HERBSTGAMING, INC. RESTRUCTURINGTERM SHEET MARCH 9,2009

EXHIBIT 10.1

March 9, 2009

To the Consenting Parties Identified
on the Signature Pages Hereof:

This letter agreement (this “Agreement”) sets forth the terms on which the Consenting Parties (as defined below) agree, among other things, to support a restructuring (the “Restructuring”) by Herbst Gaming, Inc. (the “Company”) and the Guarantor Debtors (as defined below) in accordance with the term sheet (the “Term Sheet”) attached hereto as Exhibit A, as it may be modified in accordance with the terms herein.  Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Term Sheet.

For purposes of this Agreement, (a) “Consenting Parties” means (i) each of the undersigned lenders (each, a “Consenting Lender” and together, the “Consenting Lenders”) under the Company’s Second Amended and Restated Credit Agreement, dated as of January 3, 2007, as amended (the “Senior Credit Facility”), (ii) Edward J. Herbst, Timothy P. Herbst and Troy D. Herbst (each, an “Existing Equity Holder” and together, the “Existing Equity Holders”), being the holders of 100% of the issued and outstanding equity interests in the Company, and (iii) Terrible Herbst, Inc. (“THI”) and each undersigned person or entity affiliated with THI that is a party to a Related Party Agreement and any other person or entity that is affiliated with THI that enters into a new agreement or agreements related to the operations of the Company (collectively with THI, the “THI Parties”), (b) “Guarantor Debtors” means each of the Company’s subsidiaries that are guarantors of the Company’s obligations under the Senior Credit Facility and/or the Senior Subordinated Notes, and (c) “Debtors” means, collectively, the Company and the Guarantor Debtors.

In exchange for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Debtors and each Consenting Party intending to be legally bound, hereby agree as follows:

1.             The Restructuring.  The Restructuring will principally consist of (a) separation of the Company’s casino and slot machine route businesses into two holding companies, (b) conversion of all outstanding obligations under the Senior Credit Facility into debt and equity of the reorganized companies, (c) termination of all outstanding obligations under the indentures (the “Indentures”) governing the Company’s (i) 8 1/8% Senior Subordinated Notes due 2012 and/or (ii) 7% Senior Subordinated Notes due 2014 (together, the “Senior Subordinated Notes”), (d) cancellation of 100% of the existing equity in the Company, and (e) amendments or modifications to, or assumptions and

2.             assignments of, certain of the Related Party Agreements, or new agreements to be entered into, and settlements of claims with the THI Parties in connection with the Related Party Agreements, all in exchange for 90% of the new equity in the reorganized slot machine route business, in each case, as set forth in the Term Sheet.  The parties agree that the Restructuring is to be implemented pursuant to pre-arranged cases for the Debtors (collectively, the “Bankruptcy Case”) under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”).

3.             The Bankruptcy Case.

(a)           The Debtors shall file voluntary petitions to commence the Bankruptcy Case under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada (the “Bankruptcy Court”).  On the date that the Bankruptcy Case is commenced, the Debtors shall file a plan of reorganization in form and substance reasonably satisfactory to (i) Consenting Lenders holding at least two-thirds in amount of the total Claims held by all Consenting Lenders arising under the Senior Credit Facility (“Required Consenting Lenders”) and (ii) the THI Parties (the “Plan”) and a disclosure statement discussing the Plan in form and substance reasonably

satisfactory to (i) Required Consenting Lenders and (ii) the THI Parties (the “Disclosure Statement”), both of which will incorporate the terms set forth in the attached Term Sheet.

(b)           This Agreement is not and shall not be deemed to be a solicitation for consents to the Plan.  The acceptance of the Consenting Parties will not be solicited until after the commencement of the Bankruptcy Case, and such solicitation shall occur in accordance with such solicitation procedures as may be approved or established by the Bankruptcy Court.

4.             Incorporation of Term Sheet; Consultation and Cooperation.  The Term Sheet is expressly incorporated herein by reference and is made part of this Agreement.  The general terms and conditions of the Restructuring are set forth in the Term Sheet; provided, however, that the Term Sheet is supplemented by the terms and conditions of this Agreement.  In the event the terms and conditions as set forth in the Term Sheet and this Agreement are inconsistent, the terms and conditions as set forth in the Term Sheet shall govern.  To the extent that any of (i) the Plan, the Disclosure Statement, or any definitive documents relating thereto (collectively, the “Plan Documents”) or (ii) any transaction contemplated by any of the Plan Documents is required under the terms of this Agreement to be reasonably satisfactory or reasonably acceptable to any of the Consenting Parties and such Plan Document or transaction is identified, described or contemplated by the Term Sheet, such Plan Documents and any transaction contemplated by the Plan Documents shall be deemed to be reasonably satisfactory or reasonably acceptable to the extent that such Plan Documents or any transaction contemplated by the Plan Documents are consistent with the terms specifically identified in the Term Sheet.  To the extent that (x) any documents or agreements executed by any of the THI Parties and/or Slot Co and/or (y) any transaction contemplated thereby include terms not specifically identified in the Term Sheet, such terms must be reasonably acceptable to the THI Parties and Slot Co.  In addition, the Debtors, the Consenting Lenders and the THI Parties agree to consult and cooperate with each other in connection with any analysis, appearances, presentations, briefs, filings, arguments or proposal made or submitted by any such party to the Bankruptcy Court, other creditor constituents or other parties with an interest in the Restructuring.

5.             Effectiveness.  This Agreement shall become effective on the date upon which: (i) counterparts of this Agreement have been duly executed by each of the Debtors, the Existing Equity Holders, the THI Parties and Consenting Lenders holding in the aggregate at least two-thirds, or such lesser amount, but not less than a majority, as may be acceptable to the Company and the THI Parties (an “Acceptable Lesser Dollar Amount”), in amount of all outstanding Claims under the Senior Credit Facility and constituting in the aggregate a majority in number, or such lesser amount as may be acceptable to the Company and the THI Parties (an “Acceptable Lesser Amount In Number”), of all lenders thereunder; provided, that if Consenting Lenders holding less than two-thirds, but at least a majority, in amount of all outstanding claims under the Senior Credit Facility, or constitute in the aggregate less than a majority in number of all lenders thereunder, but the Company and the THI Parties nonetheless determine those amounts to be an Acceptable Lesser Dollar Amount or an Acceptable Lesser Amount In Number, as applicable, the Company and the THI Parties must notify the parties in writing of such determination no later than the later of 5:00 p.m. Prevailing Pacific Time on the next Business Day, or twenty-four (24) hours, after the Company and the THI Parties have been provided a final tally setting forth the aggregate holdings, names and number of Consenting Lenders that have executed this Agreement (with interim tallies setting forth the information throughout the voting process engaged in by lenders under the Senior Credit Facility with respect to this Agreement), or this Agreement shall not be effective as to or binding upon any Consenting Lender or other party; and (ii) such executed counterparts have been exchanged among the parties to this Agreement.  This Agreement shall not be binding on or enforceable against any party and no party shall have any rights or obligations under this Agreement until this Agreement has become effective in accordance with this Section 4.

6.             Pursuit/Support of the Restructuring.

(a)           Each of the Debtors agrees and covenants that it shall (i) use commercially reasonable efforts to successfully consummate the Restructuring in the manner and in accordance with the timeline contemplated by this Agreement, (ii) use commercially reasonable efforts to avoid the occurrence of any of the Agreement Termination Events set forth in Section 12, (iii) take all commercially

reasonably necessary actions to achieve the expeditious confirmation and consummation of the Plan, and (iv) use commercially reasonable efforts to obtain an order from the Bankruptcy Court granting adequate protection to the holders of Claims arising under the Senior Credit Facility on terms set forth in Section 11 (b) below.

(b)           Each Consenting Party (i) agrees to take, or cause to be taken, all actions reasonably necessary to facilitate, encourage or otherwise support the Restructuring and the transactions contemplated by the Term Sheet and (ii) agrees not to take, or cause to be taken, directly or indirectly, any action inconsistent with the consummation of, or opposing the Restructuring or the transactions contemplated by the Term Sheet, including without limitation, in the case of clauses (i) and (ii), the matters set forth in Section 6 hereof, as applicable.  Without limiting the generality of the foregoing and subject to the terms and conditions of this Agreement, each Consenting Party agrees to neither take or direct any other person to take any action to accelerate any obligation of any Debtor owing to such Consenting Party that is or may become due nor initiate or pursue, or have initiated or pursued on its behalf, any litigation or proceeding, or any other rights or remedies of any kind, with respect to any Claim such Consenting Party may now or hereafter have against any Debtor or any Debtor’s subsidiaries, affiliates, directors, officers, and/or employees other than to enforce this Agreement or the Term Sheet.

7.             Support of the Plan, Disclosure Statement and First Day Motions.  Each Consenting Party agrees that it will take or refrain from taking, as applicable, the following actions in connection with the Bankruptcy Case:

(a)           provided that such Consenting Party has been properly solicited pursuant to Bankruptcy Code sections 1125 and 1126, (i) to vote in favor of the Plan in accordance with the voting procedures established in the Solicitation Materials and (ii) to the extent such election is available, not to elect on its ballot to preserve any Claims such Consenting Party may own that may be affected by any releases provided for under the Plan;

(b)           not object to any Plan Document, except to the extent that such Plan Document is either: (i) materially inconsistent with the Term Sheet as such Term Sheet may be amended or modified from time to time in accordance with Section 7(a) hereof, or (ii) not reasonably satisfactory to Required Consenting Lenders or the THI Parties;

(c)           take all reasonable actions necessary or reasonably requested by the Company to support the Plan and the transactions contemplated thereby, except to the extent that such Plan or such transactions are either (i) materially inconsistent with the Term Sheet, as such Term Sheet may be amended or modified from time to time in accordance with Section 7(a) hereof, or (ii) not reasonably satisfactory to Required Consenting Lenders or the THI Parties;

(d)           not to take any actions inconsistent with, or that would delay approval or confirmation of, the Plan Documents, except to the extent that such Plan Documents are either (i) materially inconsistent with the Term Sheet, as such Term Sheet may be amended or modified from time to time in accordance with Section 7(a) hereof, or (ii) not reasonably satisfactory to Required Consenting Lenders or the THI Parties;

(e)           support the release provisions contained in the Plan;

(f)            not to oppose the Debtors’ request for the entry of customary “first day” orders that are reasonably satisfactory to Required Consenting Lenders and the THI Parties;

(g)           not to directly or indirectly seek, solicit, encourage or, subject to any applicable fiduciary duties, participate in any negotiations regarding any other plan, sale, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company or any Guarantor Debtor (other than as provided in or contemplated by the Term Sheet or with respect to potential sales of some or all of the casino assets);

(h)           promptly notify the other Consenting Parties upon the receipt of any written solicitation or proposal relating to any other plan, sale, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company or any Guarantor Debtor (other than as provided in or contemplated by the Term Sheet), including potential sales of some or all of the casino assets; and

(i)            not to withdraw or revoke any properly solicited vote to accept the Plan unless (x) the Plan is modified in any respect in a manner materially inconsistent with the Term Sheet, as such Term Sheet may be amended or modified from time to time in accordance with Section 7(a) hereof, or that has not been approved by Required Consenting Lenders and the THI Parties or (y) this Agreement is terminated in accordance with its terms.

8.             Modification of Plan Documents.

(a)           The Term Sheet, the Restructuring and the Plan Documents may from time to time be amended or modified by the Debtors to modify the treatment of certain constituents junior to the Consenting Lenders (other than the THI Parties) under the Plan (each, a “Permitted Plan Amendment”), if such amendment or modification either (i) does not negatively impact the Consenting Lenders or the THI Parties or (ii) is in writing and consented to by Required Consenting Lenders and the THI Parties.

(b)           The making of any Permitted Plan Amendment shall not release any Consenting Party from its obligations under this Agreement.

9.             Cooperation During the Bankruptcy Case and In Implementation of Plan.  Each of the Debtors agrees and covenants that it shall:

(a)           during the Bankruptcy Case, cooperate and consult with the Consenting Lenders, the THI Parties and any consultants or advisors engaged by the Consenting Lenders and/or the THI Parties regarding the Debtors’ ongoing operations, including without limitation supplementing the management team for the Debtors’ casino assets and/or exploring potential sales or other restructuring transactions with respect to some or all of the casino assets; and

(b)           in connection with the implementation of the Plan, (i) cooperate with any consultants or advisors engaged by the Consenting Lenders or the THI Parties and (ii) continue to deliver any diligence information reasonably requested by the Consenting Lenders or the THI Parties, or their respective consultants or advisors.

10.           Representations and Warranties.

(a)           Each Consenting Lender represents and warrants, severally and not jointly, that, as of the date hereof, such Consenting Lender is the legal owner, beneficial owner and/or holder of investment and voting authority over, the aggregate amount of obligations outstanding under the Senior Credit Facility as set forth in the records maintained by the Senior Credit Facility Agent, and legally or beneficially owns, or has investment and voting authority over, no other obligations outstanding under the Senior Credit Facility.

(b)           Each Consenting Lender represents and warrants, severally and not jointly, that such Consenting Lender (i) is a sophisticated investor with respect to the transactions described in this Agreement with sufficient knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of owning and investing in securities (including any securities that may be issued in connection with the transactions contemplated by this Agreement), is making an informed decision with respect thereto and has made its own analysis and decision to enter this Agreement and (ii) is an “accredited investor” within the meaning of Rule 501 of the Securities Act of 1933, as amended.

(c)           Each Consenting Lender represents and warrants, severally and not jointly, that such Consenting Lender has not been offered, nor shall such Consenting Lender accept, any treatment or compensation or the right to participate in any transactions with any of the Debtors or THI Parties relating to the Plan or the Debtors’ operations that is different than such treatment, compensation or right offered to all lenders under the terms of this Agreement and the Term Sheet.

(d)           Each Existing Equity Holder represents and warrants, severally and not jointly, that, as of the date hereof, such Existing Equity Holder is the beneficial owner of and holds investment and voting authority over the equity interests in the Company set forth opposite such Existing Equity Holder’s name on the signature pages hereof; and the Existing Equity Holders further represent and warrant, jointly and severally, that, as of the date hereof, the equity interests held by the Existing Equity Holders constitute in the aggregate 100% of the issued and outstanding capital stock of the Company.

(e)           Each THI Party represents and warrants that (i) such THI Party has no Claims against any Debtor other than Claims in connection with any of the Related Party Agreements, and (ii) each Related Party Agreement to which such THI Party is a party is a legally valid and binding obligation of such party, enforceable against such party in accordance with its terms.

(f)            (x) Each of the Consenting Parties, severally and not jointly, represents and warrants to each of the Debtors and (y) each of the Debtors represents and warrants, only as to itself and not as to each other, to each Consenting Party, that the following statements, as applicable, are true, correct and complete as of the date hereof:

(i)            Power and Authority.  It has all requisite corporate, partnership, or limited liability company power and authority to enter into this Agreement and to carry out the transactions contemplated hereby, and to perform its obligations hereunder.

(ii)           Due Organization.  It is duly organized, validly existing and in good standing under the laws of its state of organization and it has the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

(iii)          Authorization.  The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary corporate, partnership or limited liability company action on its part.

(iv)          No Conflicts.  The execution, delivery and performance of this Agreement does not and shall not:  (i) violate any provision of law, rule or regulation applicable to it,  except to the extent the failure to comply therewith could not reasonably be expected to have a material adverse effect on its ability to perform its obligations hereunder; (ii) violate its articles or certificate of incorporation, bylaws or other organizational documents, except as contemplated in the Plan and the Term Sheet; or (iii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party, except to the extent such contractual obligation relates to the filing of a case under the Bankruptcy Code or insolvency of the Debtors.

(v)           Governmental Consents.  The execution, delivery and performance by it of this Agreement does not and shall not require any registration or filing 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 such filings as (i) are identified in the Term Sheet, (ii) may be necessary and/or required under antitrust laws or the federal securities laws, (iii) may be necessary and/or required under any gaming laws or regulations of any state, or (iv) may be necessary and/or required in connection with the commencement of the Bankruptcy Case, the approval of the Disclosure Statement and confirmation of the Plan.

(vi)          Binding Obligation.  Subject to the provision of sections 1125 and 1126 of the Bankruptcy Code, this Agreement is a legally valid and binding obligation of such party, enforceable against such party in accordance with its terms.

(g)           Each THI Party and each of the Debtors represents and warrants that each of the Related Party Agreements existing as of the date hereof is listed on the Related Party Agreements Term Sheet (Exhibit 4 to the Term Sheet).

11.           Survival of Agreement.  Each of the parties acknowledges and agrees that: (i) this Agreement is being executed in connection with negotiations concerning the Restructuring of the Debtors and in contemplation of the possible commencement of the Bankruptcy Case by the Debtors; (ii) the rights granted in this Agreement are enforceable by each signatory hereto without approval of the Bankruptcy Court, except as specifically contemplated by this Agreement (iii) the exercise of such rights will not violate the automatic stay provisions of the Bankruptcy Code and (iv) each party hereto hereby waives its right to assert a contrary position in the Bankruptcy Case, if any, with respect to the foregoing.

12.           Pre-Filing Interest Payments; Adequate Protection Payments; Post-Effective Date Payments; Contract Terms; Bank Account/Forbearance; Provision of Records.

(a)           The Consenting Parties agree that interest payments to be made to the lenders under the Senior Credit Facility from the effective date of this Agreement through the Petition Date shall consist of (i) a payment of interest due under the Senior Credit Facility on December 1, 2008 ($5,101,752.49), to be paid within two (2) Business Days after the effective date of this Agreement, (ii) a payment of $3.0 million as a portion of interest due under the Senior Credit Facility on January 1, 2009, to be paid within two (2) Business Days after the effective date of this Agreement, and (iii) a payment in an amount equal to the Debtors’ Estimated Week Ending Cash Balance (as reflected on the Herbst Gaming, Inc. Weekly Cash Flow Variance Analysis) in excess of $100 million as of the close of business on Friday, March 13, 2009, to be (x) calculated based upon the Herbst Gaming, Inc. Weekly Cash Flow Variance Analysis (taking full account of all interest payments under (i) and (ii) above, and any payments to the Debtors’ restructuring professionals that are expected to be made prior to the Petition Date), and (y) paid on Wednesday, March 18, 2009.

(b)           The Consenting Parties agree that during the period commencing on the Petition Date and running through the Effective Date, adequate protection payments shall be made to the lenders under the Senior Credit Facility in an amount equal to the Debtors’ Cash and Cash Equivalents (as reflected on the Debtors’ balance sheet) in excess of $100 million to be measured as of the last day of each fiscal quarter and to be paid on the 30th day thereafter; provided, however, that such payments shall be reduced by any unpaid restructuring costs for services rendered by (i) the Debtors’ professionals, (ii) Milbank (as defined below), (iii) Houlihan, Lokey, Howard & Zukin, Inc. and (iv) any other professionals (including without limitation local counsel) that have been engaged by the steering committee of lenders under the Senior Credit Facility and/or the Senior Credit Facility Agent, that have accrued or otherwise have been recorded on the Debtors’ balance sheet as of the last day of any fiscal quarter and are reasonably anticipated to be paid within 45 days thereafter.  Each of the parties agrees that the parties will use their commercially reasonable efforts to have the Bankruptcy Court enter a final order granting the lenders under the Senior Credit Facility the adequate protection payments described in this Section 11(b) within 45 days after the Petition Date.

(c)           The Consenting Parties agree that the Plan will provide that, during the period commencing on the Effective Date and running through the Substantial Consummation Date, adequate protection payments shall be made to the Holders of Senior Credit Facility Claims (i) in an amount equal to the payments that would be made under the New Slot Co Bank Loan and the New Slot Co Second Lien Facility as if those facilities were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred, provided, however, that (x) such amount shall not include any cash interest or PIK interest on the New Slot Co Second Lien

Facility, nor shall any such interest on the New Slot Co Second Lien Facility commence accruing, until the date that is six (6) months after the Effective Date (the “PIK Date”), provided, further, that if any required gaming licenses or approvals with respect to any of (a) Reorganized Herbst Gaming, its proposed officers, directors, equity holders and other persons required to file personal applications (each to the extent necessary) or (b) the non-THI Parties equity holders in Slot Co, the Lender Designee, and lenders of Slot Co (each to the extent necessary), shall not have been granted by any of the applicable gaming regulatory authorities to all such entities within one year of the Effective Date, then all interest on the New Slot Co Second Lien Facility shall cease accruing and shall only recommence (without any catch up for lost interest) once all such licenses and approvals are granted, and (y) such payments shall be made on the last day of the applicable interest period (with the initial interest period for such payments commencing on the Effective Date or the PIK Date, as applicable, and ending on the last Business Day of the third full calendar month following the month in which the Effective Date or the PIK Date, as applicable, occurs, and with each subsequent interest period commencing on the last day of the preceding interest period and ending on the last Business Day of the third full calendar month thereafter); and (ii) under the Herbst Gaming Amended and Restated Senior Credit Facility, in an amount equal to the Debtors’ Cash and Cash Equivalents (as reflected on the Debtors’ balance sheet) in excess of $100 million, (1) to be measured (x) initially, as of the last day of the third full calendar month following the month in which the Effective Date occurs and (y) as of the last day of every third full calendar month thereafter, and to be paid in each case on the 30th day after the date on which it is measured.

(1) Such amount shall be modified to reflect the separation of the Debtors’ casino and slot machine route businesses as of the later of (i) the Effective Date and (ii) five days after the date the Company receives gaming regulatory approval regarding the internal reorganization necessary to implement separation of the Debtors’ casino and slot machine route businesses.  Following the later of such dates, the cash sweep will apply only as to the casino business.

(d)           For the period from the Petition Date through the Effective Date, the Debtors shall continue to honor and perform their obligations with respect to the Related Party Agreements until such agreements are assumed under the Plan.  In addition, the Consenting Parties agree that the Confirmation Order will provide that, during the period commencing on the Effective Date and running through the Substantial Consummation Date, the economic terms of the Related Party Agreements shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described in the Related Party Agreements Term Sheet were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

(e)           The Debtors shall, on or before the date that is ten (10) days after the effective date of this Agreement, cause all of their Cash in Community Bank of Nevada to be transferred to the Debtors’ account at U.S. Bank, National Association (“U.S. Bank”); provided, however, that as a condition to such transfer, the Senior Credit Facility Agent, U.S. Bank and the Debtors shall enter into a forbearance agreement with respect to such Cash that is reasonably acceptable to each such party.

(f)            During the period commencing on the effective date of this Agreement and running through the Petition Date, the Debtors shall provide to the Consenting Lenders weekly check and wire transfer records (excluding payroll records).

13.           Termination.

(a)           This Agreement shall automatically terminate upon the occurrence of any of the following events, unless such automatic termination is waived in writing by Required Consenting Lenders, the

Debtors and/or the THI Parties, as applicable, within 5 Business Days of the occurrence of such event; provided, however, that the waiver of both the Debtors and the THI Parties, but not the Required Consenting Lenders, shall be required with respect to any automatic termination to the extent that such automatic termination occurs pursuant to any of paragraphs (iii), (xx) (resulting from an announcement by a Consenting Lender) or (xxiii) below; provided, further, that the waiver of the Required Consenting Lenders and the THI Parties, but not the Debtors, shall be required with respect to any automatic termination to the extent that such automatic termination occurs pursuant to any of paragraphs (i), (iv), (v), (vi), (xi), (xiii), (xvii), (xix) or (xxi) below; provided, still, further, that the waiver of the Required Consenting Lenders and the Debtors, but not the THI Parties shall be required with respect to any automatic termination to the extent that such automatic termination occurs pursuant to any of paragraphs (ii), (xx) (resulting from an announcement by a THI Party) or (xxii) below; and provided, still, further, the waiver of only the Required Consenting Lenders, but not the Debtors or the THI Parties, shall be required with respect to any automatic termination to the extent that such automatic termination occurs pursuant to any of paragraphs (vii) or (viii) below:

(i)            Drafts of the Plan and Disclosure Statement are not delivered by the Debtors to Milbank, Tweed, Hadley & McCloy LLP (“Milbank”) on behalf of the Consenting Lenders and to Latham & Watkins LLP (“Latham”) on behalf of the THI Parties within three (3) Business Days of the effective date of this Agreement;

(ii)           Drafts of the amended, modified or revised Related Party Contracts are not delivered by the Debtors or the THI Parties to Milbank within three (3) Business Days of the effective date of this Agreement;

(iii)          Drafts of agreements relating to each of the new Slot Co Bank Loan, New Slot Co Second Lien Facility, and Herbst Gaming Amended and Restated Senior Credit Facility are not delivered by the Consenting Lenders to the Debtors and the THI Parties within three (3) Business Days of the effective date of this Agreement;

(iv)          The Plan is not in form and substance reasonably satisfactory to Required Consenting Lenders and the THI Parties or the Disclosure Statement is not in form and substance reasonably satisfactory to Required Consenting Lenders and the THI Parties by March 20, 2009, provided, however, that the Consenting Parties agree that this Agreement shall not automatically terminate upon an assertion by Required Consenting Lenders or the THI Parties that the Disclosure Statement is not reasonably satisfactory in form and substance based solely on the fact that the Disclosure Statement does not include a liquidation analysis as of such date;

(v)           The Debtors have not delivered drafts of all anticipated first day motions to Milbank and Latham within three (3) Business Days of the effective date of this Agreement;

(vi)          The Debtors shall not have used their reasonable best efforts to reach agreement with Required Consenting Lenders and the THI Parties on the documentation necessary to commence the Bankruptcy Case to implement the Restructuring contemplated by and provided for in the Term Sheet on or before March 23, 2009;

(vii)         The Bankruptcy Case to implement the Restructuring contemplated by and provided for in the Term Sheet shall not have been commenced on or before March 23, 2009;

(viii)        In the event the Debtors decide to seek DIP financing, the Debtors file a motion seeking approval of DIP financing with anyone other than some or all of the lenders under the Senior Credit Facility, unless some or all of the lenders under the Senior Credit Facility have not agreed to provide DIP financing on commercially reasonable terms;

(ix)           The Disclosure Statement with respect to the Plan shall not have been approved by the Bankruptcy Court within 60 days after the Petition Date;

(x)            The Plan shall not have been confirmed by the Bankruptcy Court within 120 days after the Petition Date;

(xi)           The order confirming the Plan shall not be in form and substance reasonably satisfactory to Required Consenting Lenders and the THI Parties;

(xii)          The Plan shall not have been substantially consummated within one year of the Effective Date;

(xiii)         The Plan is modified in any manner that is not acceptable to Required Consenting Lenders or the THI Parties or any other Plan Document is not in form and substance reasonably satisfactory to Required Consenting Lenders or the THI Parties;

(xiv)        The Bankruptcy Case with respect to any Debtor is dismissed or is converted to a case under Chapter 7 of the Bankruptcy Code;

(xv)         The Bankruptcy Court shall enter an order appointing (i) a trustee under chapter 7 or chapter 11 of the Bankruptcy Code, (ii) a responsible officer or (iii) an examiner, in each case with enlarged powers relating to the operation of the business (powers beyond those set forth in subclauses (3) and (4) of Section 1106(a)) under Section 1106(b) of the Bankruptcy Code;

(xvi)        The orders of the Bankruptcy Court approving the Disclosure Statement or confirming the Plan or any interim or final order granting adequate protection to the lenders under the Senior Credit Facility shall have been stayed, reversed, vacated or otherwise modified, other than merely ministerial modifications (e.g., with  respect to names, addresses and similar modifications);

(xvii)       Any of the Debtors shall file a motion or the Bankruptcy Court shall enter an order approving a payment to any other party (whether in cash or other property or whether as adequate protection, settlement of a dispute, or otherwise) that would be materially inconsistent with the treatment of such party under the Term Sheet;

(xviii)      Any court shall enter a final, non-appealable judgment or order declaring this Agreement or any material portion hereof to be unenforceable;

(xix)         The Debtors shall withdraw the Plan or publicly announce their intention not to support the Plan;

(xx)          Any of (i) Consenting Lenders holding sufficient Claims under the Senior Credit Facility to result in all other Consenting Lenders holding less than a majority in dollar amount of all outstanding Claims under the Senior Credit Facility, or (ii) the THI Parties shall publicly announce their intention not to support the Plan;

(xxi)         any material breach of this Agreement by any Debtor;

(xxii)        any material breach of this Agreement by any of the THI Parties; or

(xxiii)       any material breach of this Agreement by Consenting Lenders holding sufficient Claims under the Senior Credit Facility to result in all other Consenting Lenders holding less than a majority in dollar amount of all outstanding Claims under the Senior Credit Facility.

(b)           Upon a termination of this Agreement in accordance with this Section 12, no party hereto shall have any continuing liability or obligation to any other party hereunder and the provisions of this Agreement shall have no further force or effect, except for the provisions in Sections 13 and 16-25, each of which shall survive termination of this Agreement; provided that no such termination shall relieve any party from liability for its breach or non-performance of its obligations hereunder prior to the date of such termination.

14.           No Third-Party Beneficiaries.  This Agreement shall be solely for the benefit of the parties hereto and no other person or entity shall be a third-party beneficiary hereof.

15.           Additional Claims and Interests Subject.  Nothing in this Agreement shall be deemed to limit or restrict the ability or right of a Consenting Party to purchase or take assignment of any additional Claims (“Additional Claims”) against or interests in any Debtor or any affiliate of any Debtor; provided, however, that in the event a Consenting Party purchases or takes assignment of any such Additional Claims or other interests after the date hereof, such Additional Claims or other interests shall immediately upon such acquisition become subject to the terms of this Agreement.

16.           Restrictions on Transfer.

(a)           Except as set forth in Section 15(b), each Consenting Party hereby agrees that, for so long as this Agreement shall remain in effect, it shall not sell, transfer or assign all or any of its Claims, as the case may be, or any option thereon or any right or interest (voting, participation or otherwise) therein (each, a “Transfer”) without the prior written consent of the Company.

(b)           Notwithstanding the foregoing, any Consenting Lender may Transfer any or all of its respective Claims, provided that, as a condition precedent, the transferee thereof agrees in writing to be bound by the terms of this Agreement.

(c)           Any Transfer of any Claim that does not comply with the foregoing shall be deemed void ab initio.

17.           Entire Agreement.  As of the date this Agreement becomes effective, this Agreement, including the Term Sheet, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

18.           Amendment or Waiver.

(a)           Except as provided in Section 7 hereof, this Agreement, including the Term Sheet, may not be modified, altered, amended, waived or supplemented except by an agreement in writing signed by each of the Debtors and Required Consenting Lenders, or the THI Parties, as applicable.

(b)           Each of the parties hereto agrees to negotiate in good faith all amendments and modifications to this Agreement, including the Term Sheet, as reasonably necessary and appropriate to consummate the Restructuring.

(c)           No waiver of any of the provisions of this Agreement shall be deemed or constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall any waiver be deemed a continuing waiver.

19.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.  Each party hereby irrevocably submits to the jurisdiction of any New York state court sitting in the Borough of Manhattan in the City of New York or any federal court sitting in the Borough of Manhattan in the City of New York in respect of any suit, action or proceeding arising out of or relating to this Agreement, and irrevocably accepts for itself and in respect of its property, generally and unconditionally, jurisdiction of the aforesaid courts.  Each party irrevocably waives, to the fullest extent it

may effectively do so under applicable law, any objection that it may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Nothing herein shall affect the right of any party to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction.  Notwithstanding the foregoing consent to New York jurisdiction, if the Bankruptcy Case is commenced, each party agrees that the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement.

20.           Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts and by facsimile, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.

21.           Severability.  Any term or provision of this Agreement, which is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

22.           Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not affect the interpretation hereof.

23.           Prior Negotiations.  This Agreement supersedes all prior negotiations with respect to the subject matter hereof but shall not supersede the Definitive Documentation.

24.           Notice.  Any notices or other communications required or permitted under, or otherwise in connection with, this Agreement shall be in writing and shall be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission or on receipt after dispatch by registered or certified mail, postage prepaid, or on the next Business Day if transmitted by national overnight courier, addressed in each case as follows:

(a)           If to the Company, at:

Herbst Gaming, Inc.

3440 West Russell Road

Las Vegas, Nevada 89118

Attn:  Office of the CEO

Telephone:  (702) 798-6400

Facsimile:  (702) 798-8079

with a copy to:

Herbst Gaming, Inc.

3440 West Russell Road

Las Vegas, Nevada 89118

Attn:  Sean Higgins, General Counsel

Telephone:  (702) 798-6400

Facsimile:  (702) 798-8079

(b)           If to a Consenting Party, to the address for such Consenting Party provided on the signature pages hereof.

Please sign in the space provided below to indicate your agreement and consent to the terms hereof.

Very truly yours,

Accepted and agreed to by the

Consenting Parties named below:

CONSENTING LENDERS:

[NAME OF LENDER]

EXISTING EQUITY HOLDERS:

EDWARD J. HERBST

EXISTING EQUITY HOLDERS:

TIMOTHY P. HERBST

EXISTING EQUITY HOLDERS:

TROY D. HERBST

THI:

TERRIBLE HERBST, INC.

with a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA 90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

OTHER THI PARTIES:

THE HERBST FAMILY LIMITED PARTNERSHIP:

With a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA  90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

HERBST GRANDCHILDREN’S TRUST:

With a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA  90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

BERRY-HINCKLEY INDUSTRIES:

With a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA  90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

JERRY E. HERBST:

With a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA  90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

EDWARD J. HERBST:

With a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA  90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

TIMOTHY P. HERBST:

With a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA  90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

TROY D. HERBST:

With a copy to:

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, CA  90071-1560

Telephone:  (213) 485-1234

Facsimile:  (213) 891-8763

Attn:  Robert A. Klyman, Esq.

EXHIBIT A TO AGREEMENT

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN OF REORGANIZATION, IT BEING UNDERSTOOD THAT SUCH AN OFFER OR  SOLICITATION, IF ANY, WILL ONLY BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES AND/OR BANKRUPTCY LAWS.  THIS TERM SHEET DOES NOT ADDRESS ALL MATERIAL TERMS THAT WOULD BE REQUIRED IN CONNECTION WITH THE RESTRUCTURING (AS DEFINED HEREIN) AND IS SUBJECT TO THE COMPLETION AND EXECUTION OF DEFINITIVE DOCUMENTATION.  THIS TERM SHEET HAS BEEN PRODUCED FOR DISCUSSION AND SETTLEMENT PURPOSES ONLY AND IS SUBJECT TO THE PROVISIONS OF RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND OTHER SIMILAR APPLICABLE STATE AND FEDERAL RULES.

HERBST GAMING, INC.

RESTRUCTURING TERM SHEET

MARCH 9, 2009

This term sheet (the “Term Sheet”) outlines a proposed restructuring transaction (the “Restructuring”) for Herbst Gaming, Inc. (“Herbst Gaming”) and certain of its Affiliates (collectively, the “Company”) to be implemented pursuant to a pre-arranged joint plan of reorganization (the “Plan”) under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in Exhibit 1.  Capitalized terms not otherwise defined herein or in Exhibit 1 shall have the meanings given to such terms in the Bankruptcy Code.  The terms “include,” includes,” or “including” are not limiting.  This Term Sheet does not include a description of all of the terms, conditions and other provisions that are to be contained in the definitive documentation governing the Restructuring, which remain subject to discussion and negotiation.  Any material change to any provision of this Term Sheet must be reasonably acceptable to each of the Company, the THI Parties and the Required Consenting Lenders.

(2)           For the avoidance of doubt, a supermajority vote shall not be required for any decision by Slot Co to pay PIK interest to the extent permitted by the applicable documents.

(3)           Such amount shall be modified to reflect the separation of Debtors’ casino and slot machine route businesses as of the later of (i) the Effective Date and (ii) five days after the date the Company receives gaming regulatory approval regarding the internal reorganization necessary to implement separation of the Debtors’ casino and slot machine route businesses.  Following the later of such dates, the cash sweep will apply only as to the casino business.

(4)           Any Cash payment to Holders of Allowed Class 4 Claims shall be made by the Debtors, first from unencumbered assets, then, to the extent the Debtors do not have sufficient unencumbered assets to make such payments, such payments shall, pursuant to the Senior Credit Facility Gift, be deemed to have been transferred by gift by Holders of Allowed Class 3 Claims.

EXHIBIT 1

Definitions

EXHIBIT 2

New Slot Co Bank Loan Term Sheet

EXHIBIT 3

New Slot Co Second Lien Facility Term Sheet

EXHIBIT 4

Related Party Agreements Term Sheet(5)

(5)      Unless otherwise expressly set forth on this Related Party Agreements Term Sheet, all terms and provisions in each of the Related Party Agreements shall continue to be valid and enforceable.

Terrible’s Town Pahrump  (The economic terms of each of the following shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.)

1.                                      T’Town Pahrump Lease between The Herbst Family Limited Partnership (Lessor) & E-T-T, Inc. (Lessee) dated July 1, 1996

Proposed Treatment:  Lessee assigns to Herbst Gaming, Inc. or its subsidiary (which subsidiary shall become a subsidiary of Reorganized Herbst Gaming) that is the applicable operating entity.  Proposed terms modification as follows:  (i) expiration date of December 31, 2016, resulting in no options to renew; and (ii) monthly rental fee of $15,000/month through proposed expiration date.

2.                                      Terrible’s Town Pahrump Service Station Lease Agreement between E-T-T, Inc. (Lessor) and Terrible Herbst, Inc. (Lessee), dated November 16, 1995

Proposed Treatment:  Lessor assigns to Herbst Gaming, Inc. or its subsidiary (which subsidiary shall become a subsidiary of Reorganized Herbst Gaming) that is the applicable operating entity.  Proposed terms modification as follows:  (i) expiration date of December 31, 2016, resulting in no options to renew; and (ii) fixed at current amount.

Lakeside Pahrump  (The economic terms of each of the following shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.)

Note:  Reorganized Herbst Gaming will own and operate Lakeside Pahrump, and the property and operations will be in Reorganized Herbst Gaming upon Substantial Consummation.

3.                                      Terrible’s Lakeside Lease Agreement between E-T-T Enterprises, L.L.C. (Lessor) and E-T-T, Inc. (Lessee), dated August 1, 1998

Proposed Treatment:  To be terminated.

4.                                      Terrible’s Lakeside Service Station Lease Agreement between E-T-T Enterprises, L.L.C. (Lessor) and Terrible Herbst, Inc. (Lessee), dated August 1, 1998

Proposed Treatment:  Lessor assigns to Herbst Gaming, Inc. or its subsidiary (which subsidiary shall become a subsidiary of Reorganized Herbst Gaming) that is the applicable operating entity.  Proposed terms modification as follows:  (i) expiration date of December 31, 2016; and (ii) fixed at current amount.

Headquarters  (The economic terms of each of the following shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.)

Note:  The Russell Road Lease is a sublease of the Headquarters Lease.

5.                                      HGI Headquarters Lease between The Herbst Family Limited Partnership (Lessor) & E-T-T Enterprises, L.L.C. (Lessee) dated July 1, 1997

Proposed Treatment:  Lessee assigns to Slot Co.  Proposed terms modification as follows:  (i) expiration date of December 31, 2016.

6.                                      HGI Headquarters Sub-lease between Slot Co (Sublessor) and Reorganized Herbst Gaming (Sublessee) (new document)

Proposed Treatment:  Proposed term modification as follows:  (i) expiration date of one year following the Substantial Consummation Date, subject to automatic renewal unless Slot Co notified by Reorganized Herbst Gaming of non-renewal six months prior to expiration date; (ii) terms to mirror Corporate Overhead Allocation Agreement; and (iii) Slot Co will be sublessor and Reorganized Herbst Gaming will be sublessee.

7.                                      Russell Road Service Station/warehouse Lease between E-T-T Enterprises, L.L.C. (Lessor) & Terrible Herbst, Inc. (Lessee) dated July 1, 1997

Proposed Treatment:  Lessor assigns to Slot Co.

Polaris Rd.  (The economic terms of each of the following shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.)

8.                                      Polaris Rd. Warehouse Office Space & Warehouse Space Lease between Herbst Grandchildren’s Trust (Lessor) & Herbst Gaming, Inc. (Lessee) dated Nov. 27, 2002

Proposed Treatment:  Lessee assigns to Slot Co.  Proposed terms modification as follows:  (i) expiration date of December 31, 2016.

9.                                      Polaris Rd. Warehouse Office Space & Warehouse Sub-lease between Slot Co (Sublessor) and Reorganized Herbst Gaming (Sublessee) (new document)

Proposed Treatment:  (i) expiration date of one year following the Substantial Consummation Date, subject to automatic renewal unless Slot Co notified of non-renewal by Reorganized Herbst Gaming six months prior to expiration date; (ii) terms to mirror Corporate Overhead Allocation Agreement; and (iii) E-T-T will be sublessor and Reorganized Herbst Gaming will be sublessee.

Searchlight

10.                               Terrible’s Searchlight Lease between Terrible Herbst, Inc. (Lessor) & E-T-T, Inc. (Lessee) dated July 1, 2002

Proposed Treatment:  Lessee assigns to Herbst Gaming, Inc. or its subsidiary (which subsidiary shall become a subsidiary of Reorganized Herbst Gaming) that is the applicable operating entity.  The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

Other Agreements

11.                               Gaming Device License Agreement between E-T-T, Inc. & Terrible Herbst, Inc. dated December 20, 1999

Proposed Treatment:  Proposed terms modification as follows:  (i) all slot machines priced at $1,200 through proposed expiration date of December 31, 2014; (ii) elimination of anti-assignment clause following Event of Default under Slot Co debt; and (iii) no per location minimum payment.  The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

12.                               Gaming Device License Agreement between Slot Co Majority Shareholder & Terrible Herbst, Inc. (new document)

Proposed Treatment:  (i) term from January 1, 2015 through December 31, 2016; (ii) all slot machines priced at $1,200 through proposed expiration date of December 31, 2016; (iii) elimination of anti-assignment clause following Event of Default under Slot Co debt; (iv) to be assigned to Slot Co upon Substantial Consummation Date in exchange for equity of Slot Co; and (v) no per location minimum payment.  Upon the Substantial Consummation Date, there will be an assignment of this agreement to Slot Co (new document).  The economic terms of this agreement shall be effective as of the Substantial Consummation Date.

13.                               Shared Services Agreement between Herbst Gaming, Inc., Terrible Herbst, Inc. & Berry-Hinckley Industries dated January 1, 2009

Proposed Treatment:  Remains in place.  This agreement shall be assigned to Slot Co upon the Substantial Consummation Date.  The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

14.                               Master ATM Agreement between E-T-T, Inc. & Terrible Herbst, Inc. dated March 1, 2008

Proposed Treatment:  Proposed terms modification as follows:  (i) expiration date of December 31, 2016; and (ii) all ATMs except casino ATMs stay with Slot Co.  The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

15.                               Advertising Purchasing Agreement between Herbst Gaming, Inc. & Terrible Herbst, Inc. dated March 1, 2008

Proposed Treatment:  Proposed terms modification as follows:  (i) expiration date of one year following the Substantial Consummation Date; (ii) continuous one-year extension options available through December 31, 2016, exercisable at Reorganized Herbst Gaming’s discretion; (iii) monthly fee at $30,000/month through proposed expiration date; and (iv) lenders retain assignability rights.  The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

16.                               Trademark License Agreement between Terrible Herbst, Inc. & Herbst Gaming, Inc. dated August 24, 2001

Proposed Treatment: Proposed terms modification as follows:  (i) expiration date December 31, 2016, terminable by Reorganized Herbst Gaming after December 31, 2013 upon the payment of an early termination fee of $1 million; (ii) $1.73 million/year through proposed expiration date, to be paid monthly in equal installments; and (iii) one-time bonus of $1.5 million payable on one-year anniversary of the Effective Date.  The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the

Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

17.                               Trademark License Agreement between Terrible Herbst, Inc. & Slot Co (new document)

Proposed Treatment:  (i) expiration date of December 31, 2016.  The economic terms of this agreement shall be effective as of the Substantial Consummation Date.

18.                               Non-compete agreements.

Each of Jerry E. Herbst, Timothy P. Herbst, Troy D. Herbst and Edward J. Herbst will enter into non-competition agreements with Slot Co or Reorganized Herbst Gaming; such agreements shall expire on the earlier of (i) the repayment in full of the New Slot Co Bank Loan and the New Slot Co Second Lien Facility and (ii) December 31, 2016.  The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.

19.                               Deposit Services Agreement between E-T-T, Inc. & Terrible Herbst, Inc.

The economic terms of this agreement shall be honored and performed by the parties thereto as if all assumptions, modifications or other treatments described herein were in effect as of the Effective Date, notwithstanding the fact that the Substantial Consummation Date may not yet have occurred.