further that on the first Business Day of the month following receipt of a past due certificate by Administrative Agent, the Applicable Commitment Fee Percentage shall be deter mined as set forth in clause (i) above: Leverage Ratio Applicable Commitment Fee % _ less than or equal to 1.50 0.30% greater than 1.50 0.40% but less than or equal to 2.00 greater than 2.00 0.50% If on any date of determination, the average daily Total Utilization of Commitments for the 30 day period ended on the date of the most recent Pricing Determination Certificate delivered by Company pursuant to Subsection 4.1T or Subsection 6.1(xvii) date is less than $30,000,000, then, subject to clauses (i) and (ii) above, the Applicable Commitment Fee Percentages listed above shall be reduced by 10 basis points (0.10%) for such date of determination. "Applicable Eurodollar Margin" means, as of any date of determination, (i) a percentage per annum as shown below deter mined by the Leverage Ratio on the date of the most recent Pricing Determination Certificate delivered by Company pursuant to Subsection 4.1T or Subsection 6.1(xvii) and the average daily Total Utilization of Commitments for the 30 day period ending on the date of such Pricing Determination Certificate; provided that the Applicable Eurodollar Margin shall not be adjusted upon receipt of a Pricing Determination Certificate until the first Business Day of the first calendar month following the date on which such Pricing Determination Certificate is due or (ii) if Company has failed to provide such certificate within the period set forth for such delivery in Subsection 6.1(xvii), the Applicable Eurodollar Margin shall be 2.50% on and after the first Business Day following the date on which delivery of such Pricing Determination Certificate was due until the first Business Day of the month following the date that such past due certificate is actually received by Administrative Agent; provided further that on the first Business Day of the month following receipt of a past due certificate by Administrative Agent, the Applicable Eurodollar Margin shall be determined as set forth in clause (i) above: Leverage Ratio Applicable Eurodollar Margin less than or equal to 1.50 1.00% greater than 1.50 1.50% but less than or equal to 2.00 greater than 2.00 2.00% but less than or equal to 2.50 greater than 2.50 2.25% but less than or equal to 3.00 greater than 3.00 2.50% If on any date of determination, the average daily Total Utilization of Commitments for the 30 day period ended on the date of the most recent Pricing Determination Certificate delivered by Company pursuant to Subsection 4.1T or Subsection 6.1(xvii) date is less than $30,000,000, then, subject to clauses (i) and (ii) above, the Applicable Eurodollar Margins listed above shall be reduced by 15 basis points (0.15%) for such date of determination. "Arranger" means WFB. "Assessment" means the obligation of any Person that owns an equity interest in any legal entity to pay or contribute additional capital to such entity, whether such obligation arises on a scheduled basis or upon the occurrence of one or more contingent events. "Asset Sale" means the sale by Company or any of its Subsidiaries to any Person other than Company or any of its wholly-owned Subsidiaries of (i) any of the stock of any of Company's Subsidiaries, (ii) 50% or more of the assets of Company or any of its Subsidiaries, or (iii) any other assets used or useful in the operations of Company or its Subsidiaries (whether tangible or intangible) outside of the ordinary course of business. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy", as now and hereafter in effect, or any successor statute. "Barges" means all barges located at or used in connection with the Illinois Facilities or the Louisiana Facilities, whether owned on the date hereof or subsequently acquired, including, without limitation, all barges that are documented, registered or certified pursuant to the laws of the State of Illinois or the State of Louisiana. "Base Rate" means, at any time, the higher of (x) the Prime Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate. "Base Rate Loans" means Loans bearing interest at rates determined by reference to the Base Rate as provided in subsection 2.2A. "Best Knowledge" means, as applied to any individual, actual knowledge by such individual of any fact and means, as applied to Company, (i) actual knowledge by any Responsible Officer of any fact or (ii) imputed knowledge of any fact which should, upon the reasonable exercise of diligence (appropriate for the circumstances in question) by any such Responsible Officer in his or her employment position, have been known. "Business Day" means (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of California, Nevada or New Jersey or is a day on which banking institutions located in any such state are authorized or required by law or other governmental action to close, and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day described in clause (i) above and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Capital Lease," as applied to any Person, means any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Cash" means money, currency or a credit balance in a Deposit Account. "Cash Equivalents" means, as at any date of determina tion, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obliga tions issued by any state of the United States of America or any political subdivision of any such state or any public instrumen tality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, the highest rating obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisi tion thereof, a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers' accep tances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator), (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000 and (c) has a long-term rating of not less than "A-" from S&P or "A3" from Moody's; and (v) shares of any money market mutual fund that (a) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody's. "Cash Proceeds" means Cash payments (including any Cash received by way of deferred payment pursuant to, or monetization of, a note receivable or otherwise, but only as and when so received) and Cash Equivalents received by Company or any of its Subsidiaries from any Asset Sale or upon the occurrence of an Event of Loss. "Change of Control" means (i) any Person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall have acquired "beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Company representing 20% or more of the combined voting power of all securities of Company entitled to vote in the election of directors; or (ii) during any period of up to 12 consecutive months, commencing before or after the date of this Agreement, individuals who at the beginning of such 12-month period were directors of Company shall cease for any reason to constitute a majority of the Board of Directors of Company; or (iii) any Person or "group" shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that upon consummation shall result in its or their acquisition of or control over, securities of Company representing 20% or more of the combined voting power of all securities of Company entitled to vote in the election of directors; provided that a Change of Control shall not be deemed to occur under clauses (i) or (iii) above if the Person referred to in either such clause is an Excluded Person, or the "group" referred to in either such clause consists exclusively of two or more Excluded Persons, unless (x) the transaction or series of transactions that creates the Change of Control is subject to Rule 13e-3 under the Exchange Act or any similar or successor rule and (y) immediately prior to and during the 180-day period following either (1) such transac tion or series of transactions referred to in clause (x), or (2) the time that any such Excluded Person or "group" consisting exclusively of two or more Excluded Persons shall have acquired "beneficial ownership", directly or indirectly, of 20% or more of such total voting power, as referred to in clause (iii), the Senior Notes are or become rated, in the case of clause (1) or (2), "B+" or below by S&P and "B1" or below by Moody's or, if either such rating agency or both such rating agencies shall no longer make a rating of the Senior Notes publicly available, the comparable ratings of another nationally recognized securities rating agency or agencies, as the case may be, selected by Company, which shall be substituted for S&P or Moody's or both, as the case may be; provided further that the 180-day period referred to in clause (y) shall be extended for so long as the rating of the Senior Notes is under publicly announced considera tion for possible downgrade by any such rating agency. "Collateral" means all the real, personal and mixed property made subject to a Lien pursuant to the Collateral Documents. "Collateral Account" has the meaning assigned to that term in the Collateral Account Agreement. "Collateral Account Agreement" means the Collateral Account Agreement dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, pursuant to which Company may pledge cash to Administrative Agent to secure the obligations of Company to reimburse Administrative Agent for payments made under one or more Letters of Credit as provided in Section 8, as such Collateral Account Agreement has been amended to the date hereof and as it may hereafter be amended, supple mented or otherwise modified from time to time. "Collateral Assignment Agreement" means that certain Collateral Assignment Agreement between PMGC and Administrative Agent dated as of August 25, 1995, executed and delivered pursu ant to the Original Credit Agreement, as it has been amended to the date hereof and as it may hereafter be amended, supplemented or otherwise modified, from time to time. "Collateral Documents" means the Existing Collateral Documents, any amendments, supplements or modifications to the Existing Collateral Documents, and all other instruments or documents now or hereafter granting Liens on property of Company or any of its Subsidiaries to Administrative Agent for benefit of Lenders. "Commitments" means the commitments of Lenders to make Loans as set forth in subsection 2.1A, and the "Commitments" of any Lender means the commitments of such Lender to make Loans as set forth in subsection 2.1A. "Commitment Termination Date" means March 31, 2003. "Company" means Players International, Inc., a Nevada corporation. "Company Pledge Agreements" means those certain Pledge Agreements between Company and Administrative Agent dated August 25, 1995 executed and delivered pursuant to the Original Credit Agreement, as each such agreement has been amended to the date hereof and as each such agreement may hereafter be amended, supplemented or otherwise modified, from time to time. "Company Security Agreement" means that certain Security Agreement between Company and Administrative Agent dated August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as it has been amended to the date hereof and as it may hereafter be amended, supplemented or otherwise modi fied, from time to time. "Compliance Certificate" means a certificate substan tially in the form of Exhibit IX annexed hereto delivered to Administrative Agent and Lenders by Company pursuant to subsec tion 6.1(iv). "Consolidated Capital Expenditures" means, for any period, the sum of the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability and including that portion of Capital Leases that is capitalized on the consolidated balance sheet of Company and its Subsidiaries) by Company and its Subsidiaries during that period that, in conformity with GAAP, are included in "additions to property, plant and equipment" or comparable items reflected in the consoli dated statement of cash flows of Company and its Subsidiaries. "Consolidated EBITDA" means, for any period Consoli dated Net Income for such period plus, to the extent such items were subtracted in the determination of Consolidated Net Income, the sum of the amounts for such period of (i) Consolidated Interest Expense, (ii) provisions for taxes based on income, (iii) total depreciation expense, (iv) total amortization expense, and (v) other non-cash items reducing Consolidated Net Income less other non-cash and/or extraordinary, non-recurring items increasing Consolidated Net Income plus other extraordinary and non-recurring items decreasing Consolidated Net Income, all of the foregoing as determined on a consolidated basis for Company and its Subsidiaries in conformity with GAAP. "Consolidated Fixed Charges" means, for any period, the sum (without duplication) of the amounts for such period of (i) Consolidated Interest Expense, (ii) scheduled payments of principal on the long-term portion of Consolidated Total Debt, (iii) the principal component of payments on Capital Leases and (iv) all Assessments payable by Company or any of its Subsid iaries during such period. "Consolidated Interest Expense" means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Company and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Company and its Subsidiaries, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Interest Rate Agreements, but excluding, however, any amounts referred to in subsection 2.3 payable to Administrative Agent and Lenders on or before the Effective Date. "Consolidated Net Income" means, for any period, the net income (or loss) of Company and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; provided that there shall be excluded (i) the income (or loss) of any Person (other than a Subsidiary of Company) in which any other Person (other than Company or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distri butions actually paid to Company or any of its Subsidiaries by such Person during such period, (ii) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Company or is merged into or consolidated with Company or any of its Subsidiaries or that Person's assets are acquired by Company or any of its Subsidiaries, (iii) the income of any Subsidiary of Company to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (iv) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the extent not included in clauses (i) through (iv) above) any net extraordinary gains or net non-cash extraordinary losses. "Consolidated Tangible Net Worth" means, as at any date of determination, the sum of the par value of Company's capital stock and additional paid-in capital plus retained earnings (or minus accumulated deficits) less all intangible assets (including goodwill and excess purchase price over historical basis entries) of Company and its Subsidiaries on a consolidated basis deter mined in conformity with GAAP plus, to the extent the Company's net worth has been reduced thereby, the amount of any non-cash impairment loss recognized in accordance with FASB 121 in the net book value of or loss on the disposition of the Company's and its Subsidiaries' interest in the Maryland Heights Facilities and in any other assets used in the operation of the Maryland Heights Facilities. "Consolidated Total Assets" means as at any date of determination, the total assets of Company and its Subsidiaries which would be shown as assets on a consolidated balance sheet of Company and its Subsidiaries as of such date prepared in accor dance with GAAP, after eliminating all amounts properly attribut able to minority interests, if any, in the stock and surplus of Subsidiaries. "Consolidated Total Debt" means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Company and its Subsidiaries on a consolidated basis in accordance with GAAP. "Consolidating" means, as used to describe financial statements referred to in subsections 5.3, 6.1(ii), 6.1(iii) and 6.1(xiv), the separate financial statements reflecting the accounts of Company and its Subsidiaries. "Contingent Obligation", as applied to any Person, means any direct or indirect liability, contingent or otherwise, of that Person (i) with respect to any Indebtedness, lease, dividend or other obligation of another if the primary purpose or intent thereof by the Person incurring the Contingent Obligation is to provide assurance to the obligee of such obligation of another that such obligation of another will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, (ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings, (iii) under Interest Rate Agreements, or (iv) to make an Investment in any other Person. Contingent Obligations shall include, without limitation, (a) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another, (b) the obligation to make take-or-pay or similar payments if required regardless of non-performance by any other party or parties to an agreement, and (c) any liability of such Person for the obligation of another through any agree ment (contingent or otherwise) (X) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (Y) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if less, the amount to which such Contingent Obligation is specifi cally limited. "Contractual Obligation", as applied to any Person, means any provision of any Security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "Deposit Account" means a demand, time, savings, passbook or like account with a bank, savings and loan associa tion, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit. "Dollars" and the sign "$" mean the lawful money of the United States of America. "Effective Date" means the date on or before March 31, 1998, on which the conditions set forth in subsection 4.1 are first satisfied or waived in writing by Administrative Agent and Requisite Lenders. "Eligible Assignee" means (A)(i) a commercial bank organized under the laws of the United States or any state thereof; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; and (iv) any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act) which extends credit or buys loans as one of its businesses including, but not limited to, insurance companies, mutual funds and lease financing companies, in each case (under clauses (i) through (iv) above) that is reasonably acceptable to and consented to by Managing Agent; and (B) any Lender and any Affiliate of any Lender; provided that no Affiliate of Company shall be an Eligible Assignee. "Employee Benefit Plan" means any "employee benefit plan" as defined in Section 3(3) of ERISA which is, or was at any time, maintained or contributed to by Company or any of its ERISA Affiliates. "Environmental Claim" means any accusation, allegation, notice of violation, claim, demand, abatement order or other order or direction (conditional or otherwise) by any governmental authority or any Person for any damage, including, without limitation, personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restric tions, in each case relating to, resulting from or in connection with Hazardous Materials and relating to Company, any of its Subsidiaries, any of their respective Affiliates or any Facility. "Environmental Indemnities" means (i) the Environmental Indemnity from Company in favor of Administrative Agent on behalf of Lenders dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, pursuant to which Company indemnifies Administrative Agent on behalf of Lenders against environmental risks, as it has been amended to the date hereof and as it may hereafter be amended, supplemented or other wise modified from time to time and (ii) the Environmental Indem nity from Company in favor of Administrative Agent on behalf of Lenders dated as of January 9, 1998, executed and delivered pursuant to the Existing Credit Agreement, pursuant to which Company indemnifies Administrative Agent on behalf of Lenders against environmental risks, as it has been amended to the date hereof and as it may hereafter be amended, supplemented or other wise modified from time to time. "Environmental Laws" means all statutes, ordinances, orders, rules, regulations, plans, policies or decrees and the like relating to (i) environmental matters, including, without limitation, those relating to fines, injunctions, penalties, damages, contribution, cost recovery compensation, losses or injuries resulting from the Release or threatened Release of Hazardous Materials, (ii) the generation, use, storage, transpor tation or disposal of Hazardous Materials, or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner appli cable to Company or any of its Subsidiaries or any of their respective properties, including, without limitation, the Compre hensive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601 et seq.), the Hazardous Materials Transporta tion Act (49 U.S.C. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water Pollution Control Act ( 33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136 et seq.), the Occupational Safety and Health Act (29 U.S.C. 651 et seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), each as amended or supplemented, and any analogous future or present local, state and federal statutes and regulations promulgated pursuant thereto, each as in effect as of the date of determination. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ERISA Affiliate", as applied to any Person, means (i) any corporation which is, or was at any time, a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is, or was at any time, a member; (ii) any trade or business (whether or not incorporated) which is, or was at any time, a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is, or was at any time, a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is, or was at any time, a member. "ERISA Event" means (i) a "reportable event" within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Company or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to termi nate any Pension Plan, or the occurrence of any event or condi tion which might constitute grounds under ERISA for the termina tion of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Company or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal by Company or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiem ployer Plan if there is any potential liability therefor, or the receipt by Company or any of its ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Company or any of its ERISA Affiliates of any material fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Company or any of its ERISA Affiliates in connection with any such Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan. "Eurodollar Rate Loans" means Loans bearing interest at rates determined by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A. "Event of Default" means each of the events set forth in Section 8. "Event of Loss" means, with respect to any property or asset, (i) any loss, destruction or damage of such property or asset or (ii) any condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property or asset, or confiscation or requisition of the use of such property or asset. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "Excluded Person" means (a) Company or any Guarantor wholly-owned by Company, (b) any employee benefit plan of Company or any Guarantor wholly-owned by Company or any trustee or similar fiduciary holding capital stock of Company for or pursuant to the terms of any such plan, (c) Merv Griffin, (d) Edward Fishman, (e) David Fishman, (f) Howard Goldberg, (g) Thomas E. Gallagher, (h) Marshall S. Geller, (i) Lee Seidler, (j) Peter J. Aranow, (k) Jay Green, (l) Earl Webb, (m) Lawrence Cohen, (n) Charles Masson, (o) Henry Applegate III, (p) John Groom and (q) members of the immediate families and Affiliates of any such Person (where the determination of whether a Person is an Affiliate is made without reference to clause (ii) of the definition of such term). "Existing Collateral Documents" means the Mortgages, the Ship Mortgages, the Guaranties, the Company Security Agree ment, the Subsidiary Security Agreements, the Company Pledge Agreements, the LLC Membership Interest Security Agreements, the Partnership Interest Security Agreements, the Resources Pledge and Security Agreement, the Collateral Assignment Agreement, all agreements listed on Schedule 1.1(a) hereto and all other instru ments or documents now granting Liens on property of Company or any of its Subsidiaries to Administrative Agent for benefit of Lenders. "Existing Credit Agreement" has the meaning specified in Preliminary Statement B to this Agreement. "Existing Letter of Credit" means each Letter of Credit (as defined in the Existing Credit Agreement) outstanding on the Effective Date that has not expired or been cancelled as of the Effective Date. "Existing Revolving Loan" has the meaning specified in subsection 2.1F. "Facilities" means, collectively, the Illinois Facili ties, the Louisiana Facilities, the Maryland Heights Facilities and the Louisiana Hotel Facilities. "Facility Debt" means for any Fiscal Quarter, the average of the aggregate principal amount of Loans outstanding, including Swing Line Loans, and the aggregate stated amount of Letters of Credit outstanding as of the last day of each calendar month in such Fiscal Quarter. "Federal Funds Effective Rate" means, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by Administrative Agent. "FF&E" means any and all furniture, fixtures and equip ment which have been installed or are to be installed and used in connection with the operation of the Improvements located upon any of the Premises and those items of furniture, fixtures and equipment which have been purchased or leased or are hereafter purchased or leased in connection with any of the Facilities. "Fiscal Quarter" means the calendar quarters ending on March 31, June 30, September 30 and December 31. "Fiscal Year" means the fiscal year period beginning April 1 of each calendar year and ending on the following March 31. "Fixed Charge Coverage Ratio" means, as of any date of determination, the ratio of (y) Consolidated EBITDA for the consecutive four full Fiscal Quarters most recently ended on or before such date of determination to (z) the sum of (i) Consoli dated Fixed Charges plus (ii) to the extent not included in clause (i), the amount of payments made in respect of purchase obligations for the Louisiana Ship known as the Star Casino for such four Fiscal Quarter period. "Flood Act" means the National Flood Insurance Act of 1968 as amended by the Flood Disaster Protection Act of 1973 (42 U.S.C. 4013 et. seq.). "Former Lender" has the meaning assigned to that term in subsection 10.1B(iii). "Funding and Payment Office" means the office of Administrative Agent located at the address for Notices of Borrowing set forth on the signature pages hereof. "Funding Date" means the date of the funding of a Loan or the issuance of a Letter of Credit. "GAAP" means, subject to the limitations on the appli cation thereof set forth in subsection 1.2, generally accepted accounting principles set forth in 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 state ments by such other entity as may be approved by a significant segment of the accounting profession, in each case as the same are applicable to the circumstances as of the date of determina tion. "Gaming Authority" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States federal or foreign govern ment, any state, province or any city or other political subdivi sion or otherwise and whether now or hereafter in existence, or any officer or official thereof, including, without limitation, the Illinois Gaming Authorities, the Missouri Gaming Authorities, the Louisiana Gaming Authorities, and the Kentucky Gaming Authorities, with authority to regulate any gaming operation (or proposed gaming operation) owned, managed or operated by Company or any of its Subsidiaries. "Gaming Laws" means all statutes, rules, regulations, ordinances, codes and administrative or judicial precedents pursuant to which any Gaming Authority possesses regulatory, licensing or permit authority over gambling, gaming or casino activities conducted by Company and its Subsidiaries within its jurisdiction, including the Illinois Riverboat Gambling Act, the Kentucky Gaming Law, the Louisiana Riverboat Economic Development and Gaming Control Act, and the Missouri Gaming Act. "Governmental Acts" has the meaning assigned to that term in subsection 3.5A. "Governmental Authority" means any of the United States government, the government of any state thereof and any political subdivision, agency, department, commission, court, board, bureau or instrumentality of any of them, including any local authori ties and any Gaming Authority. "Governmental Authorization" means any permit, license, authorization, plan, directive, consent, order or consent decree of or from any Governmental Authority, including any Gaming Authority. "Guarantor" means any of PBD, PDI, PEI, PHI, PLC, PLCI, PLCR, PMGC, PMH, PMHN, PML, PMHLP, PNEV, PRES, PRI, PRM, PRLLC, PSI, RR, SIRCC, and SSP and "Guarantors" means all of them, collectively; provided, however, that "Guarantors" shall also mean any Person that becomes a Subsidiary of Company after the Effective Date. "Guaranties" means (i) the Guaranty dated as of August 25, 1995, executed and delivered by each then existing Guarantor in favor of Administrative Agent, pursuant to the Original Credit Agreement, and (ii) the PHI Guaranty, as each such agreement has been amended to the date hereof and as each such agreement may hereafter be amended, supplemented or other wise modified from time to time, including, without limitation, by the inclusion as Guarantors of Persons becoming Subsidiaries of Company after the Effective Date. "Harrah's" means Harrah's Maryland Heights Corporation, a Nevada corporation. "Hazardous Materials" means (i) any chemical, material or substance at any time defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous mate rials", "extremely hazardous waste", "restricted hazardous waste", "infectious waste", "toxic substances" or any other formulations intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosi vity, reactivity, carcinogenicity, toxicity, reproductive toxi city, "TCLP toxicity" or "EP toxicity" or words of similar import under any applicable Environmental Laws or publications promul gated pursuant thereto; (ii) any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (iv) any flammable substances or explosives; (v) any radioactive materials; (vi) asbestos in any form; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million; (ix) pesticides; and (x) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of the Facilities. "Hostile Acquisition" means any acquisition of the outstanding Securities or capital stock of any corporation, partnership or other Person that is not an Affiliate of Company other than (i) an acquisition which has been approved by resolu tions of the Board of Directors of the Person being acquired or by similar action if the Person is not a corporation, and as to which such approval has not been withdrawn, or (ii) any acquisi tion of less than twenty percent (20%) of the outstanding Securities of any class or type of any Person; provided that an acquisition of Securities described in clause (ii) hereof as to which Company or any of its Subsidiaries is required to file a statement containing the information required by Schedule 13D under the Exchange Act shall not be considered a Hostile Acquisi tion only if the then currently effective Schedule 13D of Company or such Subsidiary indicates that Company or such Subsidiary views the Securities as an attractive Investment and that Company or such Subsidiary has no plans or proposals which relate to or which would result in any of the transactions described in para graphs (b) through (j) of Item 4 of Schedule 13D. "Illinois Facilities" means the Illinois Premises and the Improvements made thereon, along with all other related personal and mixed property located thereon or related thereto, including, without limitation, a four-deck paddle-wheeler riverboat casino, a docking site (including all Barges), a new office building, a cabaret style theater, all related restaurant, bar, recreation and other facilities and all FF&E and other personal property located therein, as more fully described in the "Business" and "Properties" sections of the 10-K. "Illinois Gaming Authorities" means, without limita tion, the Illinois Gaming Board and any other applicable Govern mental Authority involved in the regulation of gaming and gaming activities conducted by Company or any of its Subsidiaries in the State of Illinois. "Illinois Mortgage" means that certain Mortgage, Fixture Filing and Security Agreement with Assignment of Rents, by and among SIRCC, as mortgagor and owner, in favor of Adminis trative Agent, as mortgagee, dated August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as it has been amended to the date hereof and as it may hereafter be amended, supplemented or otherwise modified from time to time. "Illinois Premises" means the real property owned in fee or leased by Company or its respective Subsidiaries with respect to the property commonly known as the Metropolis complex in Metropolis, Illinois, as more fully described on Schedule A-1 hereto. "Illinois Riverboat Gambling Act" means the Riverboat Gambling Act of Illinois, as from time to time amended, or any successor provision of law, and the regulations promulgated thereunder. "Illinois Ships" means each of the Players Riverboat Casino II and any other riverboat casino subsequently acquired by Company or any of its Subsidiaries and operated out of the Illinois Facilities, in each case, including the engines, boilers, machinery, masts, derricks, drawworks, spars, boats, anchors, cables, chains, tackle, fittings, pumping equipment and all other components and appurtenances thereto, whether now owned or hereafter acquired, whether on board or not, and whether installed by Company, SIRCC or any other Person, and also any and all changes, improvements, alterations, additions, renewals and replacements at any time made in or to such units or any parts thereof. "Improvements" means all buildings, structures, facilities and other improvements of every kind and description now or hereafter located on any of the Premises, including all parking areas, roads, driveways, walks, fences, walls, beams, recreation facilities, drainage facilities, lighting facilities and other site improvements, all water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone and other utility equipment and facilities, all plumbing, lighting, heating, ventilating, air-conditioning, refrigerating, incinerating, compacting, fire protection and sprinkler, surveillance and security, vacuum cleaning, public address and communications equipment and systems, all screens, awnings, floor coverings, partitions, elevators, escalators, motors, machinery, pipes, fittings and other items of equipment and personal property of every kind and description now or hereafter located on any of the Premises or attached to the improvements that by the nature of their location thereon or attachment thereto are real property under applicable law; and including all materials intended for the construction, reconstruction, repair, replacement, altera tion, addition or improvement of or to such buildings, equipment, fixtures, structures and improvements. "Indebtedness", as applied to any Person, means (i) all indebtedness for borrowed money, (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money, (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obli gations incurred under ERISA), which purchase price is (a) due more than six months from the date of incurrence of the obliga tion in respect thereof or (b) evidenced by a note or similar written instrument, and (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person. Any Contingent Obligation shall not constitute Indebted ness until such time as, and only to the extent that, the under lying obligation owed by the primary obligor to which such Contingent Obligation relates has become due and payable and remains unsatisfied after the due date thereof. Obligations under Interest Rate Agreements constitute Contingent Obligations. "Indemnitee" has the meaning assigned to that term in subsection 10.3. "Indenture" means that certain Indenture, dated as of April 10, 1995, executed by Company, its Subsidiaries and First Fidelity Bank, National Association, as trustee, in connection with the issuance of and governing the terms of the Senior Notes, as in effect on August 25, 1995, except to the extent amended in accordance with subsection 7.13. "Intellectual Property" means all patents, trademarks, tradenames, copyrights, technology, know-how and processes used in or necessary for the conduct of the business of Company and its Subsidiaries as currently conducted that are material to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company and its Subsidiaries, taken as a whole. "Interest Coverage Ratio" means, as of any date of determination, the ratio of (x) Consolidated EBITDA for the immediately preceding four Fiscal Quarters to (y) the Consoli dated Interest Expense for the immediately preceding four Fiscal Quarters. "Interest Payment Date" means (i) with respect to any Base Rate Loan, the last Business Day of each March, June, September and December of each year, commencing on the first such date to occur after the Effective Date, and (ii) with respect to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided that in the case of each Interest Period of longer than three months, "Interest Payment Date" shall also include each date that is three months after the commencement of such Interest Period. "Interest Period" has the meaning assigned to that term in subsection 2.2B. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect Company or any of its Subsidiaries against fluctuations in interest rates. "Interest Rate Exchangers" means any Lender that is a party to a Lender Interest Rate Agreement. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter. "Investment" means (i) any direct or indirect purchase or other acquisition by Company or any of its Subsidiaries of, or of a beneficial interest in, any Securities of any other Person (other than a Person that is a wholly-owned Subsidiary of Company), (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by any Subsidiary of Company from any Person other than Company or any of its Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Company or any of its Subsidiaries to any other Person (other than a Person that is a wholly-owned Subsidiary of Company), including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business. 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. "Issuing Lender" means WFB and any assignee of WFB acting as Issuing Lender. "Joint Venture" means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party. "Joint Venture Agreement" means the Partnership Agree ment, dated as of November 2, 1995, by and between PMHLP and Harrah's. "Joint Venture Interest Security Agreement" means that certain Joint Venture Interest Security Agreement between PMHLP and Administrative Agent, dated as of December 16, 1996, executed and delivered pursuant to the Existing Credit Agreement, as such agreement may hereafter be amended, supplemented or otherwise modified from time to time. "Kentucky Gaming Authority" means the Kentucky Racing Commission. "Kentucky Gaming Law" means Section 230.225 of the Kentucky Revised Statutes and the rules and regulations promul gated thereunder. "Lender" and "Lenders" means the persons identified as "Lenders" and listed on the signature pages of this Agreement, together with their successors and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall include Swing Line Lender unless the context otherwise requires. "Lender Assignment Agreement" has the meaning assigned to that term in subsection 10.1A and a form of which is attached as Exhibit IV hereto, as noted in subsection 10.1B. "Lender Interest Rate Agreements" means each Interest Rate Agreement between Company and a Lender, which agreement provides that it is intended to be secured by the Collateral. "Letter of Credit" or "Letters of Credit" means Standby Letters of Credit issued or to be issued by Administrative Agent for the account of Company pursuant to subsection 3.1. "Letter of Credit Usage" means, as at any date of determination, the sum of (i) the maximum aggregate amount which is or at any time thereafter may become available for drawing under all Letters of Credit then outstanding plus (ii) the aggre gate amount of all drawings under Letters of Credit honored by Administrative Agent and not theretofore reimbursed by Company (including any such reimbursement out of the proceeds of Loans pursuant to subsection 3.3B). "Leverage Ratio" means, as of any date of determina tion, the ratio of (y) Total Funded Debt on such date to (z) Consolidated EBITDA for the consecutive four full Fiscal Quarters most recently ended on or prior to such date. "License Revocation" means the revocation, failure to renew or suspension of, or the appointment of a receiver, super visor or similar official with respect to, any casino, gambling or gaming license issued by any Gaming Authority covering any casino, gambling or gaming facility owned or operated by Company, any of its Subsidiaries. "Lien" means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing. "LLC Membership Interest Security Agreements" means (i) those certain Security Agreements between each of PRI and PRM, and Administrative Agent, dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as each such agreement has been amended to the date hereof and each such agreement may hereafter be amended, supplemented or otherwise modified from time to time and (ii) those certain LLC Membership Interest Security Agreements between certain Subsidiaries of Company and Administrative Agent, dated as of December 16, 1996, executed and delivered pursuant to the Existing Credit Agreement, as each such Agreement may hereafter be amended, supplemented or otherwise modified from time to time. "Loan Documents" means this Agreement, the Notes, the Letters of Credit (and any applications for, or reimbursement agreements or other documents or certificates executed by Company in favor of Administrative Agent relating to, the Letters of Credit), the Collateral Account Agreement, the Collateral Documents, the New Loan Documents and all other instruments or documents executed in connection therewith. "Loan Exposure" means, with respect to any Lender as of any date of determination (i) prior to the termination of the Commitments, that Lender's Commitments and (ii) after the termination of the Commitments, the sum of (a) the aggregate outstanding principal amount of the Loans of that Lender plus (b) in the event that Lender is Administrative Agent, the aggre gate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (in each case net of any participations purchased by other Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all participations purchased by that Lender in any outstanding Letters of Credit or any unreimbursed drawings under any Letters of Credit plus (d) in the case of Swing Line Lender, the aggre gate outstanding principal amount of all Swing Line Loans (net of any participations therein purchased by other Lenders) plus (e) the aggregate amount of all participations purchased by that Lender in any outstanding Swing Line Loans. "Loan Party" means any of Company and any Guarantor and "Loan Parties" means Company and all Guarantors, collectively. "Loans" means, collectively, all Revolving Loans made pursuant to subsection 2.1A and all Swing Line Loans made pursuant to subsection 2.1B. "Louisiana Facilities" means the Louisiana Premises and the Improvements made thereon, along with all other related personal and mixed property located thereon or related thereto, including, without limitation, two three-deck paddle-wheeler riverboat casinos (individually known as the "Players Riverboat III" and the "Star Casino"), a docking site, floating entertainment island and floating administrative center (includ ing all Barges), a hotel, all related restaurant, bar, recreation and other facilities and all FF&E and other personal property located therein, as more fully described in the "Business" and "Properties" sections of the 10-K. "Louisiana Gaming Authorities" means, without limita tion, the Louisiana Gaming Control Board, the Riverboat Gaming Enforcement Division of the Louisiana State Police and any other applicable Governmental Authority involved in the regulation of gaming and gaming activities conducted by Company or any of its Subsidiaries in the State of Louisiana. "Louisiana Gaming Control Act" means the Louisiana Riverboat Economic Development and Gaming Control Act, as from time to time amended, or any successor provision of law, and the regulations promulgated thereunder. "Louisiana Hotel Facilities" means the Louisiana Hotel Premises and the Improvements made thereon, along with all other related personal and mixed property located thereon or related thereto, including without limitation a hotel building and other facilities and all FF&E and other personal property located therein. "Louisiana Hotel Mortgage" means that certain Act of Mortgage, Fixture Filing and Security Agreement with Pledge and Assignment of Leases and Rents, by and among PLC, as mortgagor and owner, in favor of Administrative Agent, as mortgagee, dated January 9, 1998, as it has been amended to the date hereof and as it may hereafter be amended, supplemented or otherwise modified from time to time. "Louisiana Hotel Premises" means the real property owned in fee by Company or its Subsidiaries with respect to the property formerly known as the Holiday Inn located in Lake Charles, Louisiana, as more fully described on Schedule A-3 hereto. "Louisiana Mortgage" means that certain Act of Mort gage, Fixture Filing and Security Agreement with Pledge and Assignment of Leases and Rents, among PLC, as mortgagor and owner, in favor of Administrative Agent, as mortgagee, dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as it has been amended to the date hereof and as it may hereafter be amended, supplemented or otherwise modified from time to time. "Louisiana Premises" means the real property owned in fee or leased by Company or its respective Subsidiaries with respect to the property commonly known as the Lake Charles complex in Lake Charles, Louisiana, as more fully described on Schedule A-2 hereto. "Louisiana Ships" means each of the Star Casino, the Players Riverboat III and any other riverboat casino subsequently acquired by Company or any of its Subsidiaries and operated out of the Louisiana Facilities, in each case, including the engines, boilers, machinery, masts, derricks, drawworks, spars, boats, anchors, cables, chains, tackle, fittings, pumping equipment and all other components and appurtenances thereto, whether now owned or hereafter acquired, whether on board or not, and whether installed by Company, PLC, SSP or any other Person, and also any and all changes, improvements, alterations, additions, renewals and replacements at any time made in or to such units or any parts thereof. "Managing Agent" means WFB. "Margin Stock" has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Maryland Heights Facilities" means the riverboat casino entertainment complex in Maryland Heights, Missouri operated by the Riverside Joint Venture as more fully described in the "Business" and "Properties" sections of the 10-K. "Maryland Heights Premises" means the real property owned in fee or leased by the Riverside Joint Venture with respect to the property commonly known as the Players Island Casino at Riverport Casino Center in Maryland Heights, St. Louis County, Missouri. "Maryland Heights Subsidiaries" means PMH, PMHN and PMHLP. "Material Adverse Effect" means (i) a material adverse effect upon the business, operations, properties, assets, condi tion (financial or otherwise) or prospects of Company and its Subsidiaries, taken as a whole, or (ii) the impairment of the ability of Company to perform, in any material respect, or of Administrative Agent or Lenders to enforce, the Obligations. "Missouri Gaming Act" means Sections 313.800 - 313.850 of the Revised Statutes of Missouri (Excursion Gambling Boats). "Missouri Gaming Authority" means Missouri Gaming Commission. "Missouri Pledge and Security Agreements" means (i) that certain Company Pledge Agreement dated as of August 25, 1995 between Company and Administrative Agent, (ii) the PHI Pledge Agreement, (iii) that certain Subsidiary Security Agreement (Missouri) dated as of December 16, 1996 between PMHN, PMH, PMHLP, and Administrative Agent, (iv) that certain Partnership Interest Security Agreement dated as of December 16, 1996 between PMH and Administrative Agent, (v) that certain Partnership Interest Security Agreement dated as of December 16, 1996 between PMHN and Administrative Agent, and (vi) that certain Joint Venture Interest Security Agreement dated as of December 16, 1996, between PMHLP and Administrative Agent. "Mortgage Amendments" has the meaning assigned thereto in subsection 4.1G. "Mortgages" means the Illinois Mortgage, the Louisiana Mortgage and the Louisiana Hotel Mortgage. "Multiemployer Plan" means a "multiemployer plan", as defined in Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is contributing, or ever has contributed, or to which Company or any of its ERISA Affiliates has, or ever has had, an obligation to contribute. "Net Cash Proceeds" means Cash Proceeds received from any Asset Sale or upon the occurrence of an Event of Loss, in each case, net of the sum of all bona fide direct fees, commis sions and other expenses incurred in connection therewith less the amount of (estimated reasonably and in good faith by Company) income, franchise, sales and other applicable taxes required to be paid by Company or any of its Subsidiaries as a result thereof within two years of the date of receipt of any such Cash Proceeds. "New Loan Documents" means this Agreement, the Notes, the Mortgage Amendments, the Ship Mortgage Amendments, the Acknowledgement and Confirmation, the Amendments to Missouri Pledge and Security Agreements and all other new agreements to be executed by the Loan Parties on the Effective Date. The New Loan Documents to be executed by each Loan Party are set forth on Schedule 1.1(b) hereto. "Noncontinuing Lenders" and "Noncontinuing Lender" means the persons identified on Schedule 1.1(c) hereto. "Notes" means, collectively, the Revolving Notes and the Swing Line Notes, as they may be amended, supplemented, or otherwise modified from time to time. "Notice of Borrowing" means a notice substantially in the form of Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant to subsection 2.1C with respect to a proposed borrowing. "Notice of Conversion/Continuation" means a notice substantially in the form of Exhibit II annexed hereto delivered by Company to Administrative Agent pursuant to subsection 2.2D with respect to a proposed conversion or continuation of the applicable basis for determining the interest rate with respect to the Loans specified therein. "Notice of Issuance of Letter of Credit" means a notice substantially in the form of Exhibit III annexed hereto delivered by Company to Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a Letter of Credit. "Notification Date" has the meaning assigned to that term in subsection 3.1A(iii). "Obligations" means all obligations of every nature of any Loan Party, from time to time owed to Administrative Agent, Managing Agent, Arranger, Lenders or any of them under the Loan Documents, whether for principal, interest, reimbursement of amounts drawn under Letters of Credit, fees, expenses, indemnification or otherwise. "Officers' Certificate" means, as applied to any corporation, a certificate executed on behalf of such corporation by its chairman of the board (if an officer) or president, vice presidents, chief financial officer or treasurer; provided that every Officers' Certificate with respect to the compliance with a condition precedent to the making of any Loans hereunder shall include (i) a statement that the officer or officers making or giving such Officers' Certificate have read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that, in the opinion of the signers, they have made or have caused to be made such examina tion or investigation as is necessary to enable them to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signers, such condition has been complied with. "Other Allowed Indebtedness (Secured)" means Indebted ness of the Company or any Subsidiary that consists of Purchase Money Debt and Capital Leases existing on the Effective Date plus other Purchase Money Debt and Capital Leases incurred after the Effective Date (including such Indebtedness incurred before the date of its acquisition by a Subsidiary acquired by Company after the Effective Date) in an aggregate outstanding principal amount not to exceed $5,000,000 at any time. "Other Allowed Indebtedness (Unsecured)" means Indebt edness of the Company or any Subsidiary which consists of (i) Indebtedness outstanding under the Senior Notes and (ii) all other unsecured Indebtedness, whether existing on the Effective Date or subsequently incurred (including such Indebtedness incurred before the date of its acquisition by a Subsidiary acquired after the Effective Date), of Company or any of its Subsidiaries, in an aggregate outstanding principal amount not to exceed in the case of this clause (ii) $15,000,000 at any time. "Participant Subsidiary" has the meaning assigned to that term in subsection 6.10B. "Partnership Interest Security Agreements" means (i) those certain Security Agreements between each of PRLLC and PRM, and Administrative Agent, each dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as each such agreement has been amended to the date hereof and as each such agreement may hereafter be amended, supplemented or otherwise modified from time to time, and (ii) those certain Partnership Interest Security Agreements between each of PMH, PMHN and SIRCC and Administrative Agent, each dated as of December 16, 1996, executed and delivered pursuant to the Existing Credit Agreement, as each such agreement may hereafter be amended, supplemented or otherwise modified from time to time. "PBD" means Players Bluegrass Downs, Inc., a Kentucky corporation. "PBGC" means the Pension Benefit Guaranty Corporation (or any successor thereto). "PCI" means PCI, Inc., a Nevada corporation. "PDI" means Players Development, Inc., a Nevada corporation. "PEI" means Players Entertainment, Inc., a Nevada corporation. "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA. "Permitted Encumbrances" means the following types of Liens (other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA): (i) Liens for taxes, assessments or governmental charges or claims the payment of which is not, at the time, required by subsection 6.3; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (iv) any attachment or judgment Lien not constituting an Event of Default under subsection 8.8; (v) leases or subleases granted to others (including, without limitation, any Subsidiary of Company) not inter fering in any material respect with the ordinary conduct of the business of Company or any of its Subsidiaries; and (vi) easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar immaterial charges or encumbrances that (a) arise prior to the Effective Date and are accepted by Administra tive Agent as exceptions to the Title Policies or (b) arise after the Effective Date and would not, either individually or in the aggregate, result in a Material Adverse Effect. "Person" means and includes natural persons, corpora tions, limited partnerships, general partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, limited liability companies or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "PHI" means Players Holding, Inc., a Nevada corporation wholly owned by Company. "PHI Guaranty" means the Guaranty dated as of December 16, 1996, executed and delivered by PHI in favor of Administrative Agent pursuant to the Existing Credit Agreement, as such Guaranty may hereafter be amended, supplemented or otherwise modified from time to time. "PHI Pledge Agreement" means that certain Pledge Agreement between PHI and Administrative Agent dated as of December 16, 1996, executed and delivered pursuant to the Existing Credit Agreement, as such Pledge Agreement may hereafter be amended, supplemented or otherwise modified from time to time. "PLC" means Players Lake Charles, LLC, a Louisiana limited liability company. "PLCI" means Players LC, Inc., a Nevada corporation. "PLCR" means Players Lake Charles Riverboat, Inc., a Louisiana corporation. "PMGC" means Players Mesquite Golf Club, Inc., a Nevada corporation. "PMH" means Players Maryland Heights, Inc., a Missouri corporation. "PMHLP" means Players MH, L.P., a Missouri limited partnership. "PMHN" means Players Maryland Heights Nevada, Inc., a Nevada corporation. "PML" means Players Mesquite Land, Inc., a Nevada corporation. "PNEV" means Players Nevada, Inc., a Nevada corporation. "PRES" means Players Resources, Inc., a Nevada corporation. "Policies of Insurance" means the insurance required to be obtained and maintained by Company throughout the term of this Agreement pursuant to subsection 6.4B hereof and Schedules 6.4(a) and 6.4(b) annexed hereto. "Potential Event of Default" means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default. "Premises" means, collectively, the Illinois Premises, the Louisiana Premises and the Louisiana Hotel Premises. "PRI" means Players Riverboat, Inc., a Nevada corporation. "Pricing Determination Certificate" means an Officers' Certificate of Company delivered on the Effective Date pursuant to subsection 4.1T and thereafter pursuant to subsection 6.1(xvii) setting forth in reasonable detail (i) the Consolidated EBITDA for the four consecutive Fiscal Quarter period ending on the date of such Officers' Certificate, (ii) the Leverage Ratio as of the last day of such period, and (iii) the average daily Total Utilization of Commitments for the 30 day period ending on the date of such Officers' Certificate. "Prime Rate" means the rate that WFB announces from time to time at its principal office in San Francisco, California as its prime lending rate, as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. WFB or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "PRLLC" means Players Riverboat, LLC, a Louisiana limited liability company. "PRM" means Players Riverboat Management, Inc., a Nevada corporation. "Pro Rata Share" means, with respect to each Lender, the percentage obtained by dividing (x) the Commitments of that Lender by (y) the aggregate Commitments of all Lenders, as such percentage may be adjusted by assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share of each Lender is set forth opposite the name of that Lender in Schedule 2.1 annexed hereto. "PSI" means Players Services, Inc., a New Jersey corporation. "Purchase Money Debt" means Indebtedness incurred to finance the acquisition of assets pertaining to any business reasonably related to any of Company's or its Subsidiaries' gaming business and necessary for, in support or anticipation of and ancillary to or in preparation for such gaming business provided that the amount of such Indebtedness does not exceed eighty percent (80%) of the purchase price of the asset acquired and provided further that such Indebtedness is incurred at the time of, or within 30 days following, such acquisition and provided still further that any Lien securing such Indebtedness shall attach only to the asset acquired and not to any other asset of the obligor of such Indebtedness. "Railroad" has the meaning assigned to that term in subsection 6.10D. "Refunded Swing Line Loans" has the meaning assigned to that term in subsection 2.1B. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Reimbursement Date" has the meaning assigned to that term in subsection 3.3B. "Related Business" means the gaming business (including parimutuel betting) conducted (or proposed to be conducted) by Company and its Subsidiaries as of the Effective Date and any and all reasonably related businesses necessary for, in support or anticipation of and ancillary to or in preparation for, the gaming business including, without limitation, the development, expansion or operation of any casino, hotel, casino/hotel, resort, casino/resort, riverboat casino, dock casino, any other type of casino, golf course, retail facility, entertainment center or similar facility. "Release" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including, without limitation, the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or into or out of any Facility, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property. "Requiring Lender" has the meaning given that term in Subsection 2.9. "Requisite Lenders" means two or more Lenders having or holding not less than sixty-six and two-thirds percent (66-2/3%) of the Loan Exposure, or if no Loans or Letters of Credit are outstanding, having not less than sixty-six and two-thirds percent (66-2/3%) of the Commitments; provided that, at any time that there shall be only one Lender, such Lender shall constitute Requisite Lenders. "Resources Pledge and Security Agreement" means that certain Pledge and Security Agreement between PRES and Adminis trative Agent dated as of December 16, 1996, executed and deliv ered pursuant to the Existing Credit Agreement, as such agreement may be amended from time to time. "Responsible Officer" means each of the following offi cers of Company or any of its Subsidiaries, at the time that any individual holds any such position: the chief executive officer, the president, the chief financial officer, the treasurer, any vice president, the general counsel and the corporate secretary. "Restricted Payment" means (i) any dividend or other distribution of items of distribution, direct or indirect, on account of any class of stock of Company in Company now or hereafter outstanding, except a distribution payable solely in interests of that class of stock to the holders of that class, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any interests of any class of stock of Company now or hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any interests of any class of stock of Company now or hereafter outstanding, (iv) any payment or prepayment of princi pal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in substance or legal defea sance), sinking fund or similar payment with respect to, any subordinated indebtedness, and (v) any payment or prepayment of principal of, premium, if any, or redemption, purchase, retire ment or defeasance (including in substance or legal defeasance) of the outstanding principal of any of the Senior Notes other than as required under the Indenture (after giving effect to any mandatory prepayment pursuant to subsection 2.4A(iii)) upon the occurrence of an Asset Sale or an Event of Loss. "Revolving Commitment" means the commitment of a Lender to make Revolving Loans to Company pursuant to subsection 2.1A, and "Revolving Commitments" means such commitments of all Lenders in the aggregate. "Revolving Loans" means the Loans made by Lenders to Company pursuant to subsection 2.1A and the Existing Revolving Loans converted into Revolving Loans pursuant to subsection 2.1F. "Revolving Notes" means the promissory notes of Company issued pursuant to subsection 2.1E, to evidence the Revolving Loans of the respective Lenders, substantially in the form of Exhibit V annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Riverside Joint Venture" means that certain Joint Venture between PMHLP and Harrah's for the development and opera tion of a riverboat casino entertainment complex in Maryland Heights, Missouri, as more fully described in the "Business" and "Properties" sections of the 10-K. "RR" means Riverfront Realty Corporation, an Illinois corporation. "Securities" means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or partici pations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended from time to time, and any successor statute. "Senior Notes" means those certain 10-7/8% Senior Notes Due 2005 of Company, in the original aggregate principal amount of $150,000,000 issued pursuant to the Indenture, as amended from time to time. "Ship Mortgages" means (i) the First Preferred Ship Mortgage by SSP in favor of the Trustee, for the benefit of Administrative Agent on behalf of Lenders, dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as such mortgage has been amended to the date hereof and as such mortgage may hereafter be amended, supplemented or otherwise modified from time to time and (ii) the First Preferred Ship Mortgages by each of PLC and SIRCC in favor of the Trustee, for the benefit of Administrative Agent on behalf of Lenders, each dated as of December 16, 1996, executed and delivered pursuant to the Existing Credit Agreement, as such mortgages may hereafter be amended, supplemented or otherwise modified from time to time. "Ship Mortgage Amendments" has the meaning assigned thereto in subsection 4.1G. "Ships" means, collectively, the Illinois Ships and the Louisiana Ships. "SIRCC" means Southern Illinois Riverboat/Casino Cruises, Inc., an Illinois corporation. "SIRCC Pledge Agreement" means that certain Pledge Agreement between SIRCC and Administrative Agent dated as of December 16, 1996, executed and delivered pursuant to the Existing Credit Agreement, as such agreement may be amended from time to time. "Solvent" means, with respect to any Person, that as of the date of determination both (A)(i) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities with respect to Indebtedness) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circum stances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "SSP" means Showboat Star Partnership, a Louisiana general partnership. "Standby Letter of Credit" means any standby letter of credit or similar instrument issued for the purpose of supporting (i) Indebtedness of Company or any of its Subsidiaries in respect of industrial revenue or development bonds or financings, (ii) workers' compensation liabilities of Company or any of its Subsidiaries, (iii) the obligations of third party insurers of Company or any of its Subsidiaries arising by virtue of the laws of any jurisdiction requiring third party insurers, (iv) obliga tions with respect to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and (v) performance, payment, deposit or surety obligations of Company or any of its Subsid iaries, in any case if required by law or governmental rule or regulation or in accordance with custom and practice in the industry; provided that Standby Letters of Credit may not be issued for the purpose of supporting (a) trade payables or (b) any Indebtedness constituting "antecedent debt" (as that term is used in Section 547 of the Bankruptcy Code. "Subordinated Indebtedness" means Indebtedness of Company subordinated in right of payment to the Obligations pursuant to documentation containing maturities, amortization schedules, covenants, defaults, remedies, subordination provi sions and other material terms in form and substance satisfactory to Administrative Agent and Requisite Lenders. "Subsidiary" means, with respect to any Person, any corporation, partnership, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsid iaries of that Person or a combination thereof. "Subsidiary Security Agreements" means (i) those certain Security Agreements between certain of Company's Subsid iaries and Administrative Agent each dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as each such agreement has been amended to the date hereof and as each such agreement may hereafter be amended, supplemented or otherwise modified from time to time, including, without limita tion, by the inclusion of Subsidiaries of Company formed after the execution thereof, and (ii) those certain Security Agreements between certain of Company's Subsidiaries and Administrative Agent each dated as of December 16, 1996, executed and delivered pursuant to the Existing Credit Agreement, as such agreements may be amended from time to time. "Substitute Lender" has the meaning assigned to that term in subsection 10.1B(iii). "Swing Line Lender" means WFB, in its capacity as Swing Line Lender hereunder and any assignee of WFB acting as Swing Line Lender. "Swing Line Loan Commitment" means the commitment of Swing Line Lender to make Swing Line Loans to Company pursuant to subsection 2.1B. "Swing Line Loans" means the Loans made by Swing Line Lender to Company pursuant to subsection 2.1B. "Swing Line Note" means any promissory note of Company issued pursuant to subsection 2.1E to evidence the Swing Line Loans of Swing Line Lender, substantially in the form of Exhibit VI annexed hereto, as it may be amended, supplemented or otherwise modified from time to time. "Tax" or "Taxes" means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by any Governmental Authority, on whomsoever and wherever imposed, levied, collected, withheld or assessed; provided that "Tax on the overall net income" of a Person shall be construed as a reference to a tax imposed by any Governmental Authority on all or part of the net income, profits or gains of that Person (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise). "10-K" means the annual report of the Company for the Fiscal Year ended March 31, 1997, filed on Form 10-K with the Securities and Exchange Commission. "Title Company" means Chicago Title Insurance Company. "Title Policies" means Policy Number LA-001-107-50497, Policy Number 14 0142 107 00000001, Policy Number 29 0010 107 16901, Policy Number 29 0010 107 16902 and Policy Number LA-01-107-97-197, each issued by the Title Company, insuring Administrative Agent's interest as mortgagee on certain real property described therein. "Total Funded Debt" means, as of any date, the sum (without duplication) of the outstanding principal amount of Other Allowed Indebtedness (Secured) as of such date plus the outstanding principal amount of Other Allowed Indebtedness (Unsecured) as of such date plus the average daily Total Utilization of Commitments for the Fiscal Quarter most recently ended on or prior to such date plus, without duplication, Contingent Obligations as of such date. "Total Utilization of Commitments" means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing the Issuing Lender for any amount drawn under any Letter of Credit but not yet so applied) plus (ii) the aggregate principal amount of all outstanding Swing Line Loans plus (iii) the Letter of Credit Usage. "Trust Agreement" means the Master Vessel and Collat eral Trust Agreement between the Trustee and Administrative Agent on behalf of Lenders, dated as of August 25, 1995, executed and delivered pursuant to the Original Credit Agreement, as such agreement has been amended to the date hereof and as such agreement may hereafter be amended, supplemented or otherwise modified from time to time. "Trustee" means WFB, solely in its capacity as trustee under the Trust Agreement and not in its individual capacity. "US Documented Barges" means all barges located at or used in connection with any of the Facilities, whether owned on the date hereof or subsequently acquired, that are subject to a valid certificate of documentation issued by the United States Coast Guard under the laws and regulations of the United States and are listed on Schedule 5.5. "WFB" has the meaning assigned to that term in the first paragraph of this Agreement. "Withdrawal Period" has the meaning assigned to that term in subsection 10.1B(iii). 1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement. Except as otherwise expressly provided in this Agree ment, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Company to Lenders pursuant to clauses (i), (ii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in subsection 6.1(iv)). Calculations in connection with the defini tions, covenants and other provisions of this Agreement shall utilize accounting principles and policies in conformity with those used to prepare the financial statements referred to in subsection 5.3. 1.3 Other Definitional Provisions. References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. Any of the terms defined in subsection 1.1 may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS 2.1 Commitments; Making of Loans; Notes. A. Revolving Loans. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Loan Parties set forth in the Loan Documents, each Lender hereby severally agrees, subject to the limitations set forth below with respect to the maximum amount of Loans permitted to be outstanding from time to time, to lend to Company from time to time during the period from the Effective Date to but excluding the Commitment Termination Date an aggregate amount not at any time outstanding exceeding such Lender's Pro Rata Share of the aggregate amount of the Revolving Commitments to be used for the purposes identified in subsection 2.5A(i). The original amount of each Lender's Revolving Commitment is set forth opposite its name on Schedule 2.1 annexed hereto, and the aggregate original amount of the Revolving Commitments is $80,000,000; provided that the Revolving Commitments of Lenders shall be adjusted to give effect to any assignments of the Revolving Commitments pursuant to subsection 10.1B; and provided further that the amount of the Revolving Commitments shall be reduced from time to time by the amount of any reductions thereto made pursuant to subsections 2.4A and 2.4B. Each Lender's Revolving Commitment shall expire on the Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Commitments shall be paid in full no later than that date. Loans made by Lenders pursuant to this subsection 2.1A are described herein as "Revolving Loans." Amounts borrowed under this subsection 2.1A may be repaid and reborrowed (subject to compliance with Section 4) to but excluding the Commitment Termination Date. B. Swing Line Loans. Swing Line Lender hereby agrees, subject to the limitations set forth below with respect to the maximum amount of Swing Line Loans permitted to be outstanding from time to time and subject to the other terms and conditions hereof, to make a portion of the Revolving Commitments available to Company from time to time during the period from the Effective Date to but excluding the fifth Business Day prior to the Commit ment Termination Date by making Swing Line Loans to Company in an aggregate amount not exceeding the amount of the Swing Line Loan Commitment to be used for the purposes identified in subsection 2.5A(iv), notwithstanding the fact that such Swing Line Loans, when aggregated with Swing Line Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share of the Letter of Credit Usage then in effect, may exceed Swing Line Lender's Revolving Commitment. The original amount of the Swing Line Loan Commitment is $3,000,000; provided that any reduction of the Commitments made pursuant to subsection 2.4A or 2.4B which reduces the aggregate Revolving Commitments to an amount less than the then current amount of the Swing Line Loan Commitment shall result in an automatic corresponding reduction of the Swing Line Loan Commitment to the amount of the Revolving Commitments, as so reduced, without any further action on the part of Company or Swing Line Lender. Each Swing Line Loan shall be due and payable not more than five Business Days after the Funding Date of such Swing Line Loan. The Swing Line Loan Commitment shall expire on the fifth Business Day prior to the Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans shall be paid in full no later than that date. Amounts borrowed under this subsection 2.1B may be repaid and reborrowed to but excluding the fifth Business Day prior to the Commitment Termination Date. Swing Line Lender shall not be obligated to make any Swing Line Loans if it has elected not to do so after the occurrence and during the continuation of a Potential Event of Default of which it is aware or an Event of Default. On Friday of each week, Swing Line Lender will notify the Administrative Agent of the amount of Swing Line Loans then outstanding and the Administrative Agent shall notify each Lender of the amount of Swing Line Loans then outstanding. Anything contained in this Agreement to the contrary notwithstanding, the Swing Line Loans and the Swing Line Loan Commitment shall be subject to the limitation that in no event shall the Total Utilization of Commitments at any time exceed the Revolving Commitments then in effect. With respect to any Swing Line Loans which have not been voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may, at any time in its sole and absolute discretion, deliver to Lenders (with a copy to Company), no later than 8:30 A.M. (Pacific time) on the first Business Day in advance of the proposed Funding Date, a notice (which shall be deemed to be a Notice of Borrowing given by Company) requesting Lenders to make Revolving Loans that are Base Rate Loans on such Funding Date in an amount equal to the amount of such Swing Line Loans (the "Refunded Swing Line Loans") outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (i) the proceeds of Revolving Loans made by Lenders other than Swing Line Lender shall be immediately delivered to Swing Line Lender (and not to Company) and applied to repay a corresponding portion of the Refunded Swing Line Loans and (ii) on the day such Revolving Loans are made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute part of Swing Line Lender's outstanding Revolving Loans and shall be due under the Revolving Note of Swing Line Lender. Company hereby authorizes Swing Line Lender to charge Company's account with Swing Line Lender (up to the amount available in each such account) in order to immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent the proceeds of such Revolving Loans made by Lenders, including the Revolving Loan deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Company from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or other wise, the loss of the amount so recovered shall be ratably shared among all Lenders in the manner contemplated by subsection 10.5. If, as a result of any bankruptcy or similar proceeding with respect to Company, Revolving Loans are not made pursuant to this subsection 2.1B in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans, each Lender shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans in an amount equal to its Pro Rata Share (calculated with out giving effect to clauses (d) and (e) of the definition of Loan Exposure) of the unpaid amount together with accrued interest thereon. Upon one Business Day's notice from Swing Line Lender, each Lender shall deliver to Swing Line Lender an amount equal to its respective participation in same day funds at the Funding and Payment Office. In order to evidence such partici pation each Lender agrees to enter into a participation agreement at the request of Swing Line Lender in form and substance reason ably satisfactory to all parties. In the event any Lender fails to make available to Swing Line Lender the amount of such Lender's participation as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon at the rate customarily used by Swing Line Lender for the correction of errors among banks for three Business Days and thereafter at the Base Rate. In the event Swing Line Lender receives a payment of any amount in which other Lenders have purchased participations as provided in this paragraph, Swing Line Lender shall promptly distribute to each such other Lender its Pro Rata Share of such payment. Anything contained herein to the contrary notwith standing, each Lender's obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loan pursuant to the second preceding paragraph and each Lender's obligation to purchase a participation in any unpaid Swing Line Loan pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (a) any set-off, counterclaim, re coupment, defense or other right which such Lender may have against Swing Line Lender, Company or any other Person for any reason whatsoever; (b) the occurrence or continuation of an Event of Default or a Potential Event of Default; (c) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company or any of its Subsidiaries; (d) any breach of this Agreement or any other Loan Document by any party thereto; or (e) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided if such unpaid Swing Line Loan increased Total Utilization of Commitments (after giving effect to the repayment of any Revolving Loan with the proceeds of such Swing Line Loan), such obligation of each Lender is subject to the condition that one of the following must have occurred: (X) Swing Line Lender did not have actual knowledge that any of the conditions under Section 4 to the making of the applicable unpaid Swing Line Loans were not satisfied at the time such unpaid Swing Line Loans were made, (Y) such Lender had actual knowledge by receipt of any notices required to be delivered to Lenders pursuant to subsection 6.1(x) or otherwise, that any such condition had not been satisfied and such Lender failed to notify Swing Line Lender in writing that it had no obligation to make Revolving Loans until such condition was satisfied (any such notice to be effective as of the date of receipt thereof by Swing Line Lender), or (Z) the satisfaction of any such condition not satisfied had been waived in accordance with subsection 10.6 prior to or at the time such unpaid Swing Line Loans were made. C. Borrowing Mechanics. Revolving Loans made on any Funding Date (other than Revolving Loans made pursuant to a request by Swing Line Lender pursuant to subsection 2.1B for the purpose of repaying any Refunded Swing Line Loans or Revolving Loans made pursuant to subsection 3.3B for the purpose of reimbursing the Issuing Lender for the amount of a drawing under a Letter of Credit issued by it) shall be in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount; provided that Revolving Loans made on any Funding Date as Eurodollar Rate Loans with a particular Interest Period shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount. Swing Line Loans made on any Funding Date shall be in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount. Whenever Company desires that Lenders make Revolving Loans it shall deliver to Administrative Agent a Notice of Borrowing no later than 8:30 A.M. (Pacific time) at least three Business Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate Loan) or at least one Business Day in advance of the proposed Funding Date (in the case of a Base Rate Loan). Whenever Company desires that Swing Line Lender make a Swing Line Loan, it shall deliver to Administrative Agent a Notice of Borrowing no later than 8:30 A.M. (Pacific time) on the proposed Funding Date. Each Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the amount and type of Loans requested, (iii) in the case of Swing Line Loans and any Revolving Loans made on the Effective Date, that such Loans shall be Base Rate Loans, (iv) in the case of any Revolving Loans not made on the Effective Date, whether such Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (v) in the case of any Revolving Loans requested to be made as Eurodollar Rate Loans, the initial Interest Period requested therefor. Revolving Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of delivering the above-described Notice of Borrowing, Company may give Adminis trative Agent telephonic notice by the required time of any proposed borrowing under this subsection 2.1C; provided that such notice shall be promptly confirmed in writing by delivery of a Notice of Borrowing to Administrative Agent on or before the applicable Funding Date. Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized to borrow on behalf of Company or for otherwise acting in good faith under this subsection 2.1C, and upon funding of Loans by Lenders in accordance with this Agreement pursuant to any such telephonic notice Company shall have effected Loans hereunder. Company shall notify Administrative Agent prior to the funding of any Loans in the event that any of the matters to which Company is required to certify in the applicable Notice of Borrowing is no longer true and correct as of the applicable Funding Date, and the acceptance by Company of the proceeds of any Loans shall constitute a re-certification by Company, as of the applicable Funding Date, as to the matters to which Company is required to certify in the applicable Notice of Borrowing. Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after the issuance thereof, and Company shall be bound to make a borrowing in accordance therewith. D. Disbursement of Funds. All Revolving Loans under this Agreement shall be made by Lenders simultaneously and propor tionately to their respective Pro Rata Shares, it being under stood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligation to make a Loan requested hereunder nor shall the Commitment of any Lender be increased or decreased as a result of a default by any other Lender in that other Lender's obligation to make a Loan requested hereunder. Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1C (or telephonic notice in lieu thereof), Administrative Agent shall notify each Lender or Swing Line Lender, as the case may be, of the proposed borrowing. Each Lender shall make the amount of its Loan available to Administrative Agent not later than 11:00 A.M. (Pacific time) on the applicable Funding Date, and Swing Line Lender shall make the amount of its Swing Line Loan available to Administrative Agent not later than 11:00 A.M. (Pacific time) on the applicable Funding Date, in each case in same day funds in Dollars, at the Funding and Payment Office. Except as provided in subsection 2.1B or subsection 3.3B with respect to Revolving Loans used to repay Refunded Swing Line Loans or to reimburse Administrative Agent for the amount of a drawing under a Letter of Credit issued by it, upon satisfaction or waiver of the conditions precedent specified in subsections 4.1 (in the case of Loans made or converted on the Effective Date), and 4.4 (in the case of all Loans), Administrative Agent shall make the proceeds of such Loans available to Company on the applicable Funding Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent from Lenders or Swing Line Lender, as the case may be, to be credited to the account of Company at the Funding and Payment Office. Unless Administrative Agent shall have been notified by any Lender prior to the Funding Date for any Revolving Loans that such Lender does not intend to make available to Administrative Agent the amount of such Lender's Loan requested on such Funding Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Funding Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Company a correspond ing amount on such Funding Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the custo mary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent's demand therefor, Adminis trative Agent shall promptly notify Company and Company shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the rate payable under this Agreement for Base Rate Loans of the type then being repaid by Company. Nothing in this subsection 2.1D shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that Company may have against any Lender as a result of any default by such Lender hereunder. E. Notes. On the Effective Date, the Company shall execute and deliver to each Lender (or to Administrative Agent for that Lender) a Revolving Note to evidence that Lender's Revolving Loans, in the principal amount of that Lender's Revolving Commitment and with other appropriate insertions, and the Company shall execute and deliver to Swing Line Lender a Swing Line Note to evidence Swing Line Lender's Swing Line Loans, in the principal amount of the Swing Line Loan Commitment and with other appropriate insertions. Upon the execution and delivery to any Lender or Swing Line Lender of Notes pursuant to this subsection 2.1E, the Revolving Note (and any Tranche A Note, Tranche B Note and Tranche C Note, as each such term is defined in the Existing Credit Agreement) or Swing Line Note, as the case may be, that were executed and delivered to such Lender or Swing Line Lender pursuant to the Existing Credit Agreement shall be null and void, and such Lender or Swing Line Lender shall promptly return such Revolving Note or Swing Line Note to Company for cancellation. Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a Lender Assignment Agreement effecting the assignment or transfer thereof shall have been accepted by Administrative Agent as provided in subsection 10.1B(ii). Any request, authority or consent of any person or entity who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, assignee or transferee of that Note or of any Note or Notes issued in exchange therefor. F. Conversion of Existing Revolving Loans into Revolving Loans. Upon satisfaction or written waiver by Requisite Lenders of the conditions set forth in subsections 4.1 and 4.4, as of the Effective Date all Revolving Loans (as defined in the Existing Credit Agreement) outstanding under the Existing Credit Agreement as of, and at the time of, the Effective Date ("Existing Revolving Loans") shall be converted into and deemed to be Revolving Loans for all purposes under this Agreement. Any amounts of accrued interest or other amounts owed (whether or not presently due and payable) by Company to the Lenders under or in respect of the Existing Revolving Loans shall, as of the Effec tive Date, continue to be due and payable to the Lenders under the Revolving Notes issued to the Lenders hereunder. The conver sion of the Existing Revolving Loans hereunder shall not be deemed to be repayment thereof, and Company shall not be required to deliver any notice of prepayment or notice of borrowing or to satisfy any other condition relating to required amounts of prepayments or borrowings hereunder with respect to such conver sion of the Existing Revolving Loans. 2.2 Interest on the Loans. A. Rate of Interest. Subject to the provisions of subsections 2.2B, 2.2E, 2.6 and 2.7, each Revolving Loan shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by acceleration or otherwise) at a rate determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the case may be. Subject to the provisions of subsection 2.7, the applicable basis for determining the rate of interest with respect to any Loan shall be selected by Company initially at the time a Notice of Borrowing is given with respect to such Loan pursuant to subsection 2.1C. If on any day a Loan is outstanding with respect to which notice is required to be delivered to Administrative Agent in accordance with the terms of this Agreement specifying the applicable basis for determining the rate of interest but such notice has not been so delivered, then for that day that Loan shall bear interest determined by reference to the Base Rate. Subject to the provisions of subsections 2.2E and 2.7, the Revolving Loans shall bear interest through maturity as follows: (a) if a Base Rate Loan, then at the sum of the Base Rate plus the Applicable Base Rate Margin; or (b) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate plus the Applicable Eurodollar Margin. The Applicable Base Rate Margin and the Applicable Eurodollar Margin shall automatically be adjusted in accordance with the respective definitions of such terms. Subject to the provisions of subsections 2.2E and 2.7, the Swing Line Loans shall bear interest through their maturity at the Prime Rate. B. Interest Periods. In connection with each Eurodollar Rate Loan, Company may, pursuant to the applicable Notice of Borrowing or Notice of Conversion/Continuation, as the case may be, select an interest period (each an "Interest Period") to be applicable to such Loan, which Interest Period shall be, at Company's option, either a one, two, three or six month period; provided that: (i) the initial Interest Period for any Eurodollar Rate Loan shall commence on the Funding Date in respect of such Loan, in the case of a Loan initially made as a Eurodollar Rate Loan, or on the date specified in the applicable Notice of Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate Loan; (ii) in the case of immediately successive Interest Periods applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice of Conversion/Continuation, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires; (iii) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iv) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (v) of this subsection 2.2B, end on the last Business Day of a calendar month; (v) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Commitment Termination Date; (vi) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the date on which a permanent reduction of the Commitments is scheduled to occur unless the sum of (a) the aggregate principal amount of Revolving Loans that are Base Rate Loans plus (b) the aggregate principal amount of Revolving Loans that are Eurodollar Rate Loans with Interest Periods expiring on or before such date plus (c) the excess of the Commitments then in effect over the aggregate principal amount of Revolving Loans then outstanding equals or exceeds the permanent reduction of the Commitments that is scheduled to occur on such date; (vii) there shall be no more than five Interest Periods outstanding at any time; and (viii) in the event Company fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of Conversion/Continuation, Company shall be deemed to have selected an Interest Period of one month. C. Interest Payments. Subject to the provisions of subsection 2.2E, interest on each Loan shall be payable in arrears on and to each Interest Payment Date applicable to that Loan, upon any prepayment of that Loan (to the extent accrued on the amount being prepaid) and at maturity (including final maturity); provided that in the event any Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4A(iii) or 2.4B(i), interest accrued on such Loans through the date of such prepayment shall be payable on the next succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier, at final maturity). D. Conversion or Continuation. Subject to the provisions of subsection 2.6, Company shall have the option (i) to convert at any time all or any part of its outstanding Base Rate Loans equal to $5,000,000 and integral multiples of $1,000,000 in excess of that amount to Eurodollar Rate Loans, (ii) to convert at any time all or any part of its outstanding Eurodollar Rate Loans equal to $500,000 and integral multiples of $100,000 in excess of that amount to Base Rate Loans, or (iii) upon the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the expiration date of an Interest Period applicable thereto. Company shall deliver a Notice of Conversion/Continuation to Administrative Agent no later than 8:30 A.M. (Pacific time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation shall specify (i) the proposed conversion/continuation date (which shall be a Business Day), (ii) the amount and type of the Loan to be converted/continued, (iii) the nature of the proposed conversion/continuation, (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no Event of Default or, to Company's Best Knowledge (following the reasonable exercise of diligence appropriate for the circumstance in question by the officers of the Company executing such certificate), no Potential Event of Default has occurred and is continuing. In lieu of delivering the above- described Notice of Conversion/Continuation, Company may give Administrative Agent telephonic notice by the required time of any proposed conversion/continuation under this subsection 2.2D; provided that such notice shall be promptly confirmed in writing by delivery of a Notice of Conversion/Continuation to Administra tive Agent on or before the proposed conversion/continuation date. Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith consistent with commercial banking practices to have been given by a duly authorized officer or other person authorized to act on behalf of Company or for otherwise acting in good faith under this subsection 2.2D, and upon conversion or continuation of the applicable basis for determining the interest rate with respect to any Loans in accordance with this Agreement pursuant to any such telephonic notice Company shall have effected a conversion or continuation, as the case may be, hereunder. Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to effect a conversion or continuation in accordance therewith. E. Post-Default Interest. Upon the occurrence and during the continuation of any Event of Default, the outstanding principal amount of all Loans and, to the extent permitted by applicable law, the amount of any overdue interest payments on the Loans or any overdue fees or other amounts owed hereunder shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective, such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this subsection 2.2E is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender. F. Computation of Interest. Interest on the Loans shall be computed (i) in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conver sion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided that if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. 2.3 Fees. A. Unused Commitment Fees. Company agrees to pay to Administrative Agent, for distribution to each Lender in propor tion to that Lender's Pro Rata Share, commitment fees for the period from and including the Effective Date to and excluding the Commitment Termination Date equal to (i) the average of the daily excess of the Commitments over the sum of the aggregate principal amount of Revolving Loans outstanding plus the Letter of Credit Usage multiplied by (ii) Applicable Commitment Fee Percentage, such commitment fees to be calculated on the basis of a 360-day year, and the actual number of days elapsed and to be payable quarterly in arrears on the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the Effective Date and on the Commitment Termination Date. B. Additional Fees. (i) [omitted] (ii) Company agrees to pay to Administrative Agent all fees set forth in the Agent's fee letter executed and delivered pursuant to subsection 4.1P. (iii) Company agrees to pay to Administrative Agent on the Effective Date for distribution to each Lender in accordance with such Lender's Pro Rata Share, all accrued unpaid interest and fees owed under the Existing Credit Agreement, whether or not then due and payable under the Existing Credit Agreement. 2.4 Payments, Prepayments and Reductions in Commitments; General Provisions Regarding Payments. A. Scheduled and Mandatory Reductions of Commitments and Mandatory Prepayments. (i) Scheduled Reductions of Revolving Commitments. The Revolving Commitments shall terminate on the Commitment Termination Date. (ii) [omitted]. (iii) Mandatory Prepayments and Mandatory Reductions of Commitments. The Loans shall be prepaid and the Commitments shall be permanently reduced in the amounts and under the circumstances set forth below, all such prepayments and reductions to be applied as set forth below or as more specifically provided in subsection 2.4C: (a) Prepayments and Reductions From Asset Sales. (1) If Company or any of its Subsidiaries receives any Net Cash Proceeds in an amount equal to or greater than $2,500,000 from any Asset Sale, Company shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to the excess of such Net Cash Proceeds of such Asset Sale over the amount of such Net Cash Proceeds that the Company intends to invest in a Related Business and are so invested within 270 days of receipt by the Company or any of its Subsidiaries. Such prepayment shall be due and such reduction in Commitments shall occur on the earlier of (i) the second Business Day following a determination by a Responsible Officer that such Net Cash Proceeds will not be invested in assets or property of a Related Business or (ii) 270 days after the receipt of such Cash Proceeds, if they have not been so invested in a Related Business; (2) If Company or any of its Subsidiaries receives any Net Cash Proceeds in an amount less than $2,500,000 from any Asset Sale, Company shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to the excess of such Net Cash Proceeds of such Asset Sale over such Net Cash Proceeds that Company intends to invest in a Related Business and are so invested within 270 days of receipt by Company or any of its Subsidiaries. Such prepayment shall be due and such reduction in Commit ments shall occur on the second Business Day following receipt by Company or any of its Subsidiaries of Net Cash Proceeds in an amount that, together with all Net Cash Proceeds received by Company from Asset Sales since the later of the Effective Date or the date of the most recent payment made pursuant to this subsection 2.4A(iii)(a), exceeds $6,000,000. (3) Concurrently with any prepayment of the Loans and reduction of the Commitments pursuant to this subsection 2.4A(iii)(a), Company shall deliver to Agent an Officers' Certificate demonstrating the derivation of the Net Cash Proceeds from the correlative Asset Sale from the gross sales price thereof. In the event that Company shall, at any time after receipt of Cash Proceeds from any Asset Sale requiring a prepayment or a reduction of the Commitments pursuant to this subsection 2.4A(iii)(a), determine that the prepayments and/or reductions of the Commitments previously made in respect of such Asset Sale were in an aggregate amount less than that required by the terms of this subsection 2.4A(iii)(a), Company shall promptly make an additional prepayment of the Swing Line Loans, or Revolving Loans, as the case may be (and the Commitments shall be permanently reduced), in the manner described above in an amount equal to the amount of any such deficit, and Company shall concurrently therewith deliver to Agent an Officers' Certificate demonstrating the derivation of the additional Net Cash Proceeds resulting in such deficit. (b) Prepayments and Reductions Due to the Occurrence of an Event of Loss. (1) If Company or any of its Subsidiaries receives any Net Cash Proceeds in an amount equal to or greater than $2,500,000 from any Event of Loss, Company shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to the excess of such Net Cash Proceeds of from such Event of Loss over the amount of such Net Cash Proceeds that the Company intends to invest in a Related Business and are so invested within 270 days of receipt by the Company or any of its Subsidiaries. Such prepayment shall be due and such reduction in Commitments shall occur on the earlier of (i) the second Business Day following a determination by a Responsible Officer that such Net Cash Proceeds will not be invested in assets or property of a Related Business or (ii) 270 days after the receipt of such Net Cash Proceeds, if they have not been so invested in a Related Business; (2) If Company or any of its Subsidiaries receives any Net Cash Proceeds in an amount less than $2,500,000 from any Event of Loss, Company shall prepay the Loans and the Revolving Commitments shall be permanently reduced in an aggregate amount equal to the excess of such Net Cash Proceeds of such Asset Sale over such Net Cash Proceeds that Company intends to invest in a Related Business and are so invested within 270 days of receipt by Company or any of its Subsidiaries. Such prepayment shall be due and such reduc tion in Commitments shall occur on the second Business Day following receipt by Company or any of its Subsidiaries of Net Cash Proceeds in an amount that, together with all Net Cash Proceeds received by Company from Events of Loss since the later of the Effective Date or the date of the most recent payment made pursuant to this subsection 2.4A(iii)(b), exceeds $6,000,000. (3) Concurrently with any prepayment of the Loans and reduction of the Commitments pursuant to this subsection 2.4A(iii)(b), Company shall deliver to Agent an Officers' Certificate demonstrating the derivation of the Net Cash Proceeds from the correlative Event of Loss. In the event that Company shall, at any time after receipt of Cash Proceeds from any Event of Loss requiring a prepayment or a reduction of the Commitments pursuant to this subsection 2.4A(iii)(b), determine that the prepayments and/or reductions of the Commitments previously made in respect of such Event of Loss were in an aggregate amount less than that required by the terms of this subsection 2.4A(iii)(b), Company shall promptly make an additional prepayment of the Swing Line Loans or Revolving Loans, as the case may be (and the Commitments shall be permanently reduced), in the manner described above in an amount equal to the amount of any such deficit, and Company shall concurrently therewith deliver to Agent an Officers' Certificate demonstrating the derivation of the additional Net Cash Proceeds resulting in such deficit. (c) [omitted] (d) [omitted] (e) [omitted] B. Voluntary Prepayments, Mandatory Prepayments and Voluntary Reductions in Commitments. (i) Voluntary Prepayments. Company may, upon written or telephonic notice to Administrative Agent on or prior to 8:30 A.M. (Pacific time) on the date of prepayment, which notice, if telephonic, shall be promptly confirmed in writing, at any time and from time to time prepay without premium or penalty any Swing Line Loan on any Business Day in whole or in part in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount. Company may, upon written or telephonic notice given to Administrative Agent by 8:30 A.M. (Pacific time) not less than three Business Days in advance (in the case of a Eurodollar Rate Loan) or one Business Day in advance (in the case of a Base Rate Loan) of any proposed prepayment date and, if given by telephone, promptly confirmed in writing to Administrative Agent (which written or telephone notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time prepay without premium and penalty any Base Rate Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000 and any integral multiples of $100,000 in excess of that amount or any Eurodollar Rate Loans on any Business Day in whole or in part in an aggregate minimum amount of $5,000,000 and any integral multiples of $1,000,000 in excess of that amount and any such prepayment of Base Rate Loans or Eurodollar Rate Loans will include all interest accrued thereon to the day of prepayment; provided, however, that if a Eurodollar Rate Loan is prepaid prior to the expiration of the Interest Period applicable thereto, such prepayment shall include all costs payable under Section 2.6D as a result of such prepay ment. Any voluntary prepayments made pursuant to this Section 2.4B(i) shall be applied to the type of Loan directed by Company; provided that all voluntary prepayments shall be used first to pay any interest and/or fees accrued to the prepayment date on the Loan to be prepaid; provided further that in the event Company fails to specify the Loans to which any such prepayment shall be applied, such prepay ment shall be applied first to repay outstanding Swing Line Loans to the full extent thereof and second to repay outstanding Revolving Loans to the full extent thereof. (ii) Mandatory Prepayments. Company will make the prepayments on the Loans required by subsection 2.4A. (iii) Voluntary Reductions of Commitments. Company may, upon not less than five Business Days' prior written or telephonic notice confirmed in writing to Administrative Agent (which original written or telephonic notice Adminis trative Agent will promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Commitments in an amount up to the amount by which the Commitments exceed the Total Utilization of Commitments at the time of such proposed termination or reduction; provided that any such partial reduction of the Commitments shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount. Company's notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Commit ments shall be effective on the date specified in Company's notice and shall reduce the Commitment of each Lender proportionately to its Pro Rata Share. C. Application of Prepayments and Commitment Reductions. (i) Application of Mandatory Prepayments by Type of Loans. Any amount (the ``Prepayment Amount'') required to be applied as a mandatory prepayment of the Loans pursuant to subsections 2.4A(iii)(a)-(c) shall be applied first to prepay the Swing Line Loans to the full extent thereof, second, to the extent of any remaining portion of the Prepayment Amount, to prepay the Revolving Loans to the full extent thereof. (ii) Application of Prepayments to Base Rate Loans and Eurodollar Rate Loans. Any prepayment of the Loans shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Company pursuant to subsection 2.6D. (iii) [omitted] (iv) [omitted] D. General Provisions Regarding Payments. (i) Manner and Time of Payment. All payments by Company of principal, interest, fees and other Obligations hereunder and under the Notes, if any, shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 11:00 A.M. (Pacific time) on the date due at the Funding and Payment Office for the account of Lenders; funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Company on the next succeed ing Business Day. Company hereby authorizes Administrative Agent to charge its accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees, expenses and other amounts due hereunder (subject to sufficient funds being available in its accounts for that purpose). (ii) Application of Payments to Principal and Interest. Except as set forth in subsection 2.2C, all payments in respect of the principal amount of any Loan shall include payment of accrued interest on the principal amount being repaid or prepaid, and all such payments shall be applied to the payment of interest before application to principal. (iii) Apportionment of Payments. Subject to the provisions of subsection 2.4D(vi), aggregate principal and interest payments (other than payments in respect of Swing Line Loans, which shall be made to the Swing Line Lender) shall be apportioned among all outstanding Revolving Loans to which such payments relate, in each case proportionately to Lenders' respective Pro Rata Shares. Administrative Agent shall promptly distribute to each Lender, at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request, its Pro Rata Share of all such payments received by Administrative Agent and the commitment fees of such Lender when received by Administrative Agent pursuant to subsection 2.3A. Notwithstanding the foregoing provi sions of this subsection 2.4D(iii), if (i) pursuant to the provisions of subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected Lender, (ii) any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, (iii) Company repays all amounts owed to a Requiring Lender pursuant to subsection 2.9, or (iv) Company prepays all amounts owed to a Former Lender after the expiration of the applicable Withdrawal Period pursuant to subsection 10.1B(iii), then Administrative Agent shall give effect thereto in apportioning payments received thereafter. (iv) Payments on Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day except as set forth in subsection 2.2B(iii), and such extension of time shall be included in the computation of the payment of interest hereunder or of the commitment fees hereunder, as the case may be. (v) Notation of Payment. Each Lender agrees that before disposing of any Note held by it, or any part thereof (other than by granting participations therein), that Lender will make a notation thereon of all Revolving Loans evidenced by that Note and all principal payments previously made thereon and of the date to which interest thereon has been paid; provided that the failure to make (or any error in the making of) a notation of any Revolving Loans made under such Note shall not limit or otherwise affect the obligations of Company hereunder to the extent of Company's actual indebtedness or under such Note with respect to any Revolving Loans or any payments of principal or interest on such Note. (vi) Non-Pro Rata Prepayment on the Effective Date. Anything contained herein or in the other Loan Documents to the contrary notwithstanding, the parties hereto agree that the prepayment of the Existing Revolving Loans on the Effective Date pursuant to subsection 4.1N shall not be applied to the prepayment of the Existing Revolving Loans in proportion to the Lenders' respective Pro Rata Shares thereof (as would otherwise be required pursuant to subsection 2.4(D)(iii)) but shall instead shall be applied (i) to the repayment in full of all Existing Revolving Loans owed to the Noncontinuing Lenders on the Effective Date and (ii) the repayment of Existing Revolving Loans owed to each Lender in amounts such that, after giving effect thereto, the Revolving Loans of each Lender shall be in an amount directly proportional to such Lender's Pro Rata Share of all Revolving Loans then outstanding. 2.5 Use of Proceeds. A. Use of Proceeds. (i) Revolving Loans. The proceeds of Revolving Loans shall be applied by Company for general corporate purposes, including share repurchases and other acquisitions (other than Hostile Acquisitions) as permitted herein; provided, however, Company may not apply all or any portion of the proceeds of the Revolving Loans to fund, directly and indirectly, a Hostile Acquisition. (ii) [omitted] (iii) [omitted] (iv) Swing Line Loans. The proceeds of the Swing Line Loans shall be applied by Company for general corporate purposes; provided, however, that Company may not apply all or any portion of the proceeds of Swing Line Loans to fund, directly or indirectly, a Hostile Acquisition. B. Margin Regulations. No portion of the proceeds of any borrowing under this Agreement shall be used by Company or any of its Subsidiaries in any manner that might cause the borrowing or the application of such proceeds to violate Regulation G, Regula tion U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds. 2.6 Special Provisions Governing Eurodollar Rate Loans. Notwithstanding any other provision of this Agreement to the contrary, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered: A. Determination of Applicable Interest Rate. As soon as practicable after 8:30 A.M. (Pacific time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Company and each Lender. B. Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circum stances affecting the interbank Eurodollar market adequate and fair means do not exist for ascertaining the interest rate appli cable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Company and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Company and Lenders that the circumstances giving rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Company. If, at any time following such a determination, Administrative Agent determines that such circumstances that affected the interbank Eurodollar market no longer exist, it shall promptly notify Company and each Lender thereof, at which time the provisions of clauses (i) and (ii) above shall no longer be effective. C. Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Company and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regula tion, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law but which such Lender complies with as a matter of policy even though the failure to comply therewith would not be unlawful) or (ii) has become impracticable, or would cause such Lender material hardship, as a result of contingencies occurring after the date of this Agreement which materially and adversely affect the interbank Eurodollar market or the position of such Lender in that market, then, and in any such event, such Lender shall be an "Affected Lender" and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Company and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (b) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall make such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected Loans") shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (d) the Affected Loans shall auto matically convert into Base Rate Loans on the date of such termi nation. Notwithstanding the foregoing, to the extent a determi nation by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall have the option, subject to the provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to Adminis trative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this subsection 2.6C shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement. D. Compensation For Breakage or Non-Commencement of Interest Periods. Company shall compensate each Lender, upon written request by that Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including, without limitation, any interest paid by that Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by that Lender in connection with the liquidation or re-employment of such funds) which that Lender may sustain: (i) if for any reason (other than a default by that Lender or the occurrence of an event described in subsection 2.6C) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of Borrowing or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of Conversion/Continuation or a telephonic request for conversion or continuation, (ii) if any prepayment or other principal payment or any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Company, or (iv) as a consequence of any other default by Company in the repayment of its Eurodol lar Rate Loans when required by the terms of this Agreement. E. Booking of Eurodollar Rate Loans. Subject to each Lender's obligations under subsection 2.8, any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of that Lender. F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A shall be made as though that Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this subsection 2.6 and under subsection 2.7A. G. Eurodollar Rate Loans After Default. After the occur rence of and during the continuation of a Potential Event of Default of which it is aware to its Best Knowledge or an Event of Default, (i) Company may not elect to have a Loan be made or maintained as, or converted to, a Eurodollar Rate Loan after the expiration of any Interest Period then in effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation given by Company with respect to a requested borrowing or conversion/continuation that has not yet occurred shall be deemed to be rescinded by Company. 2.7 Increased Costs; Taxes; Capital Adequacy. A. Compensation for Increased Costs and Taxes. Subject to the provisions of subsection 2.7B, in the event that any Lender shall reasonably determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order adopted after the date hereof, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi- governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of its obligations hereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including without limitation any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the interbank Eurodollar market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall deter mine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this subsection 2.7A, which statement shall be conclusive and binding upon all parties hereto absent manifest error. B. Withholding of Taxes. (i) Payments to Be Free and Clear. All sums payable by Company under this Agreement and the other Loan Documents shall be paid free and clear of and (except to the extent required by law) without any deduction or withholding on account of any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of Company or by any federation or organiza tion of which the United States of America or any such jurisdiction is a member at the time of payment. (ii) Grossing-up of Payments. If Company or any other Person is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by Company to Administrative Agent or any Lender under any of the Loan Documents: (a) Company shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Company becomes aware of it; (b) Company shall pay any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on Company) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (c) the sum payable by Company in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (d) within 30 days after paying any sum from which it is required by law to make any deduction or withholding, and within 30 days after the due date of payment of any Tax which it is required by clause (b) above to pay, Company shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority. (iii) Evidence of Exemption from U.S. Withholding Tax. (a) Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or other political subdivision thereof (for purposes of this subsection 2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent for transmission to Company, on or prior to the Effective Date (in the case of each Lender listed on the signa ture pages hereof) or on the date of the Lender Assign ment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Company or Administrative Agent (each in the reasonable exercise of its discretion), (1) two original copies of Internal Revenue Service Form 1001 or 4224 (or any successor forms), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents or (2) if such Lender is not a "bank" or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8 (or any successor form), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regula tions issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Loan Documents. (b) Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, such Lender shall (1) deliver to Administrative Agent for transmission to Company two new original copies of Internal Revenue Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8, as the case may be, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Loan Documents or (2) immediately notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence; provided that Company may continue to rely on any form, certificate or other evidence delivered to it pursuant to subsection 2.7B(iii)(a) until such time as it has received information pursuant to this subsection 2.7B(iii)(b) that is intended to replace or supplant the information provided on any such previously delivered form or certificate. (c) Company shall not be required to pay any additional amount to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such Lender shall have failed to satisfy the requirements of subsection 2.7B(iii)(a); provided that if such Lender shall have satisfied such requirements on the Effective Date (in the case of each Lender listed on the signature pages hereof) or on the date of the Lender Assignment Agreement pursuant to which it became a Lender (in the case of each other Lender), nothing in this subsection 2.7B(iii)(c) shall relieve Company of its obligation to pay any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, adminis tration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in subsection 2.7B(iii)(a). C. Capital Adequacy Adjustment. If any Lender shall reasonably have determined that the adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender's Loans or Commitments or Letters of Credit or participations therein or other obligations hereunder with respect to the Loans or Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, appli cability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Company from such Lender of the statement referred to in the next sentence, Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis of the calculation of such add itional amounts, which statement shall be conclusive and binding upon all parties hereto absent manifest error. 2.8 Obligation of Lenders and Administrative Agent to Mitigate. Each Lender and Administrative Agent agree that, as promptly as practicable after the officer of such Lender or Administrative Agent responsible for administering the Loans or Letters of Credit of such Lender or Administrative Agent becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under subsection 2.6, subsection 2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal policies of such Lender or Administrative Agent and any applicable legal or regulatory restrictions, use reasonable efforts (i) to make, issue, fund or maintain the Commitment of such Lender or Adminis trative Agent or the affected Loans of such Lender or Adminis trative Agent through another lending or letter of credit office of such Lender or Administrative Agent, or (ii) take such other measures as such Lender or Administrative Agent may deem reason able, if as a result thereof the circumstances which would cause such Lender or Administrative Agent to be an Affected Lender would cease to exist or the additional amounts which would other wise be required to be paid to such Lender or Administrative Agent pursuant to subsection 2.6, subsection 2.7 or subsection 3.6 would be materially reduced and if, as determined by such Lender or Administrative Agent in its sole discretion, the making, issuing, funding or maintaining of such Commitment or Loans or Letters of Credit through such other lending or letter of credit office or in accordance with such other measures, as the case may be, would not otherwise materially adversely affect such Commitment or Loans or Letters of Credit or the interests of such Lender or Administrative Agent; provided that such Lender or Administrative Agent will not be obligated to utilize such other lending or letter of credit office pursuant to this subsection 2.8 unless Company agrees to pay all reasonable incremental expenses incurred by such Lender or Administrative Agent as a result of utilizing such other lending or letter of credit office as described in clause (i) above. A certificate as to the amount of any such expenses payable by Company pursuant to this subsection 2.8 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender or Adminis trative Agent to Company (with a copy to Administrative Agent) shall be conclusive absent manifest error. 2.9 Replacement or Termination of Lenders. In the event Company is required under the provisions of subsection 2.7 or subsection 3.6 to make payments to any Lender (a "Requiring Lender"), Company may, within 120 days after the date any notice or demand requiring such payment under subsection 2.7 or subsection 3.6 is given and so long as no Event of Default shall have occurred and be continuing, elect to terminate such Lender as a party to this Agreement; provided that, concurrently with such termination, Company either (x) voluntarily elects to terminate the Commitments of such Requiring Lender and repays all principal, interest and other amounts then owed to such Requiring Lender or (Y) solicits one or more Eligi ble Assignees that agree(s) to assume the Commitments of such Requiring Lender and assume all obligations of such Requiring Lender pursuant to a Lender Assignment Agreement. SECTION 3. LETTERS OF CREDIT 3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein. A. Letters of Credit. In addition to Company requesting that Lenders make Revolving Loans pursuant to subsection 2.1A and that Swing Line Lender make Swing Line Loans pursuant to subsec tion 2.1B, Company may request, in accordance with the provisions of this subsection 3.1, from time to time during the period from the Effective Date to but excluding the fifth day prior to the Commitment Termination Date, that the Issuing Lender issue Letters of Credit for the account of Company for the purposes specified in the definition of Standby Letters of Credit. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Company herein set forth, the Issuing Lender shall issue such Letters of Credit in accordance with the provisions of this subsection 3.1; provided that Company shall not request that the Issuing Lender issue (and the Issuing Lender shall not issue): (i) any Letter of Credit if, after giving effect to such issuance, the Total Utilization of Commitments would exceed the Revolving Commitments then in effect (and the Issuing Bank shall not issue any Letter of Credit without a confirmation in writing from Administrative Agent as to compliance with the foregoing restriction); (ii) any Letter of Credit if, after giving effect to such issuance, the Letter of Credit Usage would exceed $1,000,000; (iii) any Letter of Credit having an expiration date later than the earlier of (a) five days prior to the Commitment Termination Date and (b) the date which is one year from the date of issuance of such Letter of Credit; provided that the immediately preceding clause (b) shall not prevent the Issuing Lender from agreeing that a Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each unless the Issuing Lender elects not to extend for any such additional period; or (iv) any Letter of Credit denominated in a currency other than Dollars. B. Mechanics of Issuance. (i) Notice of Issuance. Whenever Company desires the issuance of a Letter of Credit, it shall deliver to the Issuing Lender (with a copy to Administrative Agent) an irrevocable Notice of Issuance of Letter of Credit substantially in the form of Exhibit III annexed hereto no later than 10:00 A.M. (Pacific time) at least 5 Business Days, or in each case such shorter period as may be agreed to by the Issuing Lender in any particu lar instance, in advance of the proposed date of issuance. The Notice of Issuance of Letter of Credit shall specify (a) the proposed date of issuance (which shall be a Business Day), (b) the face amount of the Letter of Credit, (c) the expiration date of the Letter of Credit, (d) the name and address of the beneficiary, and (e) the verbatim text of the proposed Letter of Credit or the proposed terms and conditions thereof, including a precise description of any documents and the verbatim text of any certificates to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of the Letter of Credit, would require the Issuing Lender to make payment under the Letter of Credit; provided that the Issuing Lender, in its reasonable discretion, may require changes in the text of the proposed Letter of Credit or any such documents or certificates; and provided, further that no Letter of Credit shall require payment against a conforming draft to be made thereunder on the same business day (under the laws of the jurisdiction in which the office of the Issuing Lender to which such draft is required to be presented is located) that such draft is presented if such presentation is made after 10:00 A.M. (in the time zone of such office of the Issuing Lender) on such business day. Company shall notify the Issuing Lender (with a copy to Administrative Agent) prior to the issuance of any Letter of Credit in the event that any of the matters to which Company is required to certify in the applicable Notice of Issuance of Letter of Credit is no longer true and correct as of the proposed date of issuance of such Letter of Credit, and upon the issuance of any Letter of Credit Company shall be deemed to have re-certified, as of the date of such issuance, as to the matters to which Company is required to certify in the applicable Notice of Issuance of Letter of Credit. (ii) Issuance of Letter of Credit. Upon satisfaction or waiver (in accordance with subsection 10.6) of the conditions set forth in subsection 4.4, the Issuing Lender shall issue the requested Letter of Credit in accordance with Issuing Lender's standard operating procedures. (iii) Notification to Lenders. Upon the issuance of any Letter of Credit Issuing Lender shall notify Administrative Agent and each other Lender of such issuance, which notice shall be accompanied by a copy of such Letter of Credit. Promptly after receipt of such notice (or, if Administrative Agent is the Issuing Lender, together with such notice, Administrative Agent shall notify each Lender of the amount of such Lender's respective participation in such Letter of Credit, determined in accordance with subsection 3.1C. (iv) Reports to Lenders. Within 15 days after the end of each calendar quarter of Company ending after the Effective Date, so long as any Letter of Credit shall have been outstanding during such calendar quarter, the Issuing Lender shall deliver to each other Lender a report setting forth the average for such calendar quarter of the daily maximum amount available to be drawn under the Letters of Credit issued by the Issuing Lender that were outstanding during such calendar quarter. C. Lenders' Purchase of Participations in Letters of Credit. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from Administrative Agent a participation in such Letter of Credit and drawings thereunder in an amount equal to such Lender's Pro Rata Share of the maximum amount which is or at any time may become available to be drawn thereunder. D. Existing Letters of Credit. Each Existing Letter of Credit outstanding on the Effective Date shall be deemed to be a Letter of Credit hereunder. 3.2 Letter of Credit Fees. Company agrees to pay the following amounts with respect to Letters of Credit issued hereunder: (i) on the date of issuance and of each extension thereof of each Letter of Credit, (a) a non-refundable letter of credit fee, payable to Administrative Agent for the account of Lenders, equal to 1.00% per annum and (b) a non-refundable fronting letter of credit fee, payable directly to the Issuing Lender for its own account equal to the greater of (x) 0.25% per annum of the maximum amount available to be drawn under such Letter of Credit and (y) $500, in each case computed on the basis of a 360 day year for the actual number of days in the term of such Letter of Credit, including any extension thereof. (ii) with respect to the amendment or transfer of each Letter of Credit and each drawing made thereunder (without duplication of the fees payable under clause (i) above), documentary and processing charges payable directly to the issuing Lender for its own account in accordance with the Issuing lender's standard schedule for such charges in effect at the time of such issuance, amendment, transfer or drawing, as the case may be and, to the extent such amend ment increases the maximum amount available to be drawn under any such Letter of Credit, increased fees in accor dance with the formula set forth in subsection 3.2(i)(a) above. Promptly upon receipt by Administrative Agent of any amount described in clause (i)(a) of this subsection 3.2, Administrative Agent shall distribute to each other Lender its Pro Rata Share of such amount. 3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit. A. Responsibility of Administrative Agent With Respect to Drawings. In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit. B. Reimbursement by Company of Amounts Drawn Under Letters of Credit. In the event the Issuing Lender has determined to honor a drawing under a Letter of Credit issued by it, the Issuing Lender shall immediately notify Company and (unless the Issuing Letter is Administrative Agent) Administrative Agent, and Company shall reimburse Administrative Agent on or before the Business Day immediately following the date on which such drawing is honored (the "Reimbursement Date") in an amount in Dollars and in same day funds equal to the amount of such drawing; provided that, anything contained in this Agreement to the contrary notwithstanding, (i) unless Company shall have notified Adminis trative Agent and the Issuing Lender prior to 8:30 A.M. (Pacific time) on the date of such drawing that Company intends to reimburse the Issuing Lender for the amount of such drawing with funds other than the proceeds of Revolving Loans, Company shall be deemed to have given a timely Notice of Borrowing to Administrative Agent requesting Lenders to make Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such drawing and (ii) subject to satisfaction or waiver of the conditions specified in subsection 4.4B, Lenders shall, on the Reimbursement Date, make Base Rate Loans in the amount of such drawing, the proceeds of which shall be applied directly by Administrative Agent to reimburse the Issuing Lender for the amount of such drawing; and provided, further that if for any reason proceeds of Revolving Loans are not received by the Issuing Lender on the Reimbursement Date in an amount equal to the amount of such drawing, Company shall reimburse the Issuing Lender, on demand, in an amount in same day funds equal to the excess of the amount of such drawing over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its obligation to make Revolving Loans on the terms and condi tions set forth in this Agreement, and Company shall retain any and all rights it may have against any Lender resulting from the failure of such Lender to make such Revolving Loans under this subsection 3.3B. C. Payment by Lenders of Unreimbursed Drawings Under Letters of Credit. (i) Payment by Lenders. In the event that Company shall fail for any reason to reimburse the Issuing Lender as provided in subsection 3.3B in an amount equal to the amount of any drawing honored by the Issuing Lender under a Letter of Credit issued by it, the Issuing Lender shall promptly notify each other Lender of the unreimbursed amount of such drawing and of such other Lender's respective participation therein based on such Lender's Pro Rata Share. Each Lender shall make available to the Issuing Lender an amount equal to its respective participation, in Dollars and in same day funds, at the office of the Issuing Lender specified in such notice, not later than 1:30 P.M. (Pacific time) on the first business day (under the laws of the jurisdiction in which such office of the Issuing Lender is located) after the date notified by the Issuing Lender. In the event that any Lender fails to make available to Administrative Agent on such business day the amount of such Lender's participation in such Letter of Credit as provided in this subsection 3.3C, the Issuing Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon at the rate customarily used by the Issuing Lender for the correction of errors among banks for three Business Days and thereafter at the Base Rate. Nothing in this subsection 3.3C shall be deemed to prejudice the right of any Lender to recover from the Issuing Lender any amounts made available by such Lender to the Issuing Lender pursuant to this subsection 3.3C in the event that it is determined by the final judgment of a court of competent jurisdiction that the payment with respect to a Letter of Credit by the Issuing Lender in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of the Issuing Lender. (ii) Distribution to Lenders of Reimbursements Received From Company. In the event the Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of any drawing honored by the Issuing Lender under a Letter of Credit issued by it, the Issuing Lender shall distribute to each other Lender which has paid all amounts payable by it under subsection 3.3C(i) with respect to such drawing such other Lender's Pro Rata Share of all payments subsequently received by the Issuing Lender from Company in reimbursement of such drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request. D. Interest on Amounts Drawn Under Letters of Credit. (i) Payment of Interest by Company. Company agrees to pay to the Issuing Lender, with respect to drawings made under any Letters of Credit issued by it, interest on the amount paid by the Issuing Lender in respect of each such drawing from the date of such drawing to but excluding the date such amount is reimbursed by Company (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the period from the date of such drawing to but excluding the Reimbursement Date, the rate then in effect under this Agreement with respect to Base Rate Loans and (b) there after, a rate which is 2% per annum in excess of the rate of interest otherwise payable under this Agreement with respect to Base Rate Loans that. Interest payable pursuant to this subsection 3.3D(i) shall be computed on the basis of a 360- day year for the actual number of days elapsed in the period during which it accrues and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. (ii) Distribution of Interest Payments by the Issuing Lender. Promptly upon receipt by the Issuing Lender of any payment of interest pursuant to subsection 3.3D(i) with respect to a drawing under a Letter of Credit issued by it, (a) the Issuing Lender shall distribute to each other Lender, out of the interest received by the Issuing Lender in respect of the period from the date of such drawing to but excluding the date on which the Issuing Lender is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B), the amount that such other Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period pursuant to subsection 3.2 if no drawing had been made under such Letter of Credit, and (b) in the event the Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of such drawing, the Issuing Lender shall distribute to each other Lender which has paid all amounts payable by it under subsection 3.3C(i) with respect to such drawing such other Lender's Pro Rata Share of any interest received by the Issuing Lender in respect of that portion of such drawing so reimbursed by other Lenders for the period from the date on which such the Issuing Lender was so reimbursed by other Lenders to and including the date on which such portion of such drawing is reimbursed by Company. Any such distribution shall be made to a Lender at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request. 3.4 Obligations Absolute. The obligation of Company to reimburse the Issuing Lender for drawings made under the Letters of Credit issued by it and to repay any Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Company or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), the Issuing Lender or other Lender or any other Person or, in the case of a Lender, against Company, whether in connection with this Agreement, the transactions contem plated herein or any unrelated transaction (including any underlying transaction between Company or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by the Issuing Lender under any Letter of Credit against presentation of a demand, draft or certifi cate or other document which does not comply with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company or any of its Subsidiaries; (vi) any breach of this Agreement or any other Loan Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the fact that an Event of Default or a Potential Event of Default shall have occurred and be continuing; provided, in each case, that payment by the Issuing Lender under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of the Issuing Lender under the circumstances in question (as determined by a final judgment of a court of competent jurisdiction). 3.5 Indemnification; Nature of the Issuing Lender's Duties. A. Indemnification. In addition to amounts payable as provided in subsection 3.6, Company hereby agrees to protect, indemnify, pay and save harmless the Issuing Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and Allocated Costs of Internal Counsel) which the Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by the Issuing Lender, other than as a result of (a) the gross negligence or willful miscon duct of the Issuing Lender as determined by a final judgment of a court of competent jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor by the Issuing Lender of a proper demand for payment made under any Letter of Credit issued by it or (ii) the failure of the Issuing Lender to honor a drawing under any such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions herein called "Governmental Acts"). B. Nature of the Issuing Lender's Duties. As between Company and the Issuing Lender, Company assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by the Issuing Lender by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lender shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuing Lender, including without limitation any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of the Issuing Lender's rights or powers hereunder. In furtherance and extension and not in limitation of the specific provisions set forth in the first paragraph of this subsection 3.5B, any action taken or omitted by the Issuing Lender under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Issuing Lender under any resulting liability to Company. Notwithstanding anything to the contrary contained in this subsection 3.5, Company shall retain any and all rights it may have against the Issuing Lender for any liability arising solely out of the gross negligence or willful misconduct of such the Issuing Lender, as determined by a final judgment of a court of competent jurisdiction. 3.6 Increased Costs and Taxes Relating to Letters of Credit. In the event that the Issuing Lender or any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, adminis tration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by the Issuing Lender or Lenders with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects the Issuing Lender or such Lender (or its applicable lending or letter of credit office) to any addi tional Tax (other than any Tax on the overall net income of the Issuing Lender or such Lender) with respect to the issu ing or maintaining of any Letters of Credit or the purchas ing or maintaining of any participations therein or any other obligations under this Section 3, whether directly or by such being imposed on or suffered by the Issuing Lender; (ii) imposes, modifies or holds applicable any reserve (including without limitation any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement in respect of any Letters of Credit issued by the Issuing Lender or participations therein purchased by any Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting the Issuing Lender or such Lender (or its applicable lending or letter of credit office) regarding this Section 3 or any Letter of Credit or any participation therein; and the result of any of the foregoing is to increase the cost to the Issuing Lender or such Lender of agreeing to issue, issuing or maintaining any Letter of Credit or agreeing to purchase, purchasing or maintaining any participation therein or to reduce any amount received or receivable by the Issuing Lender or such Lender (or its applicable lending or letter of credit office) with respect thereto; then, in any case, Company shall promptly pay to the Issuing Lender or such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts as may be necessary to compensate the Issuing Lender or such Lender for any such increased cost or reduction in amounts received or receivable hereunder. the Issuing Lender or such Lender shall deliver to Company a written statement, setting forth in reasonable detail the basis for calculating the addi tional amounts owed to the Issuing Lender or such Lender under this subsection 3.6, which statement shall be conclusive and binding upon all parties hereto absent manifest error. SECTION 4. CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT 4.1 Conditions to Effectiveness. This Agreement shall become effective only upon the satisfaction or written waiver by Requisite Lenders of the following conditions precedent, which satisfaction or waiver shall be confirmed in writing on the Effective Date by Administrative Agent to Company: A. Company Documents. On or before the Effective Date, Company shall deliver or cause to be delivered to Lenders (or to Administrative Agent for Lenders with sufficient originally executed copies, where appropriate, for each Lender and its counsel) the following, each, unless otherwise noted, dated the Effective Date: (i) Certified copies of its charter documents, together with a good standing certificate from the Secretary of State of the State of Nevada and each state in which it is qualified as a foreign corporation to do business and, to the extent generally available, a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of each of such states, each dated a recent date prior to the Effective Date; (ii) Copies of its Bylaws, certified as of the Effective Date by its secretary or an assistant secretary; (iii) Resolutions of its Board of Directors approving and authorizing the execution, delivery and performance of this Agreement and the other New Loan Documents to which it is a party, certified as of the Effective Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) Signature and incumbency certificates of its officers executing this Agreement and the other New Loan Documents to which it is a party; (v) Executed originals of this Agreement, the Notes drawn to the order of each Lender and Swing Line Lender if requested by such Lender or Swing Line Lender and with appropriate insertions, the Acknowledgement and Confirmation and the other New Loan Documents to which it is a party; and (vi) Such other documents as Administrative Agent may reasonably request. B. Loan Party Documents. On or before the Effective Date, each Loan Party shall deliver or cause to be delivered to Lenders (or to Administrative Agent for Lenders with sufficient originally executed copies, where appropriate, for each Lender and its counsel) the following, each, unless otherwise noted, dated the Effective Date: (i) Certified copies of its Certificate or Articles of Incorporation, Formation or Organization or other charter documents, together with a good standing certificate from the Secretary of State of the state of its incorporation and each other state in which it is qualified as a foreign corporation to do business and, to the extent generally available, a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of each of such states, each dated a recent date prior to the Effective Date; (ii) Copies of its Bylaws, Operating Agreements or Partnership Agreements, if any, certified as of the Effective Date by its corporate secretary or an assistant secretary; (iii) Resolutions or unanimous consents of its Board of Directors, partners or members approving and authorizing the execution, delivery and performance of the New Loan Documents to which it is a party, certified as of the Effective Date by its corporate secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) Signature and incumbency certificates of its officers executing the New Loan Documents to which it is a party; (v) Executed originals of the New Loan Documents to which it is a party; and (vi) Such other documents as Administrative Agent may reasonably request. C. Corporate and Capital Structure. The corporate organizational structure of Company and its Subsidiaries shall be as set forth on Schedule 4.1(c) annexed hereto. D. Opinions of Company's Counsel. Lenders and their respective counsel shall have received (i) originally executed copies of the favorable written opinion of Morgan, Lewis & Bockius LLP, counsel for Company, in form and substance reasonably satisfactory to Administrative Agent and its counsel, dated as of the Effective Date and setting forth substantially the matters in the opinions designated in Exhibit VII annexed hereto and as to such other matters as Administrative Agent acting on behalf of Lenders may reasonably request and (ii) opinions from special counsel to Company (including admiralty counsel) with respect to such matters governed by the laws of the states of Nevada, Illinois, Louisiana, Missouri, Kentucky and New Jersey and by maritime law as Administrative Agent acting on behalf of Lenders may reasonably request. E. Opinions of Administrative Agent's Counsel. Lenders shall have received originally executed copies of one or more favorable written opinions of O'Melveny & Myers LLP, counsel to Administrative Agent, dated as of the Effective Date, substantially in the form of Exhibit VIII annexed hereto and as to such other matters as Administrative Agent acting on behalf of Lenders may reasonably request. F. Flood Insurance. Administrative Agent shall have been provided with satisfactory evidence, which may be in the form of a letter from an insurance broker, municipal engineer, or other knowledgeable source unaffiliated with Company, as to whether (a) any of the Premises that are subject to the Lien of any Mortgage are located in an area designated by the Department of Housing and Urban Development as having special flood or mudslide hazards, and (b) any of the communities in which any of the Facilities are located is participating in the National Flood Insurance Program. If both of the aforesaid conditions exist, Administrative Agent shall receive satisfactory policies of flood insurance covering the applicable Improvements as required by the Flood Act. G. Perfection of Security Interests. Loan Parties shall have taken or caused to be taken such actions in such a manner so that Administrative Agent, on behalf of Lenders, or the Trustee, solely for the benefit of Administrative Agent, on behalf of Lenders, as the case may be, each has a valid and perfected first priority security interest (subject only to Liens permitted under subsection 7.2) in all Collateral in which a Lien is purported to be granted by the Collateral Documents. Such actions shall include, without limitation, the following: (i) the receipt by Administrative Agent of evidence satisfactory to it that amendments ("Mortgage Amendments") to each Mortgage heretofore executed and delivered with respect to the Louisiana Facilities, the Illinois Facilities and the Louisiana Hotel Facilities (such Mortgages being the "Existing Mortgages") have been executed and acknowledged and will be recorded in all jurisdictions as may be necessary or, in the opinion of Administrative Agent, desirable to effectively create or maintain in effect valid and perfected Liens (subject only to Liens permitted under subsection 7.2) created by the Existing Mortgages securing the Obligations, as such Obligations have been amended or modified by this Agreement; (ii) the receipt by Administrative Agent of evidence satisfactory to it that amendments ("Ship Mortgage Amendments") to each Ship Mortgage heretofore executed and delivered with respect to the Louisiana Ships and the Illinois Ships (such Ship Mortgages being the "Existing Ship Mortgages") have been executed and acknowledged and will be recorded in all jurisdictions as may be necessary or, in the opinion of Administrative Agent, desirable to effectively create or maintain in effect valid and perfected Liens (subject only to Liens permitted under subsection 7.2) created by the Existing Ship Mortgages securing the Obligations, as such Obligations have been amended or modified by this Agreement; and (iii) the receipt by Administrative Agent of evidence satisfactory to it that all other filings, recordings and other actions Administrative Agent deems necessary or advisable to establish, preserve and perfect the first priority Liens (subject only to Liens permitted under subsection 7.2) granted to Administrative Agent in the Collateral (including, without limitation, Collateral subject to the Lien of any Collateral Document executed and delivered pursuant to the Existing Credit Agreement) shall have been made. H. Amendments to Title Policies. Lenders shall have received confirmation from the Title Company that the Title Company will issue endorsements to, or rewrites of, the Title Policies over all Liens other than Liens previously identified in and excluded from the coverage of the Title Policies, and otherwise providing the Lenders with the same types and levels of insurance provided in the Title Policies. I. Necessary Consents. On or before the Effective Date, each Loan Party shall have obtained all consents that are required for the operation of the Facilities, in each case, and the transactions contemplated under this Agreement and the other Loan Documents of (i) Illinois Gaming Authorities, Louisiana Gaming Authorities, Missouri Gaming Authorities and other Governmental Authorities and (ii) any Person required under any Contractual Obligation of any Loan Party, all of the foregoing in form and substance satisfactory to Administrative Agent. J. Interest and Certain Fees. Company shall have paid to Administrative Agent, for distribution (as appropriate) to Administrative Agent and Lenders, all accrued and unpaid interest and fees under the Existing Credit Agreement payable on the Effective Date as provided in subsection 2.3B(iii). K. [omitted] L. [omitted] M. Payment of Amounts owed under Existing Credit Agreement. Company shall have paid to Administrative Agent for distribution to the Lenders under the Existing Credit Agreement (i) all interest and commitment fees that have accrued through the Effective Date, (ii) all accrued and unpaid fees and commissions with respect to all Existing Letters of Credit that have accrued through the Effective Date and (iii) all other fees and amounts owed under the Existing Credit Agreement (other than the principal amount of the Loans that shall continue to be owed hereunder and under the Notes). N. Repayment of Existing Revolving Loans. On the Effective Date, concurrently with any borrowing of Revolving Loans made on the Effective Date, Company (i) shall repay in full all Existing Revolving Loans owed to each Noncontinuing Lender and (ii) shall repay Existing Revolving Loans owed to each Lender in amounts such that, after giving effect thereto, the Revolving Loans of each Lender shall be in an amount directly proportional to such Lender's Pro Rata Share of all Revolving Loans outstanding after giving effect to such repayment. Each such repayment shall be made together with all interest accrued on such Existing Revolving Loans to the date of repayment. O. Administrative Agent's Counsel Fees. Company shall have paid the reasonable fees and disbursements of counsel to Administrative Agent. P. Administrative Agent's Fees. Company shall have paid to Administrative Agent the fees set forth in that certain letter agreement between the Administrative Agent and Company dated February 17, 1998. Q. No Material Adverse Effect. Since March 31, 1997, no Material Adverse Effect (in the sole opinion of each Lender) shall have occurred. R. Representations and Warranties; Performance of Agreements. Company shall have delivered to Administrative Agent an Officers' Certificate, in form and substance satisfactory to Administrative Agent, to the effect that the representations and warranties in Section 5 hereof are true, correct and complete on and as of the Effective Date to the same extent as though made on and as of that date and that Company shall have performed all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by it on or before the Effective Date except as otherwise disclosed to and agreed to in writing by Administrative Agent and each Lender. S. Completion of Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request. T. Delivery of Pricing Determination Certificate. Administrative Agent shall have received a Pricing Determination Certificate calculated utilizing the most recent financial statements delivered to Administrative Agent under the Existing Credit Agreement. U. Appraisals. Administrative Agent shall have received appraisals in form, scope and substance satisfactory to Administrative Agent concerning the real property Collateral securing the Loans, in each case to the extent required under applicable laws and regulations as determined by Administrative Agent in its discretion. V. Leases. Administrative Agent shall have received complete copies of all leases for any of the properties and facilities comprising all or any portion of the Facilities that are leased by Company or any of its Subsidiaries in each case entered into after December 16, 1996, and a "landlord estoppel certificate" for such leases (other than with respect to the lease referred to in subsection 5.5A(iii)), certifying that no defaults by the lessee currently exist under any such lease and confirming, among other things, the annual rental amount paid by Company or its Subsidiaries to lessor thereunder. W. Governmental Authorizations. Administrative Agent shall have received satisfactory evidence that Company and its Subsidiaries have obtained all Governmental Authorizations (including, without limitation, Governmental Authorizations from Gaming Authorities and all zoning approvals, special or conditional use permits, variances, permits, licenses, liquor licenses, certificates of occupancy and franchises) necessary to permit the use, occupancy and operation of each of the Facilities presently in operation or necessary for Company to amend and restate the Existing Credit Agreement pursuant to this Agreement and for Loan Parties to perform the transactions contemplated hereby. X. No Disruption of Financial and Capital Markets. There shall have been no material adverse change after the date hereof in the syndication markets for credit facilities similar in nature to the Loans, and there shall not have occurred and be continuing a material disruption of or material adverse change in the financial, banking or capital markets that would have an adverse effect on such syndication market, in each case as determined by Administrative Agent in its sole discretion. Y. Effective Date. The Effective Date is on or before March 31, 1998. 4.2 [omitted]. 4.3 [omitted]. 4.4 Conditions to All Loans. The obligations of Lenders to make Revolving Loans and of Swing Line Lender to make Swing Line Loans on each Funding Date are subject to the following further conditions precedent: A. Administrative Agent shall have received before that Funding Date, in accordance with the provisions of subsection 2.1C, an originally executed Notice of Borrowing, in each case signed by the chief executive officer, the chief financial officer or the treasurer of Company or by any executive officer of Company designated by any of the above-described officers on behalf of Company in a writing delivered to Administrative Agent. B. As of that Funding Date: (i) The representations and warranties contained herein and in the other Loan Documents shall be true, correct and complete in all material respects on and as of that Funding Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true, correct and complete in all material respects on and as of such earlier date; (ii) No event shall have occurred and be continuing or would result from the consummation of the borrowing contemplated by such Notice of Borrowing that would constitute an Event of Default or, to Company's Best Knowledge (following the reasonable exercise of diligence appropriate for the circumstance in question by the officers of the Company executing the applicable Notice of Borrowing), a Potential Event of Default; (iii) Company shall have performed in all material respects all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by it on or before that Funding Date; (iv) No order, judgment or decree of any court, arbitrator or governmental authority shall purport to enjoin or restrain any Lender from making the Loans to be made by it on that Funding Date; provided that any such order, judgment or decree shall only relieve that Lender on whom such order, judgment or decree is binding from its obligation to make Loans to Company. (v) The making of the Loans requested on such Funding Date shall not violate any law including, without limitation, Regulation G, Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System; (vi) There shall not be pending or, to the knowledge of Company, threatened, any action, suit, proceeding, governmental investigation or arbitration against or affecting Company or any of its Subsidiaries or any property of Company or any of its Subsidiaries that has not been disclosed by Company in writing pursuant to subsection 5.6 or 6.1(x) prior to the making of the last preceding Loans (or, in the case of the initial Loans, prior to the execution of this Agreement), and there shall have occurred no development not so disclosed in any such action, suit, proceeding, governmental investigation or arbitration so disclosed, that, in either event, in the reasonable opinion of Administrative Agent or of Requisite Lenders, would be expected to have a Material Adverse Effect; and no injunction or other restraining order shall have been issued and no hearing to cause an injunction or other restraining order to be issued shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the making of Loans hereunder; and (vii) No Material Adverse Effect (in the sole opinion of each Lender) shall have occurred since either (i) March 31, 1997 or (ii) the date of the most recent audited financial statements of the Company delivered pursuant to subsection 6.1(iii); provided that such opinion by any Lender as to the occurrence of a Material Adverse Effect shall only relieve that Lender holding such opinion from its obligation to make Loans to Company. C. Neither Administrative Agent nor any Lender has given each other Lender written notice that it has actual knowledge of the occurrence of any event that, on such Funding Date, either (i) causes any of the representations and warranties to be made by Company on such date to be untrue in any material respect as of such date or (ii) causes any representations and warranties that specifically relate to an earlier date to have been untrue in any material respect on and as of such earlier date. 4.5 Conditions to Letters of Credit. The issuance of any Letter of Credit hereunder is subject to the following conditions precedent: A. On or before the date of issuance of the initial Letter of Credit pursuant to this Agreement, the conditions set forth in subsection 4.1 shall have been satisfied or waived in writing by Requisite Lenders. B. On or before the date of issuance of such Letter of Credit, the Issuing Lender shall have received, in accordance with the provisions of subsection 3.1B(i), an originally executed Notice of Issuance of Letter of Credit, signed by the chief executive officer, the chief financial officer or the treasurer of Company or by any executive officer of Company designated by any of the above-described officers on behalf of Company in a writing delivered to the Issuing Lender, together with all other information specified in subsection 3.1B(i) and such other documents or information as the Issuing Lender may reasonably require in connection with the issuance of such Letter of Credit. C. On the date of issuance of such Letter of Credit, all conditions precedent described in subsection 4.4B shall be satisfied to the same extent as if the issuance of such Letter of Credit were the making of a Loan and the date of issuance of such Letter of Credit were a Funding Date. SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Agreement and to make the Loans, to induce Administrative Agent to issue Letters of Credit and to induce other Lenders to purchase participations therein, Company represents and warrants to each Lender, on the date of this Agreement, on each Funding Date and on the date of issuance of each Letter of Credit, that the following statements are true, correct and complete: 5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries. A. Organization and Powers. Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. Company has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents and to carry out the transactions contemplated thereby. B. Qualification and Good Standing. Company is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had and, to Company's Best Knowledge, will not have a Material Adverse Effect. C. Conduct of Business. Company and its Subsidiaries are engaged only in the businesses permitted to be engaged in pursuant to subsection 7.10. D. Subsidiaries. Except for Subsidiaries identified on Schedule 5.1 with no substantial assets that are to be dissolved, all of the Subsidiaries of Company are identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time to time pursuant to the provisions of subsection 6.1(xviii). The capital stock of each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so supplemented) is duly authorized, validly issued, fully paid and nonassessable and none of such capital stock constitutes Margin Stock. Each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so supplemented) is an entity duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or organization set forth therein, has all requisite corporate or partnership power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted, and is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, in each case except where failure to be so qualified or in good standing or a lack of such corporate or partnership power and authority has not had and, to Company's Best Knowledge, will not have a Material Adverse Effect except for Subsidiaries identified on Schedule 5.1 with no substantial assets that are to be dissolved. Schedule 5.1 annexed hereto (as so supplemented) correctly sets forth the ownership interest of Company and each of its Subsidiaries in each of the Subsidiaries of Company identified therein. 5.2 Authorization of Borrowing, etc. A. Authorization of Borrowing. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary corporate action on the part of each Loan Party that is a party thereto. B. No Conflict. The execution, delivery and performance by each Loan Party of the Loan Documents and the consummation of the transactions contemplated by the Loan Documents do not and, to Company's Best Knowledge, will not (i) violate (X) any provision of any law or any governmental rule or regulation applicable to Company or any of its Subsidiaries the violation of which could have a Material Adverse Effect, (Y) the Certificate or Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or (Z) any order, judgment or decree of any court or other agency of government binding on Company or any of its Subsidiaries the violation of which could have a Material Adverse Effect, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Company or any of its Subsidiaries, if the execution of any of the Loan Documents would afford any party (other than Company) the right (after the giving of notice or lapse of time or both) to terminate such Contractual Obligation or seek judicial relief against Company as a result thereof, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Company or any of its Subsidiaries (other than any Liens created under any of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Company or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Effective Date and disclosed in writing to Lenders. C. Governmental Consents. The execution, delivery and performance by the Loan Parties of the Loan Documents and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body except (i) those that have been obtained and copies of which have been delivered to Administrative Agent pursuant to subsection 4.1I or the absence of which Administrative Agent has deemed satisfactory pursuant to subsection 4.1I, (ii) those notices or informational filings or both that will be required to be given to the Securities and Exchange Commission or any Gaming Board but that are not yet due, (iii) any right of any Gaming Board to object to any Lender or participant in the Loans at any future date, and (iv) any regulatory approvals in Louisiana that are granted after the fact. D. Binding Obligation. Each of the Loan Documents has been duly executed and delivered by the Loan Parties signatory thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bank ruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. 5.3 Financial Condition. Company has heretofore delivered to Lenders, at Lenders' request, the following financial statements and information: (i) the audited consolidated balance sheet of Company and its Subsidiaries as at March 31, 1997, and the related consolidated statements of income, stockholders' equity and cash flows of Company and its Subsidiaries for the Fiscal Year then ended and (ii) the unaudited consolidated and Consolidating balance sheets of Company and its Subsidiaries as at December 31, 1997, and the related unaudited consolidated and Consolidating statements of income, stockholders' equity and cash flows of Company and its Subsidiaries for the six months then ended. All such statements were prepared in conformity with GAAP and fairly present the financial position (on a consolidated and, where applicable, Consolidating basis) of the entities described in such financial statements as at the respective dates thereof and the results of operations and cash flows (on a consolidated and, where applicable, Consolidating basis) of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments, including the information presented in the footnotes to Company's audited financial statements. Company does not (and will not following the funding of the initial Loans) have any Contingent Obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing financial statements or the notes thereto or, following the funding of initial Loans, in the financial statements required to be delivered pursuant to subsection 6.1 and which in any such case is material in relation to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company and its Subsidiaries, taken as a whole. 5.4 No Material Adverse Change; No Restricted Payments. Since March 31, 1997, no event or change has occurred that has caused or evidences, either in any case or in the aggre gate, a Material Adverse Effect. Neither Company nor any of its Subsidiaries has directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Restricted Payment or agreed to do so except as permitted by subsection 7.5. 5.5 Title to Properties; Liens. A. Company and its Subsidiaries have (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), or (iii) good title to (in the case of all other personal property), all of their respective properties and assets reflected in the financial statements referred to in subsection 5.3 or in the most recent financial statements delivered pursuant to subsection 6.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under subsection 7.7. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens. B. (i) All of the assets, of whatever kind and nature, whether real, personal or mixed property, used in connection with the Illinois Facilities or placed or located in or on the Illinois Premises are owned or leased directly by SIRCC or RR and not by Company or any of Company's other Subsidiaries. (ii) All of the assets, of whatever kind and nature, whether real, personal or mixed property, used in connection with the Louisiana Facilities or placed or located in or on the Louisiana Premises are owned or leased directly by PLC, SSP or PRLLC and not by Company or any of Company's other Subsidiaries. (iii) Neither the Company nor any of its Subsidiaries owns or leases any real or personal property located in the state of Nevada, except for the lease by PRES, PEI and PHI of an office within 301 East Clark Avenue, Suite 870, Las Vegas, Nevada and except for a month to month document storage space lease at 1120 Las Vegas, Nevada 89104 and successor arrangements. (iv) All of the assets, of whatever kind and nature, whether real, personal or mixed property, used in connection with the Maryland Heights Facilities or placed or located in or on the Maryland Heights Facilities are owned or leased directly by the Maryland Heights Subsidiaries (or Harrah's) and not by Company or any of Company's other Subsidiaries. (v) All of the assets, of whatever kind and nature, whether real, personal or mixed property, used in connection with the Louisiana Hotel Facilities or placed or located in or on the Louisiana Hotel Premises are owned or leased directly by PLC and not by Company or any of Company's other Subsidiaries. C. (i) SIRCC, PLC, SSP, and PRLLC each have good and valid title to the Ship or Ships and the Barge or Barges owned by it, free and clear of all liens, charges, encumbrances and security interests other than those in favor of Administrative Agent pursuant to the Existing Credit Agreement or those permitted under subsection 7.2; (ii) each Ship listed on Schedule 5.5, as said Schedule 5.5 may be supplemented from time to time pursuant to the provisions of subsection 6.1(xxi), is subject to a valid certificate of documentation identifying SIRCC, PLC, SSP or PRLLC, as the case may be, as the registered owner thereof under the laws and regulations of the United States; and (iii) SIRCC, PLC, SSP, and PRLLC each have all necessary authority required to own and operate the Ship or Ships and the Barge or Barges owned by it for such Ships' or Barges' intended purposes. D. On the Effective Date, the only water craft of any nature whatsoever (whether constituting a vessel, Barge, US Documented Barge, floating structure or otherwise) owned by Company or any of its Subsidiaries that is subject to a valid certificate of documentation pursuant to the laws of the United States of America are the Star Casino, the Players Riverboat Casino II, the Players Riverboat III (including both vessel #999887 and vessel #999888) and the US Documented Barges described on Schedule 5.5. 5.6 Litigation; Adverse Facts. Except as set forth in Schedule 5.6 annexed hereto, there are no actions, suits, proceedings, arbitrations or, to Company's Best Knowledge, governmental investigations (whether or not purportedly on behalf of Company or any of its Subsidiaries) at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, pending or, to the knowledge of Company, threatened against or affecting Company or any of its Subsidiaries or any property of Company or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither Company nor any of its Subsidiaries is (i) in violation of any applicable laws that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect or (ii) subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. 5.7 Payment of Taxes. Except to the extent permitted by subsection 6.3, all tax returns and reports of Company and its Subsidiaries required to be filed by any of them have been timely filed, and all taxes, assessments, fees and other governmental charges upon Company and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Company knows of no proposed tax assessment against Company or any of its Subsidiaries which has not been provided for or which is not being actively contested by Company or such Subsidiary in good faith and by appropriate proceedings; provided that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor. 5.8 Performance of Agreements; Materially Adverse Agreements. A. Neither Company nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, would not have a Material Adverse Effect. B. Neither Company nor any of its Subsidiaries is a party to or is otherwise subject to any agreements or instruments or any charter or other internal restrictions which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. 5.9 Governmental Regulation. Neither Company nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. 5.10 Securities Activities. A. Neither Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. B. Following application of the proceeds of each Loan, not more than 25% of the value of the assets (either of Company only or of Company and its Subsidiaries on a consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or subject to any restriction contained in any agreement or instrument, between Company and any Lender or any Affiliate of any Lender, relating to Indebtedness and within the scope of subsection 8.2, will be Margin Stock. 5.11 Employee Benefit Plans. A. Except as described in Schedule 5.11 annexed hereto, Company and each of its ERISA Affiliates are in compliance with all applicable provisions and requirements of ERISA and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan. B. No ERISA Event has occurred or is reasonably expected to occur with respect to Company or any of its ERISA Affiliates. C. Except to the extent required under Section 4980B of the Internal Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employees of Company or any of its ERISA Affiliates. D. As of the most recent valuation date for any Pension Plan, the amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), does not exceed $5,000,000. 5.12 Certain Fees. No broker's or finder's fee or commission will be payable with respect to this Agreement or any of the transactions contemplated hereby, and Company hereby indemnifies Administrative Agent, Managing Agent and Arranger against, and agrees that it will hold Administrative Agent, Managing Agent and Arranger harmless from, any claim, demand or liability for any such broker's or finder's fees alleged to have been incurred by Administrative Agent, Managing Agent or Arranger as the result of any action or inaction by Company in connection herewith or therewith and any expenses (including reasonable fees, expenses and disbursements of counsel) arising in connection with any such claim, demand or liability. 5.13 Environmental Protection. Except as set forth in Schedule 5.13 annexed hereto: (i) the operations of Company and each of its Subsidiaries (including, without limitation, all operations and conditions at or in the Facilities) comply in all material respects with all Environmental Laws; (ii) Company and each of its Subsidiaries have obtained all Governmental Authorizations under Environmental Laws necessary to their respective operations, and all such Governmental Authorizations are in good standing, and Company and each of its Subsidiaries are in compliance with all material terms and conditions of such Governmental Authorizations; (iii) neither Company nor any of its Subsidiaries has received (a) any notice or claim to the effect that it is or may be liable to any Person as a result of or in connection with any Hazardous Materials or (b) any letter or request for information under Section 104 of the Comprehen sive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9604) or comparable state laws, and, to the best of Company's knowledge, none of the operations of Company or any of its Subsidiaries is the subject of any federal or state investigation relating to or in connection with any Hazardous Materials at any Facility or at any other location; (iv) none of the operations of Company or any of its Subsidiaries is subject to any judicial or administrative proceeding alleging the violation of or liability under any Environmental Laws which if adversely determined could reasonably be expected to have a Material Adverse Effect; (v) neither Company nor any of its Subsidiaries nor any of their respective Facilities or operations are subject to any outstanding written order or agreement with any governmental authority or private party relating to (a) any Environmental Laws or (b) any Environmental Claims; (vi) neither Company nor any of its Subsidiaries has any contingent liability in connection with any Release of any Hazardous Materials by Company or any of its Subsidiaries; (vii) neither Company nor any of its Subsidiaries nor, to Company's Best Knowledge, any predecessor of Company or any of its Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment or Release of Hazardous Materials at any Facility, and none of Company's or any of its Subsidiaries' operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent; (viii) no Hazardous Materials exist on, under or about any Facility in a manner that has a reasonably possibility of giving rise to an Environmental Claim having a Material Adverse Effect, and neither Company nor any of its Subsidiaries has filed any notice or report of a Release of any Hazardous Materials that has a reasonable possibility of giving rise to an Environmental Claim having a Material Adverse Effect; (ix) neither Company nor any of its Subsidiaries nor, to Company's Best Knowledge, any of their respective predecessors has disposed of any Hazardous Materials in a manner that has a reasonable possibility of giving rise to an Environmental Claim having a Material Adverse Effect; (x) no surface impoundments are on or at any Facility or, to Company's Best Knowledge, no underground storage tanks are on or at any Facility; and (xi) no Lien in favor of any Person relating to or in connection with any Environmental Claim has been filed or has been attached to any Facility. 5.14 Employee Matters. There is no strike or work stoppage in existence or threatened involving Company or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect. 5.15 Solvency. Company and each of its Subsidiaries (including PHI) is and, upon the incurrence of any Obligations by Company on any date on which this representation is made, will be, Solvent. 5.16 Disclosure. No representation or warranty of Company or any of its Subsidiaries contained in any Loan Document or in any other document, certificate or written statement furnished to Lenders by or on behalf of Company or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact (known to Company, in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Company to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. To Company's Best Knowledge, no facts exist (other than matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have not been disclosed herein or in such other documents, certificates and statements furnished to Lenders for use in connection with the transactions contemplated hereby. 5.17 Compliance With Laws. Company and its Subsidiaries are in compliance with the requirements of all applicable laws, rules, regulations, ordinances and orders (including, without limitation, Gaming Laws) if noncompliance would affect the ability of any such party to operate any of the Facilities or the ability of any of Company or any of its Subsidiaries to perform their obligations under the Loan Documents to which it is a party, except where the failure to so comply or perform would not have a Material Adverse Effect. The use of each of the Facilities complies with applicable zoning ordinances, regulations, restrictive covenants and requirements of Governmental Authorizations affecting the respective Facilities as well as all environmental, ecological, landmark, and other applicable laws and regulations (including, without limitation, Gaming Laws); and all requirements for such use have been satisfied, except where the failure to so comply would not have a Material Adverse Effect. 5.18 Representations Relating to Operation of Facilities. A. Each of the Facilities is open to the public and all authorizations, licenses and permits required by any Governmental Authority for the use, occupancy and operation of the Premises and the Maryland Heights Premises for the purposes contemplated herein have been obtained and all requirements for such use have been satisfied. B. All utility services required to operate each of the Facilities are available and in adequate supply. 5.19 Intangible Property. Company and its Subsidiaries are the sole and exclusive owner or licensee of all trade names, unregistered trademarks and service marks, brand names, patents, registered and unregistered copyrights, registered trademarks and service marks, and all applications for any of the foregoing, and all permits, grants and licenses or other rights with respect thereto, except where the absence of such sole ownership would not have a Material Adverse Effect. Schedule 5.19 annexed hereto sets forth a true and complete list of all service marks and registered trademarks (or trademarks for which registration is pending) of Company and its Subsidiaries. None of Company and its Subsidiaries has been charged with any material infringement of any intangible property of the character described above or been notified or advised of any material claim of any other Person relating to any of the intangible property. 5.20 Rights to Agreements, Permits and Licenses. From and after the Effective Date, Company (or its Subsidiaries) will be the true owner of all rights in and to all existing agreements, permits and licenses relating to all of its facilities (now or hereafter acquired) and each of the respective Premises (other than rights of third parties under leases and agreements permitted hereunder), and will be the true owner of all rights in and to all future agreements, permits and licenses relating to all of its facilities (now or hereafter acquired), other than rights of third parties under leases and agreements permitted hereunder, except where the absence of such true ownership would not have a Material Adverse Effect. Company's interest in all such agreements, permits, and licenses is not and, to Company's Best Knowledge, will not be subject to any present claim (other than under the Loan Documents), set-off or deduction other than in the ordinary course of business. 5.21 Classification of Ships. From and after the Effective Date, the American Bureau of Shipping classification of each Ship shall remain the highest applicable classification and rating to which a ship of the same age and type as such Ship can qualify under the rules and standards of the American Bureau of Shipping. 5.22 Recordation of Ship Mortgages. Each Ship Mortgage has been duly filed in the appropriate office of the United States Coast Guard. Each Ship Mortgage constitutes a legal, valid and binding first preferred ship mortgage under the Ship Mortgage Act of 1920, as amended and codified in Chapter 313 of Title 46 of the United States Code, on the applicable Ship or US Documented Barge in favor of the Trustee as mortgagee under such Ship Mortgage for the benefit of Administrative Agent on behalf of Lenders. No other filings or recordings or refilings or re-recordings of any other instruments are necessary to cause the lien of any of the Ship Mortgages to be legal, valid and binding on the parties thereto, and to create in favor of the Trustee, as secured party, for the benefit of Administrative Agent on behalf of Lenders, the preferred mortgage which the Ship Mortgages purport to create. 5.23 Policies of Insurance. Each of the copies of the declaration pages, original binders and certificates of insurance evidencing the Policies of Insurance delivered to Administrative Agent with respect to the Louisiana Facilities, the Illinois Facilities and the Louisiana Hotel Facilities is a true, correct and complete copy of the respective original thereof as in effect on the date hereof, and no amendments or modifications of said documents or instruments not included in such copies have been made. Furthermore, none of such documents or instruments has been terminated and each is in full force and effect. Neither the Company nor any of its Subsidiaries are in default in the observance or performance of their respective obligations under said documents and instruments and Company and its Subsidiaries have taken all actions required to be performed under all Policies of Insurance to keep unimpaired their rights thereunder. 5.24 Survival of Rights Created under Existing Credit Agreement. Notwithstanding the modification or deletion of certain representations and warranties of Company contained in the Existing Credit Agreement (including, without limitation, the deletion of representations and warranties as to the future consequences of certain events which occurred prior to the date of this Agreement), Company acknowledges and agrees that any choses in action or other rights created in favor of any Lender and their respective successors and assigns arising out of the representations and warranties of Company contained in or delivered (including representations and warranties delivered in connection with the making of loans thereunder) in connection with the Existing Credit Agreement, shall survive the execution and delivery of this Agreement. Company and Lenders acknowledge that certain representations and warranties made by Company under the Existing Credit Agreement (including representations and warranties as to the future consequences of certain events which occurred prior to the date of this Agreement) were made subject to changes in the facts and conditions on which such representations and warranties were based, which such changes were permitted or required under the Existing Credit Agreement or this Agreement and any such representations and warranties incorporated herein are so incorporated subject to such changes permitted or required under the Existing Credit Agreement or this Agreement. SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS Company covenants and agrees that, so long as the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all Letters of Credit, unless each Lender shall otherwise give prior written consent, Company shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6. 6.1 Financial Statements and Other Reports. Company will maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. Company will deliver to Administrative Agent and Lenders: (i) Monthly Financials: As soon as available and in any event within 35 days after the end of each month (and concurrently with the delivery of financial statements pursuant to subdivisions (ii) and (iii) below): (a) the consolidated balance sheet of Company and its Subsidiaries as at the end of such month and the related consolidated statements of profit and loss, stockholders' equity and cash flows of Company and its Subsidiaries for such month, setting forth in each case in comparable form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the consolidated plan and financial forecast for the current Fiscal Year delivered pursuant to subsection 6.1(xiv), all in reasonable detail and certified by the Chief Financial Officer of the Company that they fairly present the financial condition of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments, (b) an analysis of Company's operations during such month which analysis shall explain the effect of the Company's operations during such month or Company's ability to perform its obligations under the Agreement and the other Loan Documents and (c) the balance sheet of each Facility as at the end of such month and the related statements of profit and loss, stockholder's equity and cash flows of such Facility for such month, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year all in reasonable detail and certified by the Chief Financial Officer of Company that they fairly present the financial condition of such Facility as at the dates indicated and the results of such Facility's operations and cash flows for the period indicated, subject to changes resulting from audit and normal year-end adjustments. (ii) Quarterly Financials: as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year and, with respect to the fourth Fiscal Quarter of each Fiscal Year, concurrently with the delivery of financial statements pursuant to subdivision (iii) below, (1) the consolidated and Consolidating balance sheets of Company and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated and Consolidating statements of income, stockholders' equity and cash flows of Company and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the consolidated plan and financial forecast for the current Fiscal Year delivered pursuant to subsection 6.1(xiv), all in reasonable detail and certified by the chief financial officer of Company that they fairly present the financial condition of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments and (2) copies of Company's relevant 10-Q filed with the Securities and Exchange Commission within 15 days of such filing; (iii) Year-End Financials: as soon as available and in any event within 120 days after the end of each Fiscal Year, (a) (1) the consolidated and Consolidating balance sheets of Company and its Subsidiaries as at the end of such Fiscal Year and the related consolidated and Consolidating statements of income, stockholders' equity and cash flows of Company and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and, when available, the corresponding figures from the consolidated plan and financial forecast delivered pursuant to subsection 6.1(xiii) for the Fiscal Year covered by such financial statements, all in reasonable detail and certified by the chief financial officer of Company that they fairly present the financial condition of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, and (2) copies of Company's relevant 10-K filed with the Securities and Exchange Commission within 15 days of such filing, and (b) in the case of such consolidated financial statements, a report thereon of Ernst & Young, LLP or other independent certified public accountants of recognized national standing selected by Company and satisfactory to Managing Agent, which report shall be unqualified, shall not express any doubts about the ability of Company and its Subsidiaries to continue as a going concern, and shall state that such consolidated financial statements fairly present the consolidated financial position of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (iv) Officers' and Compliance Certificates: (a) together with each delivery of financial statements of Company and its Subsidiaries pursuant to subdivisions (i), (ii) and (iii) above, an Officers' Certificate of Company stating that the signers have reviewed the terms of this Agreement and have made, or caused to be made under their supervision, a review in reasonable detail of the transactions and condition of Company and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signers do not have actual knowledge of the existence as at the date of such Officers' Certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action Company has taken, is taking and proposes to take with respect thereto; and (b) together with each delivery of financial statements of Company and its Subsidiaries pursuant to subdivision (i) above, a Compliance Certificate demonstrating in reasonable detail compliance (X) during and at the end of the applicable accounting periods with the restrictions contained in subsections 7.1, 7.3(v) and 7.5 and (Y) at the end of the applicable accounting periods with the restrictions contained in subsection 7.6, and setting forth in reasonable detail the calculation of Consolidated EBITDA for the four Fiscal Quarter period ending on the date of the end of such accounting period and the Interest Coverage Ratio as of such date; (v) Reconciliation Statements: if, as a result of any change in accounting principles and policies from those used in the preparation of the audited financial statements referred to in subsection 5.3, the consolidated financial statements of Company and its Subsidiaries delivered pursuant to subdivisions (ii) and (iii) of this subsection 6.1 will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then (a) together with the first delivery of financial statements pursuant to subdivision (ii) and (iii) of this subsection 6.1 following such change, consolidated financial statements of Company and its Subsidiaries for (y) the current Fiscal Year to the effective date of such change and (z) the two full Fiscal Years immediately preceding the Fiscal Year in which such change is made, in each case prepared on a pro forma basis as if such change had been in effect during such periods, and (b) together with each delivery of financial statements pursuant to subdivision (ii) and (iii) of this subsection 6.1 following such change, a written statement of the chief accounting officer or chief financial officer of Company setting forth the differences which would have resulted if such financial statements had been prepared without giving effect to such change; (vi) Accountants' Certification: together with each delivery of consolidated financial statements of Company and its Subsidiaries pursuant to subdivision (iii) above, a written statement by the independent certified public accountants giving the report thereon (a) stating that their audit examination has included a review of the terms of this Agreement and the other Loan Documents as they relate to accounting matters, (b) stating whether, in connection with their audit examination, any condition or event that constitutes an Event of Default or Potential Event of Default has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided that such accountants shall not be liable by reason of any failure to obtain knowledge of any such Event of Default or Potential Event of Default that would not be disclosed in the course of their audit examination, and (c) stating that based on their audit examination nothing has come to their attention that causes them to believe either or both that the information contained in the certificates delivered therewith pursuant to subdivision (iv) above is not correct or that the matters set forth in the Compliance Certificates delivered therewith pursuant to clause (b) of subdivision (iv) above for the applicable Fiscal Year are not stated in accordance with the terms of this Agreement; (vii) Accountants' Reports: promptly upon, but in no case later than 15 calendar days after, receipt thereof (unless restricted by applicable professional standards), copies of all reports submitted to Company by independent certified public accountants in connection with each annual, interim or special audit of the financial statements of Company and its Subsidiaries made by such accountants, including, without limitation, any comment letter submitted by such accountants to management in connection with their annual audit; (viii) Insurance: as soon as practicable and in any event by the last day of each Fiscal Year, a report in form and substance satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such report by Company and its Subsidiaries (including all coverages referred to in subsection 6.4B hereof and Schedules 6.4(a) and 6.4(b) annexed hereto, section 6 of each of the Mortgages and within each of the Ship Mortgages under the heading "Vessel Insurance Requirements and Provisions") and all material insurance coverage then planned to be maintained by Company and its Subsidiaries in the immediately succeeding Fiscal Year, if in each case there shall be any material changes in such insurance coverage from the insurance coverage in existence on the date hereof; (ix) SEC Filings and Press Releases: promptly upon their becoming available but in any event within 15 days after filing with the Securities and Exchange Commission, copies of (a) all financial statements, reports, notices and proxy statements sent or made available generally by Company to its security holders or by any Subsidiary of Company to its security holders other than Company or another Subsidiary of Company, (b) all regular and periodic reports and all registration statements (other than on Form S-8 or a similar form) and prospectuses, if any, filed by any of Company's Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, and (c) all press releases and other statements made available generally by Company or any of Company's Subsidiaries to the public concerning material developments in the business of Company or any of Company's Subsidiaries; (x) Events of Default, etc.: promptly, but in any event within 5 calendar days, upon Company's Best Knowledge (a) of any condition or event that constitutes an Event of Default or Potential Event of Default, or that any Lender has given any notice (other than to Administrative Agent) or taken any other action with respect to a claimed Event of Default or Potential Event of Default, (b) that any Person has given any notice to Company or any of its Subsidiaries or taken any other action with respect to a claimed default or event or condition of the type referred to in subsection 8.2, (c) of any condition or event that would be required to be disclosed in a current report filed by Company with the Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof) if Company were required to file such reports under the Exchange Act, or (d) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, an Officers' Certificate specifying the nature and period of existence of such condition, event or change, or specifying the notice given or action taken by any such Person and the nature of such claimed Event of Default, Potential Event of Default, default, event or condition, and what action Company has taken, is taking and proposes to take with respect thereto; (xi) Litigation or Other Proceedings: (a) promptly upon any Responsible Officer obtaining knowledge of (X) the institution of, or non-frivolous threat of, any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration against or affecting Company or any of its Subsidiaries or any property of Company or any of its Subsidiaries (collectively, "Proceedings") not previously disclosed in writing by Company to Lenders or (Y) any material development in any Proceeding that, in any case of (X) or of (Y): (1) if adversely determined, has a reasonable possibility of giving rise to a Material Adverse Effect; or (2) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby; written notice thereof together with such other information as may be reasonably available to Company to enable Lenders and their counsel to evaluate such matters; and (b) within twenty days after the end of each Fiscal Quarter of Company, a schedule of all Proceedings involving an alleged liability of, or claims against or affecting, Company or any of its Subsidiaries equal to or greater than $10,000,000 in the aggregate, and promptly after request by Administrative Agent such other information as may be reasonably requested by Administrative Agent to enable Administrative Agent and its counsel to evaluate any of such Proceedings; (xii) ERISA Events: promptly upon becoming aware of, but in no case later than 15 calendar days after, the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Company or any of its ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; (xiii) ERISA Notices: with reasonable promptness, copies of (a) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) as required to be filed by Company or any of its ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (b) all notices received by Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (c) such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request; (xiv) Financial Plans: as soon as practicable and in any event no later than 60 days after the beginning of each Fiscal Year, a consolidated and Consolidating plan and financial forecast for such Fiscal Year, including without limitation (a) forecasted consolidated and Consolidating balance sheet and forecasted consolidated statements of income and cash flows of Company and its Subsidiaries for such Fiscal Year, together with a pro forma Compliance Certificate for such Fiscal Year and an explanation of the assumptions on which such forecasts are based, (b) forecasted consolidated and Consolidating statements of income and cash flows of Company and its Subsidiaries for each Fiscal Quarter of each such Fiscal Year, together with an explanation of the assumptions on which such forecasts are based, (c) the amount of forecasted unallocated overhead for each such Fiscal Year, and (d) such other information and projections as any Lender (through the Administrative Agent) may reasonably request; (xv) Environmental Audits and Reports: as soon as practicable following receipt thereof, but in no case later than 15 calendar days after, copies of all environmental audits and reports, whether prepared by personnel of Company or any of its Subsidiaries or by independent consultants, with respect to significant environmental matters at any Facility or which relate to an Environmental Claim which could result in a Material Adverse Effect; (xvi) Board of Directors: with reasonable promptness, written notice of any change in the Board of Directors of Company; (xvii) Pricing Determination Certificate: concurrently with the delivery of the financial statements for each Fiscal Quarter required under subsection 6.1(ii), and in any event no later than 45 days after the end of each Fiscal Year, Company shall deliver a Pricing Determination Certificate; (xviii) New Subsidiaries: promptly upon any Person becoming a Subsidiary of Company, a written notice setting forth with respect to such Person (a) the date on which such Person became a Subsidiary of Company and (b) all of the data required to be set forth in Schedule 5.1 annexed hereto with respect to all Subsidiaries of Company (it being understood that such written notice shall be automatically deemed to supplement Schedule 5.1 to this Agreement for all purposes, including the Guaranty); (xix) [omitted]. (xx) Gaming Board Communications: promptly, but in no case later than 15 calendar days, after the same are available, copies of any written communication to Company or any of its Subsidiaries from any Gaming Board advising it of a violation of or non-compliance with, any Gaming Law by Company or any of its Subsidiaries; (xxi) US Documented Barges: promptly upon the acquisition or documentation by Company or any of its Subsidiaries of any additional US Documented Barge, a written notice setting forth with respect to such Person (a) the date on which such barge became a US Documented Barge and (b) all of the data required to be set forth in Schedule 5.5 annexed hereto with respect to all US Documented Barges (it being understood that such written notice shall be automatically deemed to supplement Schedule 5.5 to this Agreement for all purposes); and (xxii) Other Information: with reasonable promptness, such other information and data with respect to Company or any of its Subsidiaries as from time to time may be reasonably requested by any Lender through the Administrative Agent. 6.2 Corporate Existence, etc. Except as permitted under subsection 7.7, Company will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its corporate or other legal existence, as applicable, and all rights and franchises material to its business. 6.3 Payment of Taxes and Claims; Tax Consolidation. A. Company will, and will cause each of its Subsidiaries to, pay all taxes, assessments and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty accrues thereon, and all claims (including, without limitation, claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such tax, charge or claim need be paid if being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. B. Company will not, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Company or any of its Subsidiaries). 6.4 Maintenance of Properties; Insurance. A. Company will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Company and its Subsidiaries (including, without limitation, maintenance of Intellectual Property) and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof. B. Company will maintain or cause to be maintained, with financially sound and reputable insurers, throughout the term of this Agreement, all Policies of Insurance required pursuant to Schedules 6.4(a) and 6.4(b) annexed hereto and will otherwise comply fully with the terms and conditions provided in subsection 6 of each of the Mortgages and within each of the Ship Mortgages under the heading "Vessel Insurance Requirements and Provisions". Each such policy of insurance shall name Administrative Agent for the benefit of Lenders as the loss payee thereunder for amounts in excess of $2,500,000 and shall provide for at least 30 days prior written notice to Administrative Agent of any modification or cancellation of such policy. 6.5 Inspection; Lender Meeting. Company shall, and shall cause each of its Subsidiaries to, permit any authorized representatives designated by any Lender to visit and inspect any of the properties of Company or any of its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants (provided that Company may, if it so chooses, be present at or participate in any such discussion), all upon reasonable notice and at such reasonable times during normal business hours and as often as may be reasonably requested. Without in any way limiting the foregoing, Company will, upon the request of Managing Agent or Requisite Lenders, participate in a meeting of Managing Agent and Lenders once during each Fiscal Year to be held at Company's corporate offices (or such other location as may be agreed to by Company and Managing Agent) at such time as may be agreed to by Company and Managing Agent. 6.6 Compliance with Laws, etc. Company shall, and shall cause each of its Subsidiaries to, comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority, including all Gaming Laws, and to obtain and keep in full force and effect any permit, license, consent, or approval required under this Agreement if such noncompliance or failure to obtain and keep in full force and effect could reasonably be expected to cause a Material Adverse Effect. Company shall and shall cause each of its Subsidiaries to comply with the requirements of all Gaming Laws applicable to such Person. 6.7 Environmental Disclosure and Inspection. A. Company shall, and shall cause each of its Subsidiaries to, exercise all due diligence in order to comply and use its best efforts to cause (i) all tenants under any leases or occupancy agreements affecting any portion of the Facilities and (ii) all other Persons on or occupying such property, to comply with all Environmental Laws. B. Company agrees that Administrative Agent may, once during each Fiscal Year until the Commitment Termination Date or at any time upon the occurrence of an Event of Default, retain, at Company's expense, an independent professional consultant to review any report relating to Hazardous Materials prepared by or for Company and to conduct its own investigation of any Facility currently owned, leased, operated or used by Company or any of its Subsidiaries, and Company agrees to use its best efforts to obtain permission for Administrative Agent's professional consultant to conduct its own investigation of any Facility previously owned, leased, operated or used by Company or any of its Subsidiaries. Company hereby grants to Administrative Agent and its agents, employees, consultants and contractors the right to enter into or on to the Facilities currently owned, leased, operated or used by Company or any of its Subsidiaries to perform such tests on such property as are reasonably necessary to conduct such a review and/or investigation. Any such investigation of any Facility shall be conducted, unless otherwise agreed to by Company and Administrative Agent, during normal business hours and, to the extent reasonably practicable, shall be conducted so as not to interfere with the ongoing operations at any such Facility or to cause any damage or loss to any property at such Facility. Company and Administrative Agent hereby acknowledge and agree that any report of any investigation conducted at the request of Administrative Agent pursuant to this subsection 6.7B will be obtained and shall be used by Administrative Agent and Lenders solely for the purposes of Lenders' internal credit decisions, to monitor and police the Loans and to protect Lenders' security interests, if any, created by the Loan Documents. Administrative Agent agrees to deliver a copy of any such report to Company with the understanding that Company acknowledges and agrees that (i) it will hold harmless Administrative Agent and each Lender from any costs, losses or liabilities relating to Company's use of or reliance on such report, (ii) neither Administrative Agent nor any Lender makes any representation or warranty with respect to such report, and (iii) by delivering such report to Company, neither Administrative Agent nor any Lender is requiring or recommending the implementation of any suggestions or recommendations contained in such report. C. Company shall promptly advise Lenders in writing and in reasonable detail of (i) any Release of any Hazardous Materials required to be reported to any federal, state or local governmental or regulatory agency under any applicable Environmental Laws, (ii) any and all written communications with respect to any Environmental Claims that have a reasonable possibility of giving rise to a Material Adverse Effect or with respect to any Release of Hazardous Materials required to be reported to any federal, state or local governmental or regulatory agency, (iii) any remedial action taken by Company or any other Person in response to (x) any Hazardous Materials on, under or about any Facility, the existence of which has a reasonable possibility of resulting in an Environmental Claim having a Material Adverse Effect, or (y) any Environmental Claim that could have a Material Adverse Effect, (iv) discovery by any Responsible Officer of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws, and (v) any request for information from any governmental agency that suggests such agency is investigating whether Company or any of its Subsidiaries may be potentially responsible for a Release of Hazardous Materials. D. Company shall promptly notify Lenders of (i) any proposed acquisition of stock, assets, or property by Company or any of its Subsidiaries that could reasonably be expected to expose Company or any of its Subsidiaries to, or result in, Environmental Claims that could have a Material Adverse Effect or that could reasonably be expected to have a material adverse effect on any Governmental Authorization then held by Company or any of its Subsidiaries and (ii) any proposed action to be taken by Company or any of its Subsidiaries to commence manufacturing, industrial or other operations that could reasonably be expected to subject Company or any of its Subsidiaries to additional laws, rules or regulations, including, without limitation, laws, rules and regulations requiring additional environmental permits or licenses. E. Company shall, at its own expense, provide copies of such documents or information as Administrative Agent may reasonably request in relation to any matters disclosed pursuant to this subsection 6.7. 6.8 Company's Remedial Action Regarding Hazardous Materials. Company shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all necessary remedial action in connection with the presence, storage, use, disposal, transportation or Release of any Hazardous Materials on, under or about any Facility in order to comply with all applicable Environmental Laws and Governmental Authorizations. In the event Company or any of its Subsidiaries undertakes any remedial action with respect to any Hazardous Materials on, under or about any Facility, Company or such Subsidiary shall conduct and complete such remedial action in compliance with all applicable Environmental Laws, and in accordance with the policies, orders and directives of all federal, state and local governmental authorities except when, and only to the extent that, Company's or such Subsidiary's liability for such presence, storage, use, disposal, transportation or discharge of any Hazardous Materials is being contested in good faith by Company or such Subsidiary. 6.9 Post-Closing Matters. Company shall comply with all covenants and obligations set forth on Schedule 6.9 hereto, which are incorporated herein by this reference. 6.10 New Subsidiaries; New Joint Ventures; Further Assurances. A. In the event a Person becomes a Subsidiary of Company after the Effective Date, Company, upon the request of Administrative Agent, shall and shall cause such Subsidiary to execute and deliver such guaranties, collateral documents and such other agreements, pledges, assignments, documents and certificates (including, without limitation, any amendments to the Loan Documents) as may be necessary or desirable or as Administrative Agent may request and do such other acts and things as Administrative Agent reasonably may request in order to have a lien on the stock of such Subsidiary and to have such Subsidiary guaranty and/or secure the Obligations and effect fully the purposes of this Agreement and the other Loan Documents and any Lender Interest Rate Agreements and to provide for payment of the Obligations hereunder and all obligations in respect of any Lender Interest Rate Agreements in accordance with the terms of this Agreement and the other Loan Documents and any Lender Interest Rate Agreements. B. In the event Company or any of its Subsidiaries enters into any Joint Venture by means of the ownership of any Subsidiary (a "Participant Subsidiary") that, directly or indirectly, holds stock in a Joint Venture in corporate form or acts as a partner in a Joint Venture in partnership form, (i) Company shall, and shall cause each of its Subsidiaries to, pledge its interests in such Participant Subsidiary that enters into such Joint Venture as Collateral, (ii) neither Company nor any of its Subsidiaries shall enter into any other agreement that creates any Lien on the interests that Company or any such Subsidiary owns in such Participant Subsidiary or Joint Venture and (iii) neither Company nor any of its Subsidiaries will enter into any agreement that prohibits, restricts or conditions Lenders' rights to encumber the stock or ownership interests in such Participant Subsidiary or Joint Venture. C. Additionally, Company shall, and shall cause each of its Subsidiaries to, execute such documents as Administrative Agent reasonably may request to perfect Administrative Agent's Lien on real or personal property located at any of the Facilities acquired after the Effective Date. D. Without limiting the generality of subsection 6.10C, if, and at such time as, SIRCC or any Affiliate of Company purchases any of the parking lots used in connection with the Illinois Facilities from Burlington Northern Railroad Company (the "Railroad"), which parking lots SIRCC currently leases from the Railroad, unless Administrative Agent otherwise agrees, Company shall cause SIRCC or such Affiliate purchasing such parking lot (i) to grant to Administrative Agent a deed of trust or mortgage, in form and substance acceptable to Administrative Agent, on such parking lot(s), (ii) to pay or cause to be paid any monetary Liens then encumbering such parking lot(s), (iii) to provide Administrative Agent with a lender's policy of title insurance and any endorsements thereto, in form and substance acceptable to Administrative Agent (but, subject to such non- monetary Liens as do not materially affect the use and operation of such parking lot), insuring such deed of trust or mortgage as a first priority Lien on such parking lot in favor of Administrative Agent, and (iv) to execute and deliver such other instruments and agreements and undertake such other acts as Administrative Agent may request in connection therewith (including, without limitation, executing security agreements, fixture filings, and financing statements with respect to such parking lots). E. Company, Administrative Agent and each of the Lenders will, at the expense of Company, do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such amendments or supplements hereto or to any of the Loan Documents and such further documents, instruments and transfers as any such party may reasonably require for the curing of any defect in the execution or acknowledgment hereof or in any of the Loan Documents, or in the description of the real property or other Collateral or for the proper evidencing of giving notice of each Lien or security interest securing repayment of the Obligations. Further, upon the execution and delivery of the Mortgages, the Ship Mortgages and each of the Loan Documents and thereafter, from time to time, Company shall cause the Mortgages, the Ship Mortgages and each of the Loan Documents and each amendment and supplement thereto to be filed, registered and recorded and to be refiled, re-registered and re-recorded in such manner and in such places as may be reasonably required by Requisite Lenders or Administrative Agent, in order to publish notice of and fully protect the Liens of the Mortgages, the Ship Mortgages and each of the Loan Documents in the Collateral and to perform or cause to be performed from time to time any other actions required by law and execute or cause to be executed any and all instruments of further assurance that may be necessary for such publication, perfection, continuation and protection. F. Company shall give Administrative Agent written notice (the "Initial Notice") promptly upon entering into contracts after the Effective Date other than the Excluded Contracts (as defined below) which individually or in the aggregate could give rise to mechanic's liens in excess of $1,000,000 with respect to the construction or renovation of Improvements or any other contracts aggregating more than $1,000,000 that might give rise to mechanics or other statutory Liens at any one of the following locations (a) the Illinois Premises, (b) the Louisiana Premises or (c) the Louisiana Hotel Premises, which notice shall include the location at which such construction or renovation is taking place and a brief description of the nature of the construction or renovation. From and after the date of the Initial Notice, Company shall give Administrative Agent written notice ("Subsequent Notice") promptly upon entering into contracts which individually or in the aggregate increase Company's exposure to mechanics or other statutory Liens by any amount in excess of $100,000 from the amount of mechanics or other statutory Liens for which Company was potentially liable on the day Company gave the Initial Notice, or, thereafter, the day Company gave the most recent prior Subsequent Notice. Administrative Agent shall promptly transmit all such notices required under this clause to Lenders and, upon receipt of written requests therefor from Requisite Lenders, shall request Title Company to issue at Company's expense a California Land Title Association Form 122 (or comparable) endorsement to the Title Policy issued at the closing of this Agreement with respect to the location at which such construction or renovation is being conducted, which endorsement shall provide insurance against any mechanics or other statutory liens arising from such construction or renovation; provided that Requisite Lenders may request such an endorsement be issued no more often than quarterly during the period from the date of receipt of any such notice from Company until such date as all of the following have occurred (x) a certificate of use or occupancy (or comparable certificate in the applicable jurisdiction) has been issued with respect to such construction or renovation, (y) any statutory period within which a mechanics Lien could be asserted has expired and (z) all contractors with respect to such construction or renovation have been paid in full. Company agrees to cooperate with the Title Company to cause such endorsements to be issued. For purposes of this Section 6.10F Excluded Contracts shall mean contracts with respect to which the Title Policies delivered on the Effective Date provided endorsements as to the absence of mechanics or other statutory Liens arising in connection with the performance thereof. G. Upon each exercise of the option in the Waterbottom Lease (as defined in the Louisiana Mortgage) that permits PLC to lease additional waterbottom lands from the State of Louisiana, Players shall record, or shall cause PLC to record, in the land records of Calcasieu Parish, Louisiana, a memorandum of exercise of option for purposes of putting of record PLC's rights in such additional lands. Concurrently therewith, Players shall notify Administrative Agent in writing and shall execute, deliver, and record any instruments and agreements and do such other acts as Administrative Agent may deem necessary or appropriate to insure the senior priority of the lien of the Louisiana Mortgage over such additional lands (including, without limitation, causing the Title Company to issue, at Company's sole cost and expense, an endorsement to the applicable Title Policy ensuring the senior priority of the lien of the Louisiana Mortgage on PLC's rights in such additional lands). 6.11 Exchange Listing. Company shall take any and all actions to ensure that at all times the shares of Company's common stock are listed on NASDAQ or another national securities exchange. SECTION 7. COMPANY'S NEGATIVE COVENANTS Company covenants and agrees that, so long as the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all Letters of Credit, unless Requisite Lenders shall otherwise give prior written consent, Company shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 7. 7.1 Indebtedness. Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except (i) the Loans; (ii) the Senior Notes; (iii) [omitted]; (iv) intercompany Indebtedness of Company owed to any wholly-owned Subsidiary or any intercompany Indebtedness owed by any wholly-owned Subsidiary of Company to Company or any other wholly-owned Subsidiary of Company; provided that any payment under any Guaranty shall result in a pro tanto reduction of the amount of such intercompany Indebtedness owed by a Guarantor to Company; and (v) so long as no Event of Default or, to Company's Best Knowledge, Potential Event of Default shall have occurred and be continuing, or shall be caused thereby, (A) Other Allowed Indebtedness (Secured) and (B) Company and its Subsidiaries may create, incur, assume or guaranty or otherwise become or remain liable directly or indirectly liable with respect to Other Allowed Indebtedness (Unsecured) if, after giving effect thereto, Company shall be in compliance on a pro forma basis with subsection 7.6H. 7.2 Liens and Related Matters. A. Prohibition on Liens. Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any of their respective assets, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any of the Collateral under the Uniform Commercial Code of any State or under any similar recording or notice statute, except: (i) Permitted Encumbrances; (ii) Liens granted or permitted pursuant to the Collateral Documents; (iii) Liens to secure Other Allowed Indebtedness (Secured) to the extent permitted pursuant to the definitions of "Other Allowed Indebtedness (Secured)" and "Purchase Money Debt"; (iv) Liens existing on the Effective Date and described on Schedule 7.2 annexed hereto; and (v) a Lien to be granted by PMH and/or PMHLP, as lessee, on certain of its gaming equipment and gaming receivables, in favor of the Riverside Joint Venture, as landlord, to secure the payment by PMH of certain lease obligations owed to the Riverside Joint Venture in connection with the operation of the Maryland Heights Facilities. B. No Further Negative Pledges. Except with respect to specific property encumbered pursuant to subsection 7.2A or to be sold pursuant to an executed agreement with respect to an Asset Sale, neither Company nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired. C. No Restrictions on Subsidiary Distributions to Company or Other Subsidiaries. Except as provided herein, Company will not, and will not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any such Subsidiary to (i) pay dividends or make any other distributions on any of such Subsidiary's capital stock owned by Company or any other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or advances to Company or any other Subsidiary of Company, or (iv) transfer any of its property or assets to Company or any other Subsidiary of Company. 7.3 Investments, Loans and Advances; Capital Expenditures. Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, make or own any Investment or make any capital expenditure in any Person, including any Joint Venture or to make Consolidated Capital Expenditures, except: (i) Investments in Cash Equivalents; (ii) Investments of Net Cash Proceeds of Asset Sales in a Related Business made within 270 days of the receipt of such Net Cash Proceeds; (iii) Company and its Subsidiaries may make intercompany loans to the extent permitted under subsection 7.1; provided that the obligations under any such loans are subordinated to the Obligations of Company or any such Subsidiary under the Loans or the Guaranty, as the case may be; (iv) Company and its Subsidiaries may continue to own the Investments owned by them on the Effective Date and described in Schedule 7.3 annexed hereto; and (v) Company and its Subsidiaries may make Consolidated Capital Expenditures in the following amounts for the following purposes: (a) Consolidated Capital Expenditures for the construction or acquisition of new facilities in an aggregate amount not exceeding $35,000,000 for all periods after the Effective Date; (b) Consolidated Capital Expenditures for the maintenance of facilities (including the replacement of destroyed or damaged equipment with comparable new equipment) in an amount not exceeding $10,000,000 in any fiscal year; (c) other Consolidated Capital Expenditures (for construction of new facilities) in amounts not exceeding at any date of determination the sum of (w) 100% of the net cash proceeds received by Company from the sale of any equity securities of Company during the period from the Effective Date to such date of determination plus (x) 75% of the net cash proceeds received by Company from the sale of any Subordinated Indebtedness of the Company during the period from the Effective Date to such date of determination plus (y) 75% of Consolidated Net Income during the period from the first Fiscal Quarter to end after the Effective Date to such date of determination. 7.4 Contingent Obligations. Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Administrative Agent and Requisite Lenders, directly or indirectly, create or become or remain liable with respect to any Contingent Obligation, except: (i) Company and such Subsidiaries may become and remain liable with respect to Contingent Obligations in respect of any Indebtedness of Company or any of its Subsidiaries permitted by subsection 7.1; (ii) Company and such Subsidiaries may become and remain liable with respect to Contingent Obligations in respect to Interest Rate Agreements in respect of any Indebtedness of Company hereunder; (iii) Company and such Subsidiaries may become and remain liable with respect to Contingent Obligations in respect of Letters of Credit; and (iv) Company and such Subsidiaries may become and remain liable for Contingent Obligations to make Investments permitted by subsection 7.3. 7.5 Restricted Payments. Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment, except: (i) Company may make open-market or private purchases of its outstanding equity securities (or options or warrants to purchase such securities) in an aggregate amount for all such purchases made after the Effective Date not to exceed the sum of (x) $10,000,000 plus (y) 50% of the sum of Consolidated Net Income for each Fiscal Quarter ending after the Effective Date and prior to the making of the applicable Restricted Payment; provided that nothing contained in this subsection 7.5 shall limit Company's ability to repurchase Senior Notes pursuant to a Regulatory Redemption (as defined in the Indenture); and (ii) Company may make Restricted Payments to redeem, retire or purchase for value any interests of any class of stock of Company now or hereafter outstanding; provided that the amount of any Restricted Payment made pursuant to this clause (ii) shall not exceed the aggregate amount of net cash proceeds from the issuance or sale of the same class of stock of Company received by Company during the 180 day period preceding the date such Restricted Payment was made (excluding net cash proceeds applied to any other Restricted Payment pursuant to this clause (ii)). 7.6 Financial Covenants. A. Minimum Fixed Charge Coverage Ratio. Company shall not permit the Fixed Charge Coverage Ratio on the last day of each Fiscal Quarter to be less than 1.50:1.00. B. [Omitted]. C. [Omitted]. D. [Omitted]. E. Minimum Consolidated Tangible Net Worth. (i) Company shall not permit Consolidated Tangible Net Worth on the last day of each Fiscal Quarter ending before the first anniversary of the Effective Date to be less than $114,000,000. (ii) Company shall not permit Consolidated Tangible Net Worth on the last day of each Fiscal Quarter ending on or after the first anniversary of the Effective Date to be less than the sum of (x) $114,000,000 plus (y) an amount equal to 75% of Consolidated Net Income during the period from the first Fiscal Quarter commencing after the Effective Date to the date of determination, excluding any Fiscal Year (including, if applicable, the portion of the Fiscal Year ending on the date of determination) for which Consolidated Net Income was negative. F. [Omitted]. G. Maximum Facility Debt Ratio. Company shall not permit the ratio of Facility Debt on the last day of any Fiscal Quarter to Consolidated EBITDA for the four consecutive Fiscal Quarters ending on such day to be greater than 1.50:1.00. H. Maximum Total Funded Debt Ratio. Company shall not permit the ratio of Total Funded Debt on the last day of any Fiscal Quarter ending during any period set forth below to Consolidated EBITDA for the four consecutive Fiscal Quarters ending on such day to be more than the amount set forth below opposite such period: Period Amount Effective Date through December 30, 1998 4.75:1.00 December 31, 1998 through December 30, 1999 4.25:1.00 December 31, 1999 and thereafter 3.75:1.00 7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions. Company shall not, and shall not permit any of its Subsidiaries to, alter the corporate, capital or legal structure of Company or any of its Subsidiaries, or enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its business, property or fixed assets, whether now owned or hereafter acquired, or acquire by purchase or otherwise 50% or more of the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business of any Person, except: (i) any Subsidiary of Company (other than a Guarantor) may be merged with or into Company or any wholly-owned Subsidiary of Company, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to Company or any wholly-owned Subsidiary of Company; provided that, in the case of such a merger, Company or such wholly-owned Subsidiary shall be the continuing or surviving corporation; provided further if any Guarantor or grantor under a Collateral Document is the disappearing entity in a merger with a wholly-owned Subsidiary that is not a Guarantor or grantor, the surviving corporation shall execute a Guaranty and/or a Subsidiary Security Agreement, as the case may be; (ii) any Subsidiary of Company may change its legal structure so long as (X) any such modification does not in any manner impair any Lender's ability to realize the Collateral owned by such Subsidiary upon an Event of Default and (Y) if such Subsidiary is the disappearing entity in a merger devised to effect such a structural change, the surviving entity shall execute a Guaranty and/or a Subsidiary Security Agreement, as the case may be; (iii) subject to subsections 7.11 and 2.4A(iii), Company and its Subsidiaries may make Asset Sales of assets having a fair market value not in excess of $5,000,000 on an individual basis; provided that, with respect to the sale of any asset having a fair market value equal to or exceeding $2,500,000, (x) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof and (y) at least eighty percent (80%) of the consideration received shall be Cash; and (iv) Company and its Subsidiaries may make acquisitions of Securities issued by Company consistent with subsection 7.5. 7.8 Transactions with Shareholders and Affiliates. Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) the subject matter of which involves an amount in excess of $1,000,000 with any holder of 5% or more of any class of equity Securities of Company or with any Affiliate of Company or of any such holder, on terms that are less favorable to Company or that Subsidiary, as the case may be, than those that might be obtained at the time from Persons who are not such a holder or Affiliate; provided that nothing contained in the foregoing restriction shall apply to (i) any transaction between Company and any of its wholly-owned Subsidiaries or between any of its wholly-owned Subsidiaries or (ii) reasonable and customary fees paid to members of the Boards of Directors of Company and its Subsidiaries. 7.9 Disposal of Subsidiary Stock. Company shall not: (i) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity Securities of any of its Subsidiaries, except to qualify directors if required by applicable law; or (ii) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity Securities of any of its Subsidiaries (including such Subsidiary), except to Company, another Subsidiary of Company, or to qualify directors if required by applicable law. 7.10 Conduct of Business. From and after the Effective Date, Company shall not, and shall not permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by Company and its Subsidiaries on the Effective Date as described in the "Business" and "Properties" section of the 10-K and any Related Business and (ii) such other lines of business as may be consented to by Requisite Lenders. 7.11 Tradenames, Trademarks and Servicemarks. Company and its Subsidiaries shall not assign or in any other manner alienate its interest in any tradenames, trademarks or servicemarks relating or pertaining to any of the Facilities other than (i) as provided on Schedule 7.11, (ii) assignments in the ordinary course of Company's business and similar in nature to the types of assignments undertaken by comparable gaming entities or (iii) assignments to Company or any wholly-owned Subsidiary of Company, if such assignment does not affect the validity and enforceability of such tradenames, trademarks or servicemarks and, prior to any such assignment, the assignee has granted Administrative Agent a legally valid and enforceable security interest in any such tradenames, trademarks or servicemarks. 7.12 Change of Control Offer. Company shall not commence a Change of Control Offer (as defined in the Indenture) without the consent of Requisite Lenders. 7.13 No Amendment of Indenture. Company shall not amend the Indenture in any manner without the prior written consent of Requisite Lenders, which consent shall not be unreasonably withheld; provided that nothing contained in this restriction shall apply to any amendment to the Indenture that either (i) does not require the consent of any holder of Senior Notes or (ii) is required by a final order or decree of a court of competent jurisdiction. 7.14 No Movement of Other Barges. Company and its Subsidiaries shall not permit any Barge to be moved from permanent moorage at the Louisiana Premises or the Illinois Premises, as applicable, unless and until (i) such Barge is registered with the United States Coast Guard and (ii) a first priority Lien has been created for the benefit of the Lenders pursuant to a duly authorized, executed and delivered Ship Mortgage. SECTION 8. EVENTS OF DEFAULT IF any of the following conditions or events ("Events of Default") shall occur: 8.1 Failure to Make Payments When Due. Failure by Company to pay (i) any installment of principal of or interest on any Loan when due, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to the Issuing Lender in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee or any other amount due under this Agreement within five days after the date due; or 8.2 Default in Other Agreements. (i) Failure of Company or any of its Subsidiaries to pay when due (a) any principal of or interest on any Indebtedness (other than Indebtedness referred to in subsection 8.1) in an individual principal amount of $2,500,000 or more or any items of Indebtedness with an aggregate principal amount of $5,000,000 or more or (b) any Contingent Obligation in an individual principal amount of $2,500,000 or more or any Contingent Obligations with an aggregate principal amount of $5,000,000 or more, in each case beyond the end of any grace period provided therefor; or (ii) breach or default by Company or any of its Subsidiaries with respect to any other material term of (a) any evidence of any Indebtedness in an individual principal amount of $2,500,000 or more or any items of Indebtedness with an aggregate principal amount of $5,000,000 or more or any Contingent Obligation in an individual principal amount of $2,500,000 or more or any Contin gent Obligations with an aggregate principal amount of $5,000,000 or more or (b) any loan agreement, mortgage, indenture or other agreement relating to such Indebtedness or Contingent Obligation(s), if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that Indebtedness or Contingent Obliga tion(s) to become or be declared due and payable prior to its stated maturity or the stated maturity of any underlying obliga tion, as the case may be (upon the giving or receiving of notice, lapse of time, both, or otherwise); or 8.3 Breach of Certain Covenants. Failure of Company to perform or comply with any term or condition contained in subsection 2.4A(iii), 2.4B(ii), 6.1(ix)(a), 6.2, 6.4B or Section 7 of this Agreement; or 8.4 Breach of Warranty. Any representation, warranty, certification or other statement made or deemed made by Company or any of its Subsidiaries in any Loan Document or in any statement or certificate at any time given by Company or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect on the date as of which made; or 8.5 Other Defaults Under Loan Documents. Company or any of its Subsidiaries shall default in the performance of or compliance with any term contained in this Agreement or any of the other Loan Documents, other than any such term referred to in any other subsection of this Section 8, and such default shall not have been remedied or waived within 15 days after the earlier of (i) a Responsible Officer becoming aware of such default or (ii) receipt by Company of notice from Administrative Agent or any Lender of such default; or 8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court having jurisdiction in the premises shall enter a decree or order for relief in respect of Company or any of its Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Company or any of its Subsidiaries under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Company or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Company or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Company or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for 45 days unless dismissed, bonded, discharged or stayed; or 8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Company or any of its Subsidiaries shall have an order for relief entered with respect to it or commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Company or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Company or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors of Company or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (i) above or this clause (ii); or 8.8 Judgments and Attachments. Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $2,500,000 or (ii) in the aggregate at any time an amount in excess of $5,000,000 (in either case not adequately covered by insurance as to which an unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Company or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of 45 days (or in any event later than five days prior to the date of any proposed sale thereunder); or 8.9 Dissolution. Any order, judgment or decree shall be entered against Company or any of its Subsidiaries decreeing the dissolution or split up of Company or that Subsidiary and such order shall remain undischarged or unstayed for a period in excess of 30 days; or 8.10 Employee Benefit Plans. A. There shall occur one or more ERISA Events which individually or in the aggregate results in or might reasonably be expected to result in liability of Company or any of its Subsidiaries or any of their respective ERISA Affiliates in excess of $5,000,000 during the term of this Agreement. B. There shall exist an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), which exceeds $5,000,000, and such default shall not have been remedied or waived within 10 days after the earlier of (i) the date that, to Company's Best Knowledge, such condition exists or (ii) receipt by Company of notice from Administrative Agent or any Lender of such default; or 8.11 Change in Control. A Change of Control shall have occurred; or 8.12 Impairment of Collateral. (A) A judgment creditor of Company or any of its Subsidiaries shall obtain possession of any material portion of the Collateral under the Collateral Documents by any means, including, without limitation, levy, distraint, replevin or self- help, (B) any substantial portion of the Collateral shall be taken by eminent domain or condemnation, (C) any of the Collateral Documents shall cease for any reason (other than an act by Administrative Agent or any Lender) to be in full force and effect, or any party thereto shall purport to disavow its obligations thereunder or shall declare that it does not have any further obligations thereunder or shall contest the validity or enforceability thereof or Lenders shall cease to have a valid and perfected first priority security interest in any material Collateral therein, or (D) Lenders' security interests or liens on any material portion of the Collateral under the Collateral Documents shall become otherwise impaired or unenforceable; or 8.13 Loss of Gaming License. The occurrence of a License Revocation by any Gaming Authority in a jurisdiction in which Company or any of its Subsidiaries owns or operates a casino, hotel, casino/hotel, resort, casino/resort, riverboat casino, dock casino, any other type of casino, golf course, entertainment center or similar facility; provided that such License Revocation continues for at least five (5) calendar days; or 8.14 [omitted]. 8.15 Invalidity of Guaranties. Either Guaranty, for any reason, other than the satisfaction in full of all Obligations, the termination of this Agreement or the termination of either Guaranty (or any Guarantor's obligations thereunder) in accordance with its terms, ceases to be in full force and effect or is declared to be null and void by final order of a court of competent jurisdiction, or any Guarantor (other than any Guarantor that is merged into another Guarantor or the Company) denies that it has any further liability under either Guaranty or claims that either Guaranty is void or has no force or effect in whole or in part or gives notice to such effect. THEN 8.16 Remedies. At any time, (i) upon the occurrence of any Event of Default described in subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on the Loans, (b) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (whether or not any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letter of Credit), and (c) all other Obligations shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by Company, and the obligation of each Lender to make any Loan and the obligation of Administrative Agent to issue any Letter of Credit shall thereupon terminate, and (ii) upon the occurrence and during the continuation of any other Event of Default, Administrative Agent shall, upon the written request or with the written consent of Requisite Lenders, by written notice to Company, declare all or any portion of the amounts described in clauses (a) through (c) above to be, and the same shall forthwith become, immediately due and payable, and the obligation of each Lender to make any Loan shall thereupon terminate and the obligation of Administrative Agent to issue any Letter of Credit hereunder shall thereupon terminate; provided, however, that the foregoing shall not affect in any way the obligations of Lenders under subsection 3.3C(i) or the obligations of Lenders to purchase participations in any unpaid Swing Line Loans as provided in subsection 2.1B. Any amounts described in clause (b) above, when received by Administrative Agent, shall be held by Administrative Agent pursuant to the terms of the Collateral Account Agreement and shall be applied as therein provided. Notwithstanding anything contained in the second preceding paragraph, if at any time within 60 days after an acceleration of the Loans pursuant to such paragraph Company shall pay all arrears of interest and all payments on account of principal which shall have become due otherwise than as a result of such acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rates specified in this Agreement) and all Events of Default and Potential Events of Default (other than non-payment of the principal of and accrued interest on the Loans, in each case which is due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to Company, may at their option rescind and annul such acceleration and its consequences; but such action shall not affect any subsequent Event of Default or Potential Event of Default or impair any right consequent thereon. The provisions of this paragraph are intended merely to bind Lenders to a decision that may be made at the election of Requisite Lenders and are not intended to benefit Company and do not grant Company the right to require Lenders to rescind or annul any acceleration hereunder, even if the conditions set forth herein are met. SECTION 9. ADMINISTRATIVE AGENT 9.1 Appointment. WFB is hereby appointed Administrative Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Administrative Agent to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. Administrative Agent agrees to act upon the express conditions contained in this Agreement and the other Loan Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Administrative Agent, Managing Agent, Arranger and Lenders and Company shall have no rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties under this Agreement, Administrative Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Company or any of its Subsidiaries. 9.2 Powers; General Immunity. A. Duties Specified. Each Lender irrevocably authorizes Administrative Agent to take such action on such Lender's behalf and to exercise such powers hereunder and under the other Loan Documents as are specifically delegated to Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Administrative Agent shall have only those duties and responsibilities that are expressly specified in this Agreement and the other Loan Documents and it may perform such duties by or through its agents or employees. Neither the Managing Agent nor the Arranger shall have any duty or responsibility under this Agreement or any Loan Document in its capacity therein. Neither the Managing Agent, Arranger nor Administrative Agent shall have, by reason of this Agreement or any of the other Loan Documents, a fiduciary relationship in respect of any Lender; and nothing in this Agreement or any of the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon Administrative Agent any obligations in respect of this Agreement or any of the other Loan Documents except as expressly set forth herein or therein. B. No Responsibility for Certain Matters. Administrative Agent shall not be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any other Loan Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by Administrative Agent to Lenders or by or on behalf of Company to Administrative Agent or any Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of Company or any other Person liable for the payment of any Obligations, nor shall Administrative Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or the use of the Letters of Credit or as to the existence or possible existence of any Event of Default or Potential Event of Default. Anything contained in this Agreement to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof. C. Exculpatory Provisions. Neither Administrative Agent nor any of its officers, directors, employees or agents shall be liable to Lenders for any action taken or omitted by Administrative Agent under or in connection with any of the Loan Documents except to the extent caused by Administrative Agent's gross negligence or willful misconduct. If Administrative Agent shall request instructions from Lenders with respect to any act or action (including the failure to take an action) in connection with this Agreement or any of the other Loan Documents, Administrative Agent shall be entitled to refrain from such act or taking such action unless and until Administrative Agent shall have received instructions from Requisite Lenders. Without prejudice to the generality of the foregoing, (i) Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Company and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or (where so instructed) refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of Requisite Lenders. Administrative Agent shall be entitled to refrain from exercising any power, discretion or authority vested in it under this Agreement or any of the other Loan Documents unless and until it has obtained the instructions of Requisite Lenders or all Lenders as required or permitted by this Agreement. Each Lender agrees that it shall not exercise any right of set-off described in subsection 10.4 without the concurrence of Administrative Agent. D. Administrative Agent Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Administrative Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, Administrative Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not performing the duties and functions delegated to it hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless the context clearly otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with Company or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Company for services in connection with this Agreement and otherwise without having to account for the same to Lenders. 9.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness. Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Company and its Subsidiaries in connection with the making of the Loans and the issuance of the Letters of Credit hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Company and its Subsidiaries. Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and Administrative Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. 9.4 Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify Administrative Agent, to the extent that Administrative Agent shall not have been reimbursed by Company, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Administrative Agent in performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Administrative Agent's gross negligence or willful misconduct. If any indemnity furnished to Administrative Agent for any purpose shall, in the opinion of Administrative Agent, be insufficient or become impaired, Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. 9.5 Successor Administrative Agent. Administrative Agent may resign at any time by giving 30 days' prior written notice thereof to Lenders and Company, provided that on or before the effective date of any such resignation, a successor Administrative Agent shall have been appointed pursuant to this subsection 9.5A. Administrative Agent may be removed at any time with cause by an instrument or concurrent instruments in writing delivered to Company and Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days' notice to Company, to appoint a successor Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 9.6 Collateral Documents. Each Lender hereby further authorizes Administrative Agent to enter into the Collateral Documents as secured party on behalf of and for the benefit of each Lender and agrees to be bound by the terms of the Collateral Documents; provided that Administrative Agent shall not enter into or consent to any amendment, modification, termination or waiver of any provision contained in the Collateral Documents except as set forth in subsection 10.6. Anything contained in any of the Loan Documents to the contrary notwithstanding, each Lender agrees that no Lender shall have any right individually to realize upon any of the collateral under the Collateral Documents, it being understood and agreed that all rights and remedies under the Collateral Documents may be exercised solely by Administrative Agent for the benefit of Lenders in accordance with the terms thereof. 9.7 Release of Collateral. Administrative Agent may release personal property Collateral without the consent of any Lender to the extent sold or disposed of by Company or any of its Subsidiaries in a transaction or series of transactions that constitute a permitted Asset Sale pursuant to subsection 7.7(ii) and that meets all of the requirements contained therein. Administrative Agent may also, upon Borrower's request, take such actions as are necessary to terminate any Ship Mortgage relating to a Barge on file with the United States Coast Guard if, and only if, (i) such Barge has ceased, or will concurrently with such termination cease, to be a US Documented Barge and (ii) Administrative Agent shall have received assurances, reasonably satisfactory to Administrative Agent, that upon giving effect to such termination, such Barge will be subject to a perfected first priority Lien in favor of Administrative Agent for the benefit of Lenders. SECTION 10. MISCELLANEOUS 10.1 Assignments and Participations in Loans and Letters of Credit A. General. Each Lender shall have the right at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii) sell participations to any Person in, all or any part (subject to certain limitations set forth in subsection 10.1B below) of its Commitments or any Loan or Loans made by it or its Letters of Credit or participations therein or any other interest herein or in any other Obligations owed to it, subject to the following restrictions: (v) no such sale, assignment, transfer or participation shall, without the consent of Company, require Company to file a registration statement with the Securities and Exchange Commission or apply to qualify such sale, assignment, transfer or participation under the securities laws of any state; (w) no such sale, assignment or transfer described in clause (i) above shall be effective unless and until a Lender Assignment Agreement (a "Lender Assignment Agreement") effecting such sale, assignment or transfer shall have been accepted by Administrative Agent as provided in subsection 10.1B(ii); and (x) no such sale, assignment, transfer or participation of any Letter of Credit or any participation therein may be made separately from a sale, assignment, transfer or participation of a corresponding interest in the Commitments and the Loans of the Lender effecting such sale, assignment, transfer or participation. Except as otherwise provided in this subsection 10.1, no Lender shall, as between Company and such Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment or transfer of, or any granting of participations in, all or any part of its Commitment or the Loans or the other Obligations owed to such Lender. B. Assignments. (i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of Credit or participation therein, or other Obligation may (a) be assigned in any amount to another Lender or to an Affiliate of the assigning Lender or another Lender, with the giving of notice to Company and Administrative Agent or (b) be assigned in an aggregate amount of not less than $5,000,000 (or such lesser amount as shall constitute the aggregate amount of the Commitments, Loans, Letters of Credit and participations therein, and other Obligations of the assigning Lender as may be agreed to by Company and Administrative Agent) to any other Eligible Assignee with the giving of notice to Company and with the consent of Managing Agent (which consent shall not be unreasonably withheld). To the extent of any such assignment in accordance with either clause (a) or (b) above, the assigning Lender shall be relieved of its obligations with respect to its Commitments, Loans, Letters of Credit or participations therein, or other Obligations or the portion thereof so assigned. The parties to each such assignment shall execute and deliver to Administrative Agent, for its acceptance, a Lender Assignment Agreement, together with a processing fee of $3,500 and such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Lender Assignment Agreement may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery, acceptance and recordation from and after the effective date specified in such Lender Assignment Agreement, (y) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (z) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Lender Assignment Agreement, relinquish its rights and be released from its obligations under this Agreement (and, in the case of a Lender Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto); provided that, anything contained in any of the Loan Documents to the contrary notwithstanding, if such Lender is Administrative Agent with respect to any outstanding Letters of Credit such Lender shall continue to have all rights and obligations of an Administrative Agent with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder). The Commitments hereunder shall be modified to reflect the Commitments of such assignee and any remaining Commitments of such assigning Lender and the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its Note to Administrative Agent for cancellation, and thereupon new Notes shall, if so requested by the assignee and/or the assigning Lender in accordance with subsection 2.1E, be issued to the assignee and/or to the assigning Lender, substantially in the form of Exhibits V or Exhibit VI, respectively, annexed hereto with appropriate insertions, to reflect the new Commitments of the assignee and/or the assigning Lender. (ii) Acceptance by Administrative Agent. Upon its receipt of a Lender Assignment Agreement executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with the processing fee and any forms, certificates or other evidence with respect to United States federal income tax withholding matters that such assignee may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if such Lender Assignment Agreement has been completed and is in substantially the form of Exhibit IV hereto and if Managing Agent have consented to the assignment evidenced thereby (to the extent such consent is required pursuant to subsection 10.1B(i)), (a) accept such Lender Assignment Agreement by executing a counterpart thereof as provided therein (which acceptance shall evidence any required consent of Administrative Agent to such assignment) and (b) give prompt notice thereof to Company. Administrative Agent shall maintain a copy of each Lender Assignment Agreement delivered to and accepted by it as provided in this subsection 10.1B(ii). (iii) Mandatory Assignment by Non-Suitable Lender. If any Lender is required to qualify or be found suitable by the regulations of any Gaming Authority and does not so qualify or otherwise not meet the suitability standards pursuant to such regulations (in such case, a "Former Lender"), such Former Lender shall and hereby agrees to sell its rights and obligations under this Agreement to Eligible Assignee (the "Substitute Lender"). The Substitute Lender shall assume the rights and obligations of the Former Lender under this Agreement pursuant to a Lender Assignment Agreement, which assumption shall be required to comply with, and shall become effective in accordance with, the provisions of subsection 10.1B; provided that the purchase price to be paid by the Substitute Lender to Administrative Agent for the account of the Former Lender for such assumption shall equal the sum of (i) the unpaid principal amount of any Loans held by the Former Lender plus accrued interest thereon plus (ii) the Former Lender's Pro Rata Share (through the required purchase of participations pursuant to subsection 3.1C) of the aggregate amount of drawings under all Letters of Credit that have not been reimbursed by Company, plus accrued interest thereon, plus (iii) such Former Lender's pro rata share of accrued fees to the date of the assumption; provided further that, upon receipt by the Former Lender of all such amounts, Administrative Agent shall thereafter pay all obligations owing to the Former Lender under the Loan Documents to the Substitute Lender. Each Lender agrees that if it becomes a Former Lender, upon payment to it by Administrative Agent (upon Administrative Agent's receipt thereof from the Substitute Lender) of all such amounts, if any, owing to it under the Loan Documents, it will execute and deliver a Lender Assignment Agreement. Notwithstanding the foregoing, if any Lender becomes a Former Lender and fails to find a Substitute Lender within 10 days of being determined unsuitable or unqualified, or such lesser period of time as specified by any such Gaming Authority for the withdrawal of a Former Lender (the "Withdrawal Period"), Company shall have an additional 90 day period, or such lesser period of time as specified by such Gaming Authority, to find a Substitute Lender, which Substitute Lender shall assume the rights and obligations of the Former Lender as provided in the preceding paragraph. In the event that Company shall not have found a Substitute Lender within such period of time, Company shall immediately (i) prepay in full the outstanding principal amount of Loans held by such Former Lender, together with accrued interest thereon to the earlier of (X) the date of payment or (Y) the last day of any Withdrawal Period, and (ii) at the option of Company either (A) place an amount equal to such Former Lender's Pro Rata Share in each Letter of Credit issued by Administrative Agent, in a separate cash collateral account with Administrative Agent for each outstanding Letter of Credit, which amount will be applied by Administrative Agent to satisfy Company's reimbursement obligations to Administrative Agent in respect of unreimbursed drawings under the applicable Letter of Credit or (B) if no Event of Default then exists, terminate the Commitments of such Former Lender, at which time the other Lenders' Pro Rata Shares will be automatically adjusted as a result thereof; provided that the option specified in this clause (B) may only be exercised if, immediately after giving effect thereto, no Lender's outstanding Revolving Loans, when added to the product of (a) such Lender's Pro Rata Share and (b) the sum of (I) the aggregate amount of all outstanding Letters of Credit at such time and (II) the aggregate amount of all Swing Line Loans then outstanding, would exceed such Lender's Commitments at such time. Each Lender agrees that, to the extent and for so long as required by any applicable Gaming Authority, such Lender's rights and obligations under this Agreement are subject to the provisions of this subsection 10.1B(iii) and all restrictions of any applicable Gaming Authority. C. Participations. The holder of any participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except action directly affecting (i) the extension of the final maturity of any portion of the principal amount of or interest on any Loan allocated to such participation or (ii) a reduction of the principal amount of or the rate of interest payable on any Loan allocated to such participation, and all amounts payable by Company hereunder (including without limitation amounts payable to such Lender pursuant to subsection 2.7) shall be determined as if such Lender had not sold such participation. Company and each Lender hereby acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5, (a) any participation will give rise to a direct obligation of Company to the participant and (b) the participant shall be considered to be a "Lender". D. Assignments to Federal Reserve Banks. In addition to the assignments and participations permitted under the foregoing provisions of this subsection 10.1, any Lender may assign and pledge all or any portion of its Loans, the other Obligations owed to such Lender, and its Note to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided that (i) no Lender shall, as between Company and such Lender, be relieved of any of its obligations hereunder as a result of any such assignment and pledge and (ii) in no event shall such Federal Reserve Bank be considered to be a "Lender" or be entitled to require the assigning Lender to take or omit to take any action hereunder. E. Assignments and Participations Subject to Gaming Laws. Subject to the last sentence of this subsection 10.1E, each Lender agrees that all assignments and participations made hereunder shall be subject to, and made in compliance with, all Gaming Laws applicable to Lenders. Company hereby acknowledges that unless Company has provided Lenders with a written opinion of counsel as to the suitability standards applicable to Lenders of any relevant Gaming Authority with jurisdiction over the business of Company and its Subsidiaries, no Lender shall have the responsibility of determining whether or not a potential assignee or participant of such Lender would qualify as a suitable Lender under the Gaming Laws of any such jurisdiction. F. Information. Each Lender may furnish any information concerning Company and its Subsidiaries in the possession of that Lender from time to time to assignees and participants (including prospective assignees and participants), subject to subsection 10.19. 10.2 Expenses. Whether or not the transactions contemplated hereby shall be consummated, Company agrees to pay promptly (i) all the actual and reasonable costs and expenses of preparation of the Loan Documents; (ii) all the costs of furnishing all opinions by counsel for Company (including without limitation any opinions requested by Lenders as to any legal matters arising hereunder) and of each Loan Party's performance of and compliance with all agreements and conditions on its part to be performed or complied with under this Agreement and the other Loan Documents including, without limitation, with respect to confirming compliance with environmental and insurance requirements; (iii) the reasonable fees, expenses and disbursements of counsel to Administrative Agent (including Allocated Costs of Internal Counsel) in connection with the negotiation, preparation, execution and administration of the Loan Documents and the Loans and any consents, amendments, waivers or other modifications hereto or thereto and any other documents or matters requested by Company or any other Loan Party; (iv) all other actual and reasonable costs and expenses incurred by Administrative Agent, Managing Agent and Arranger in connection with the syndication of the Commitments and the negotiation, preparation and execution of the Loan Documents and the transactions contemplated hereby and thereby; and (v) after the occurrence of an Event of Default, all costs and expenses, including reasonable attorneys' fees (including Allocated Costs of Internal Counsel) and costs of settlement, incurred by Administrative Agent and Lenders in enforcing any Obligations of or in collecting any payments due from Company or any other Loan Party hereunder or under the other Loan Documents by reason of such Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings. 10.3 Indemnity. In addition to the payment of expenses pursuant to subsection 10.2, whether or not the transactions contemplated hereby shall be consummated, Company agrees to defend, indemnify, pay and hold harmless Administrative Agent, Managing Agent and Co- Arranger and Lenders, and the officers, directors, employees, agents and affiliates of Administrative Agent and Lenders (collectively called the "Indemnitees") from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including without limitation the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including without limitation securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including without limitation Lenders' agreement to make the Loans hereunder or the use or intended use of the proceeds of any of the Loans or the issuance of the Letters of Credit hereunder or the use or intended use of any of the Letters of Credit) or the statements contained in the commitment letter delivered by any Lender to Company with respect thereto (collectively called the "Indemnified Liabilities"); provided that Company shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise solely from the gross negligence or willful misconduct of that Indemnitee as determined by a final judgment of a court of competent jurisdiction. To the extent that the undertaking to defend, indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Company shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them. 10.4 Set-Off; Security Interest in Deposit Accounts. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuation of any Event of Default each Lender (with the consent of Administrative Agent) is hereby authorized by Company at any time or from time to time, without notice to Company or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by that Lender to or for the credit or the account of Company against and on account of the obligations and liabilities of Company to that Lender under this Agreement, the Letters of Credit and participations therein and the other Loan Documents, including, but not limited to, all claims of any nature or description arising out of or connected with this Agreement, the Letters of Credit and participations therein or any other Loan Document, irrespective of whether or not (i) that Lender shall have made any demand hereunder or (ii) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 8 and although said obligations and liabilities, or any of them, may be contingent or unmatured. Company hereby further grants to Administrative Agent and each Lender a security interest in all deposits and accounts maintained with Administrative Agent or such Lender as security for the Obligations. 10.5 Ratable Sharing. Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment, by realization upon security, through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to that Lender hereunder or under the other Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (i) notify Administrative Agent and each other Lender of the receipt of such payment and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Company or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Company expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by Company to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. 10.6 Amendments and Waivers. No amendment, modification, termination or waiver of any provision of this Agreement, the Notes or any other Loan Document, or consent to any departure by Company therefrom, shall in any event be effective without the written concurrence of Requisite Lenders; provided that any such amendment, modification, termination, waiver or consent which: increases the amount of any of the Commitments; changes any Lender's Pro Rata Share; changes in any manner the definition of "Requisite Lenders"; changes in any manner any provision of this Agreement which, by its terms, expressly requires the approval or concurrence of all Lenders; postpones the Commitment Termination Date; postpones the date on which any interest or any fees are payable; decreases the interest rate borne by any of the Loans (other than any waiver of any increase in the interest rate applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder; increases the maximum duration of Interest Periods permitted hereunder; reduces the amount or postpones the due date of any amount payable in respect of, or extends the required expiration date of, any Letter of Credit; changes in any manner the obligations of Lenders relating to the purchase of participations in Letters of Credit; releases any Collateral (other than pursuant to a permitted Asset Sale pursuant to subsection 7.7(iii) that meets all of the requirements contained therein) or changes in any manner the provisions contained in subsection 8.1 or this subsection 10.6 shall be effective only if evidenced by a writing signed by or on behalf of all Lenders. In addition, (i) any amendment, modifica tion, termination or waiver of any of the provisions contained in Section 4 shall be effective only if evidenced by a writing signed by or on behalf of Administrative Agent and Requisite Lenders, (ii) no amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the Lender which is the holder of that Note, (iii) no amendment, modification, termination or waiver of any provision of subsection 2.1B or any other provision of this Agreement relating to the Swing Line Loan Commitment or the Swing Line Loans shall be effective without the written concurrence of Swing Line Lender, (iv) no amendment, modification, termination or waiver of any provision of Section 3 or of any Letter of Credit shall be effective without the written concurrence of Administrative Agent, and (v) no amendment, modification, termi nation or waiver of any provision of Section 9 or of any other provision of this Agreement which, by its terms, expressly requires the approval or concurrence of Administrative Agent shall be effective without the written concurrence of Administrative Agent. Administrative Agent may, but shall have no obligation to, with the written concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Company in any case shall entitle Company to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this subsection 10.6 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by Company, on Company. 10.7 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 would otherwise be within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Potential Event of Default if such action is taken or condition exists. 10.8 Notices. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex, or five Business Days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof or such other address as shall be designated by such party in a written notice delivered to the other parties hereto. 10.9 Survival of Representations, Warranties and Agreements. A. All representations, warranties and agreements made herein shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit hereunder. B. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections 9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the cancellation or termination of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination of this Agreement. 10.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Administrative Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. 10.11 Marshalling; Payments Set Aside. Neither Administrative Agent nor any Lender shall be under any obligation to marshal any assets in favor of Company or any other party or against or in payment of any or all of the Obligations. To the extent that Company makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred. 10.12 General Release. A. Except with respect to the matters, rights and obligations specified in subsection 10.12B hereof, Company, for itself and on behalf of its parent, subsidiary and affiliate corporations, past or present, and each of them, as well as each of their respective directors, officers, agents, servants, shareholders, representatives, attorneys, administrators, executors, heirs, assigns, predecessors and successors in interest, and each of them (collectively, the "Releasors") hereby release and forever discharge Lenders and each of their respective parents, subsidiaries and affiliates, past or present, and each of them, as well as each of their directors, officers, agents, servants, employees, representatives, shareholders, attorneys, administrators, executors, predecessors and successors in interest, heirs and assigns, and all other persons, firms or corporations with whom any of the former have been, are now, or may hereafter be affiliated, and each of them (collectively, the "Releasees"), from and against any and all claims, demands, liens, agreements, contracts, covenants, actions, suits, causes of action in law or equity, obligations, controversies, debts, costs, expenses, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether known or unknown, fixed or contingent, suspected or unsuspected by the Releasors, and whether concealed or hidden, which Releasors now own or hold or have at any time heretofore owned or held, which are based upon or arise out of or in connection with any matter, cause or thing existing at any time prior to the date hereof or anything done, omitted or suffered to be done or omitted at any time prior to the date hereof, which relate in any way to (i) the Existing Credit Agreement and the other Loan Documents (as defined in the Existing Credit Agreement), (ii) this Agreement and the other Loan Documents, and (iii) the transactions occurring in connection with either of the foregoing and the lending relationship established thereby, irrespective of whether any such matter, cause or thing, or action done, omitted or suffered to be done was authorized, permitted or prohibited by the documents and agreements described in the preceding clauses (i) and (ii) (collectively the "Released Matters"). B. Notwithstanding anything hereunder to the contrary, this Release shall not release or alter any obligation arising on or subsequent to the Effective Date to comply with the terms and conditions of this Agreement and the other Loan Documents. It is expressly understood and agreed that it is the intent of Company to forever release certain claims against the Lenders, including, but not limited to, any claims related to the actions and omissions of Releasees prior to the date hereof, but that nothing herein shall affect the obligations of the Releasees subsequent to the date hereof, including, but not by way of limitation, compliance subsequent to the date hereof with all terms and conditions of this Agreement and the other Loan Documents. C. Without limiting the generality of the foregoing, Company for itself and on behalf of the other Releasors expressly releases any and all past, present and future claims in connection with the Released Matters, about which the Releasors do not know of or suspect to exist in their favor, whether through ignorance, oversight, error, negligence or otherwise, and which, if known, would materially affect Company's decision to give the release set forth in this subsection 10.12, and to this end Company for itself and on behalf of each of the other Releasors waives all rights under Section 1542 of the Civil Code of California, which states in full as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Company knowingly and willingly waives the provisions of Section 1542 and acknowledges and agrees that this waiver is an essential and material term of this Agreement. Company has reviewed this Agreement and the release contained in this subsection 10.12 with Company's legal counsel, and Company understands and acknowledges the significance and consequence of this Agreement and of the specific waiver of Section 1542 of the Civil Code of California. D. Company represents, warrants and agrees that in executing and entering into this Agreement, Company is not relying and has not relied upon any representation, promise or statement made by anyone which is not recited, contained or embodied in this Agreement or the other Loan Documents. Company understands and expressly assumes the risk that any fact not recited, contained or embodied therein may turn out hereafter to be other than, different from, or contrary to the facts now known to Company or believed by Company to be true. Nevertheless, Company intends by this Agreement to release fully, finally and forever all Released Matters and agrees that this Agreement shall be effective in all respects notwithstanding any such difference in facts, and shall not be subject to termination, modification or rescission by reason of any such difference in facts. E. Company hereby represents and warrants that it has not heretofore assigned or transferred or purported to assign or transfer to any person or entity all or any part of or any interest in any Released Matter. Company agrees to indemnify and hold harmless the Releasees against any claim, contention, demand, cause of action, obligation and liability of any nature, character or description whatsoever, including the payment of attorney's fees and costs actually incurred, whether or not litigation is commenced, which may be based upon or which may arise out of or in connection with any such assignment or transfer or purported assignment or transfer of any Released Matter against any Releasee. F. Company shall, from time to time, promptly execute and deliver to the Lenders such further instruments, documents and papers and perform such further acts as may be necessary or, in Lenders' reasonable judgment, useful to carry out and effect the terms of this subsection 10.12. G. This subsection 10.12 is not to be construed and does not constitute an admission of any liability by any person or entity for any purpose. H. Company represents, warrants and agrees that in executing and entering into this Agreement, Company is not relying upon, nor is Company acting in consideration of, any other person or entity executing a similar release. This Agreement shall be binding, valid and enforceable against Company and the other Releasors irrespective of whether any other person or entity executes any other release. 10.13 Severability. In case any provision in or obligation under this Agreement or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 10.14 Obligations Several; Independent Nature of Lenders' Rights. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a Joint Venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. 10.15 Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 10.16 Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES; PROVIDED THAT THE EXERCISE OF CERTAIN RIGHTS HEREUNDER OR UNDER THE LOAN DOCUMENTS MAY BE SUBJECT TO AND/OR REQUIRE COMPLIANCE WITH THE GAMING LAWS. 10.17 Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders (it being understood that Lenders' rights of assignment are subject to subsection 10.1). Neither Company's rights or obligations hereunder nor any interest therein may be assigned or delegated by Company without the prior written consent of all Lenders. 10.18 Consent to Jurisdiction and Service of Process; Choice of Forum. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Company hereby agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to Company at its address provided in subsection 10.8, such service upon receipt by Company being hereby acknowledged by Company to be sufficient for personal jurisdiction in any action against Company in any such court upon such receipt and to be otherwise effective and binding service in every respect. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of any Lender to bring proceedings against Company in the courts of any other jurisdiction. 10.19 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party hereto acknowledges that this waiver is a material inducement to enter into a business relationship, that each has already relied on this waiver in entering into this Agreement, and that each will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. 10.20 Confidentiality. Each Lender shall hold all non-public information obtained pursuant to the requirements of this Agreement which has been identified as confidential by Company in accordance with such Lender's customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices, it being understood and agreed by Company that in any event a Lender may make disclosures reasonably required by any bona fide assignee, transferee or participant in connection with the contemplated assignment or transfer by such Lender of any Loans or any participation therein or as required or requested by any governmental agency or representative thereof or pursuant to legal process; provided that, unless specifically prohibited by applicable law or court order, each Lender shall notify Company of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information; and provided, further that in no event shall any Lender be obligated or required to return any materials furnished by Company or any of its Subsidiaries. 10.21 Licensing of Administrative Agent and Lenders. If an Event of Default shall have occurred hereunder or under any of the Loan Documents and it shall become necessary, or in the opinion of Administrative Agent advisable, for an agent, receiver or other representative of Administrative Agent to become licensed under the provisions of the laws of the State of Illinois, Louisiana, Kentucky, Missouri or Nevada, or rules and regulations adopted pursuant thereto, as a condition to receiving the benefit of any Collateral encumbered by the Collateral Documents for the benefit of Administrative Agent on behalf of Lenders or otherwise to enforce their rights hereunder, Company does hereby give its consent, and agrees to cause its Subsidiaries to give their consents, to the granting of such license or licenses and agrees to execute such further documents as may be required in connection with the evidencing of such consent. 10.22 Counterparts; Effectiveness. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective upon (i) the execution of a counterpart hereof by each of the parties hereto and receipt by Company and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof, (ii) the execution of a Consent to Amendment by each Noncontinuing Lender in the form of Exhibit XII hereto, and (iii) the satisfaction or waiver by Requisite Lenders of the conditions set forth in subsection 4.1. At the time of the effectiveness of this Agreement, this Agreement shall amend and restate the Existing Credit Agreement, all obligations of Company under the Existing Credit Agreement that have not been paid as of the Effective Date shall become Obligations of Company hereunder, and the commitments under the Existing Credit Agreement shall terminate. 10.23 Cooperation With Gaming Authorities. Administrative Agent and each Lender agree to cooperate with all Gaming Boards in connection with the administration of their regulatory jurisdiction over any Loan Party, including the provision of such documents or other information as may be requested by any such Gaming Authority relating to any Loan Party or to the Loan Documents. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. PLAYERS INTERNATIONAL, INC., as Borrower By: Title: Notice Address: Citicenter Building, Suite 800 1300 Atlantic Avenue Atlantic City, New Jersey 08401 Attention: President With copies to: Players International, Inc. Citicenter Building, Suite 800 1300 Atlantic Avenue Atlantic City, New Jersey 08401 Attention: Chief Financial Officer - and - Players International, Inc. Citicenter Building, Suite 800 1300 Atlantic Avenue Atlantic City, New Jersey 08401 Attention: General Counsel and Vice President WELLS FARGO BANK, NATIONAL ASSOCIATION, individually, as Administrative Agent, Managing Agent and Co-Arranger By: Title: Notice Address for Notices of Borrowing: 201 Third Street, 8th Floor San Francisco, California 94103 Attention: Athene Mims Notice Address for all other purposes: 3800 Howard Hughes Parkway 4th Floor, Suite 400 Las Vegas, Nevada 89109 Attention: Kathee Stone COMMUNITY NATIONAL BANK, as Lender By: Title: Notice Address: 522 Market Street Metropolis, Illinois 62960 FIRST NATIONAL BANK OF COMMERCE, as Lender By: Title: Notice Address: First NBC Center 201 St. Charles Ave., 28th Floor New Orleans, Louisiana 70170 PAMCO CAYMAN LTD. By: Protective Asset Management Company as Collateral Manager By: Title: Notice Address: 1150 Two Galleria Tower 13455 Noel Road-LB #45 Dallas, Texas 75240 EXECUTION COPY SECOND AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF MARCH 11, 1998 AMONG PLAYERS INTERNATIONAL, INC., as Borrower, THE LENDERS LISTED HEREIN, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, Individually and as Administrative Agent, Managing Agent and Arranger PLAYERS INTERNATIONAL, INC. SECOND AMENDED AND RESTATED CREDIT AGREEMENT TABLE OF CONTENTS Page SECTION 1. DEFINITIONS 2 1.1 Certain Defined Terms 2 1.2Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement 35 1.3 Other Definitional Provisions 36 SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS 36 2.1 Commitments; Making of Loans; Notes 36 2.2 Interest on the Loans 42 2.3 Fees 45 2.4Payments, Prepayments and Reductions in Commitments; General Provisions Regarding Payments 46 2.5 Use of Proceeds 51 2.6Special Provisions Governing Eurodollar Rate Loans 52 2.7 Increased Costs; Taxes; Capital Adequacy 54 2.8Obligation of Lenders and Administrative Agent to Mitigate 58 2.9 Replacement or Termination of Lenders 59 SECTION 3. LETTERS OF CREDIT 59 3.1Issuance of Letters of Credit and Lenders' Purchase of Participations Therein 59 3.2 Letter of Credit Fees 62 3.3Drawings and Reimbursement of Amounts Drawn Under Letters of Credit. 62 3.4 Obligations Absolute 65 3.5Indemnification; Nature of the Issuing Lender's Duties 66 3.6Increased Costs and Taxes Relating to Letters of Credit 67 SECTION 4. CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT 68 4.1 Conditions to Effectiveness 68 4.2 [omitted]. 73 4.3 [omitted] 73 4.4 Conditions to All Loans 73 4.5 Conditions to Letters of Credit 75 SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES 75 5.1Organization, Powers, Qualification, Good Standing, Business and Subsidiaries 76 5.2 Authorization of Borrowing, etc. 76 5.3 Financial Condition 77 5.4No Material Adverse Change; No Restricted Payments 78 5.5 Title to Properties; Liens 78 5.6 Litigation; Adverse Facts 80 5.7 Payment of Taxes 80 5.8Performance of Agreements; Materially Adverse Agreements 80 5.9 Governmental Regulation 81 5.10 Securities Activities 81 5.11 Employee Benefit Plans 81 5.12 Certain Fees 81 5.13 Environmental Protection 82 5.14 Employee Matters 83 5.15 Solvency 83 5.16 Disclosure 83 5.17 Compliance With Laws 84 5.18Representations Relating to Operation of Facilities 84 5.19 Intangible Property 84 5.20 Rights to Agreements, Permits and Licenses 85 5.21 Classification of Ships 85 5.22 Recordation of Ship Mortgages 85 5.23 Policies of Insurance 85 5.24Survival of Rights Created under Existing Credit Agreement 86 SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS 86 6.1 Financial Statements and Other Reports 86 6.2 Corporate Existence, etc. 93 6.3 Payment of Taxes and Claims; Tax Consolidation 93 6.4 Maintenance of Properties; Insurance 93 6.5 Inspection; Lender Meeting 94 6.6 Compliance with Laws, etc. 94 6.7 Environmental Disclosure and Inspection 94 6.8Company's Remedial Action Regarding Hazardous Materials 96 6.9 Post-Closing Matters 96 6.10New Subsidiaries; New Joint Ventures; Further Assurances 96 6.11 Exchange Listing 99 SECTION 7. COMPANY'S NEGATIVE COVENANTS 99 7.1 Indebtedness 99 7.2 Liens and Related Matters 100 7.3Investments, Loans and Advances; Capital Expenditures 101 7.4 Contingent Obligations 101 7.5 Restricted Payments 102 7.6 Financial Covenants 102 7.7Restriction on Fundamental Changes; Asset Sales and Acquisitions 103 7.8 Transactions with Shareholders and Affiliates 104 7.9 Disposal of Subsidiary Stock 105 7.10 Conduct of Business 105 7.11 Tradenames, Trademarks and Servicemarks 105 7.12 Change of Control Offer 105 7.13 No Amendment of Indenture 105 7.14 No Movement of Other Barges 106 SECTION 8. EVENTS OF DEFAULT 106 8.1 Failure to Make Payments When Due 106 8.2 Default in Other Agreements 106 8.3 Breach of Certain Covenants 107 8.4 Breach of Warranty 107 8.5 Other Defaults Under Loan Documents 107 8.6Involuntary Bankruptcy; Appointment of Receiver, etc.107 8.7Voluntary Bankruptcy; Appointment of Receiver, etc. 108 8.8 Judgments and Attachments 108 8.9 Dissolution 108 8.10 Employee Benefit Plans 108 8.11 Change in Control 109 8.12 Impairment of Collateral 109 8.13 Loss of Gaming License 109 8.14 [omitted] 109 8.15 Invalidity of Guaranties 109 8.16 Remedies 110 SECTION 9. ADMINISTRATIVE AGENT 111 9.1 Appointment 111 9.2 Powers; General Immunity 111 9.3Representations and Warranties; No Responsibility For Appraisal of Creditworthiness 113 9.4 Right to Indemnity 113 9.5 Successor Administrative Agent. 113 9.6 Collateral Documents 114 9.7 Release of Collateral 114 SECTION 10. MISCELLANEOUS 114 10.1Assignments and Participations in Loans and Letters of Credit 114 10.2 Expenses 119 10.3 Indemnity 119 10.4 Set-Off; Security Interest in Deposit Accounts 120 10.5 Ratable Sharing 120 10.6 Amendments and Waivers 121 10.7 Independence of Covenants 122 10.8 Notices 122 10.9Survival of Representations, Warranties and Agreements 122 10.10Failure or Indulgence Not Waiver; Remedies Cumulative 123 10.11 Marshalling; Payments Set Aside 123 10.12 General Release 123 10.13 Severability 125 10.14Obligations Several; Independent Nature of Lenders' Rights 125 10.15 Headings 126 10.16 Applicable Law 126 10.17 Successors and Assigns 126 10.18Consent to Jurisdiction and Service of Process; Choice of Forum 126 10.19 Waiver of Jury Trial 127 10.20 Confidentiality 127 10.21 Licensing of Administrative Agent and Lenders 128 10.22 Counterparts; Effectiveness. 128 10.23 Cooperation With Gaming Authorities 128 Signature pages S-1 EXHIBITS I FORM OF NOTICE OF BORROWING II FORM OF NOTICE OF CONVERSION/CONTINUATION III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT IV FORM OF LENDER ASSIGNMENT AGREEMENT V FORM OF REVOLVING NOTE VI FORM OF SWING LINE NOTE VII FORM OF OPINION OF COMPANY COUNSEL VIII FORM OF OPINION OF O'MELVENY & MYERS LLP IX FORM OF COMPLIANCE CERTIFICATE X FORM OF ACKNOWLEDGEMENT AND CONFIRMATION XI FORMS OF AMENDMENTS TO MISSOURI PLEDGE AND SECURITY AGREEMENTS XII FORM OF CONSENT TO AMENDMENT BY NONCONTINUING LENDERS XIII FORM OF REMARKETING AGREEMENT SCHEDULES 1.1(a) EXISTING COLLATERAL DOCUMENTS 1.1(b) NEW LOAN DOCUMENTS 1.1(c) NONCONTINUING LENDERS 2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES 4.1(c) CORPORATE STRUCTURE OF COMPANY AND ITS SUBSIDIARIES 5.1 SUBSIDIARIES OF COMPANY 5.5 US DOCUMENTED BARGES 5.6 LITIGATION MATTERS 5.11 ERISA MATTERS 5.13 ENVIRONMENTAL MATTERS 5.19 TRADEMARK MATTERS 6.4(a) MINIMUM INSURANCE REQUIREMENTS 6.4(b) MINIMUM INSURANCE REQUIREMENTS - CONSTRUCTION 6.9 POST-CLOSING COVENANTS 7.2 LIENS 7.3 INVESTMENTS 7.11 INTELLECTUAL PROPERTY ASSIGNMENTS A-1 DESCRIPTION OF ILLINOIS PREMISES A-2 DESCRIPTION OF LOUISIANA PREMISES A-3 DESCRIPTION OF LOUISIANA HOTEL PREMISES EX-10 9 AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT THIS AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT is made as of December ____, 1997, between LAKESHORE HOTELS, LTD., a Louisiana limited partnership in commendam ("Seller"), and PLAYERS INTERNATIONAL, INC., a Nevada corporation, its designees or assignees ("Purchaser"). R E C I T A L S A. Seller and Purchaser are parties to a certain Asset Purchase Agreement dated as of September 30, 1997, as amended by a certain Amendment No. 1 to Asset Purchase Agreement dated as of November 13, 1997 (as so amended, the "Agreement"); capitalized terms not defined herein are used as defined in the Original Agreement, unless the context clearly requires otherwise. B. Purchaser has been unable to satisfy certain of the conditions to Purchaser's obligations under Section 6.2 of the Agreement. Notwithstanding the termination rights available to Purchaser under Section 6.2 of the Agreement, Purchaser desires to complete the purchase of the Purchased Assets, and is in the process of making alternate arrangements to do so. C. In order to accommodate Purchaser's efforts to make such alternate arrangements, Seller and Purchaser desire to modify the Agreement as hereinafter set forth. A G R E E M E N T S THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties agree as follows: 1. Amendment re: Conditions. Purchaser hereby waives the conditions set forth in subsections (e) through (k) of Section 6.2 of the Agreement, and the same are hereby deleted entirely, it being understood that all Deposit Monies are and shall be non refundable except as specified in Sections 6.2 (a), (b), (c), (d) and/or (k) of the Agreement. 2. Amendment re: Closing. In order to afford Purchaser more time to modify and finalize its financing arrangements, and to obtain any appropriate consents, permits, intercreditor agreements, or approvals, with respect to such different arrangements (none of which are deemed conditions to Purchasers obligations under the Agreement, as amended hereby), the Closing Date is hereby reset and extended to February 15, 1998. Accordingly, Section 3.2 of the Agreement is hereby deleted in its entirety and replaced with the following: 3.2 Time and Place of Closing. The transaction contemplated by this Agreement shall be consummated (the 'Closing') at 9:00 a.m. at the offices of Stockwell, Sievert, Viccellio, Clements and Shaddock, L.L.P., One Lakeside Plaza, 4th Floor, Lake Charles, Louisiana 70601 on February 15, 1998; or such earlier date specified by Purchaser on at least five (5) business days' notice; or on such other date, or at such other time or place, as shall be mutually agreed upon by Seller and Purchaser. The date on which the Closing occurs in accordance with the preceding sentences, is referred to in this Agreement as the "Closing Date.' The Closing shall be deemed to be effective as of 12:01 a.m. on the Closing Date at Lake Charles, Louisiana. 3. Amendment re: Allocation. The date for Purchaser to submit its proposed allocation of the Purchase Price to Seller under Section 3.5 of the Agreement is hereby reset and extended to the date which is at least five (5) business days prior to Closing hereunder, unless otherwise agreed by Seller and Purchaser. Seller and Purchaser acknowledge and agree that Closing may be scheduled on an expedited basis, such that sufficient prior notice, as aforesaid, may not be practical or possible. In such case, the parties will cooperate to satisfy the needs of the other in all reasonable ways. 4. Amendment re: Employee Contact. Purchaser and Seller agree that the Contact Date under Section 10.10(c) of the Agreement shall in all events and for all purposes be: (i) for salaried employees, December 2, 1997; and (ii) for hourly employees, the date chosen by Purchaser that is not earlier than ten (10) business days prior to Closing. Seller and Purchaser acknowledge and agree that Closing may be scheduled on an expedited basis, such that sufficient prior notice, as aforesaid, may not be practical or possible. In such case, the parties will cooperate to satisfy the needs of the other in all reasonable ways. 5. Effect of Amendment. In the event of conflict or inconsistency between the terms of the Agreement and the terms of this Amendment No. 2, the terms of this Amendment No. 2 shall govern. Except as specifically set forth herein, the Agreement shall remain unmodified and in full force and effect, binding upon the parties thereto. 6. Execution. This Amendment No. 2 may be executed in multiple counterparts, which, taken together shall constitute one complete copy of this Amendment. It shall not be necessary for any party to produce original signatures for all parties on any copy of this Amendment. Facsimile signatures shall be deemed originals for purposes hereof. {SIGNATURES BEGIN ON NEXT PAGE} SELLER: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Lake Charles, Louisiana on this _____ day of December, 1997. WITNESSES: LAKESHORE HOTELS, LTD., a Louisiana Partnership in Commendam BY: NAME: TITLE: NOTARY PUBLIC PURCHASER: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Atlantic City, New Jersey on this _____ day of December, 1997. WITNESSES: PLAYERS INTERNATIONAL, INC., a Nevada corporation BY: NAME: TITLE: NOTARY PUBLIC AC-168627 JOINDER The undersigned hereby join in the execution of this Amendment No. 1, simultaneously with Seller, to evidence their agreement to be bound by the provisions hereof: THUS DONE AND SIGNED in the presence of the undersigned attesting witnesses and me, Notary Public at Lake Charles, Louisiana on this _____ day of December, 1997. WITNESSES (as to all signatures) WITNESSES (as to all signatures) NOTARY PUBLIC AC-168627 -----END PRIVACY-ENHANCED MESSAGE-----