Gaming and Leisure Properties
Annual Report 2015

Plain-text annual report

GAMING & LEISURE PROPERTIES, INC. FORM 10-K (Annual Report) Filed 02/22/16 for the Period Ending 12/31/15 Address Telephone CIK 845 BERKSHIRE BLVD, SUITE 200 WYOMISSING, PA 19610 610-401-2900 0001575965 Symbol GLPI SIC Code Fiscal Year 6798 - Real Estate Investment Trusts 12/31 http://www.edgar-online.com © Copyright 2016, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K(Mark One) xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2015ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from                             to                              Commission file number 001-36124Gaming and Leisure Properties, Inc.(Exact name of registrant as specified in its charter)Pennsylvania(State or other jurisdiction ofincorporation or organization) 46-2116489(I.R.S. EmployerIdentification No.)845 Berkshire Blvd., Suite 200Wyomissing, Pennsylvania(Address of principal executive offices) 19610(Zip Code)Registrant's telephone number, including area code: (610) 401-2900Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Stock, par value $.01 per share NASDAQSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xIndicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch 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 oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the bestof the 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. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "largeaccelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:Large accelerated filer x Accelerated filer o Non-accelerated filer o (Do not check if asmaller reporting company) Smaller reporting company oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No xAs of June 30, 2015 (the last business day of the registrant's most recently completed second fiscal quarter), the aggregate market value of the voting common stock held by non-affiliates of the registrant was approximately $3.8 billion . Such aggregate market value was computed by reference to the closing price of the common stock as reported on the NASDAQGlobal Select Market on June 30, 2015.The number of shares of the registrant's common stock outstanding as of February 17, 2016 was 116,686,922 .DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant's definitive proxy statement for its 2016 annual meeting of shareholders (when it is filed) will be incorporated by reference into Part III of this Annual Reporton Form 10-K.Table of ContentsIMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTSForward-looking statements in this document are subject to known and unknown risks, uncertainties and other factors that may cause actual results,performance or achievements of Gaming and Leisure Properties, Inc. ("GLPI") and subsidiaries (collectively, the "Company") to be materially different from anyfuture results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include information concerningthe Company's business strategy, plans, and goals and objectives.Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans,""may increase," "may fluctuate," and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts. You should understand that the following important factors could affect future results and could cause actual results todiffer materially from those expressed in such forward-looking statements:•the ability to receive, or delays in obtaining, the regulatory approvals required to own and/or operate our properties, or other delays or impediments tocompleting our planned acquisitions or projects;•our ability to enter into definitive agreements with a third party operator for the Meadows Racetrack & Casino (the "Meadows");•the ultimate timing and outcome of our proposed acquisition of substantially all of the real estate assets of Pinnacle Entertainment, Inc. ("Pinnacle"),including our and Pinnacle’s ability to obtain the financing and third party approvals and consents necessary to complete the acquisition; •the ultimate outcome (including the possibility that the proposed transaction may not be completed or that completion may be unduly delayed) and resultsof integrating the assets to be acquired by us in the proposed transaction with Pinnacle;•the effects of a transaction between our company and Pinnacle on each party, including the post-transaction impact on our financial condition, operatingresults, strategy and plans;•our ability to maintain our status as a real estate investment trust ("REIT"), given the highly technical and complex Internal Revenue Code (the "Code")provisions for which only limited judicial and administrative authorities exist, where even a technical or inadvertent violation could jeopardize REITqualification and where requirements may depend in part on the actions of third parties over which the Company has no control or only limited influence;•the satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis in order for theCompany to maintain its elected of REIT status;•the ability and willingness of our tenants, operators and other third parties to meet and/or perform their obligations under their respective contractualarrangements with us, including, in some cases, their obligations to indemnify, defend and hold us harmless from and against various claims, litigationand liabilities;•the ability of our tenants and operators to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities tothird parties, including without limitation obligations under their existing credit facilities and other indebtedness;•the ability of our tenants and operators to comply with laws, rules and regulations in the operation of our properties, to deliver high quality services, toattract and retain qualified personnel and to attract customers;•the availability of and the ability to identify suitable and attractive acquisition and development opportunities and the ability to acquire and lease therespective properties on favorable terms;•the degree and nature of our competition;•the ability to generate sufficient cash flows to service our outstanding indebtedness;•the access to debt and equity capital markets;•adverse changes in our credit rating;1Table of Contents•fluctuating interest rates;•the impact of global or regional economic conditions;•the availability of qualified personnel and our ability to retain our key management personnel;•GLPI's duty to indemnify Penn National Gaming, Inc. and its subsidiaries ("Penn") in certain circumstances if the spin-off transaction described in Part 1of this Form 10-K fails to be tax-free;•changes in the United States tax law and other state, federal or local laws, whether or not specific to real estate, real estate investment trusts or to thegaming, lodging or hospitality industries;•changes in accounting standards;•the impact of weather events or conditions, natural disasters, acts of terrorism and other international hostilities, war or political instability;•other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and•additional factors discussed in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results ofOperations" in this document.Certain of these factors and other factors, risks and uncertainties are discussed in the "Risk Factors" section of this document. Other unknown orunpredictable factors may also cause actual results to differ materially from those projected by the forward-looking statements. Most of these factors are difficult toanticipate and are generally beyond the control of the Company.You should consider the areas of risk described above, as well as those set forth under the heading "Risk Factors," in connection with considering anyforward-looking statements that may be made by the Company generally. The Company does not undertake any obligation to release publicly any revisions to anyforward-looking statements, to report events or to report the occurrence of unanticipated events unless required to do so by law.2Table of ContentsTABLE OF CONTENTS   PagePART I ITEM 1.BUSINESS4ITEM 1A.RISK FACTORS19ITEM 1B.UNRESOLVED STAFF COMMENTS34ITEM 2.PROPERTIES34ITEM 3.LEGAL PROCEEDINGS34ITEM 4.MINE SAFETY DISCLOSURES35PART II ITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES36ITEM 6.SELECTED FINANCIAL DATA37ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS38ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK58ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA59ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE101ITEM 9A.CONTROLS AND PROCEDURES101ITEM 9B.OTHER INFORMATION103PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE104ITEM 11.EXECUTIVE COMPENSATION104ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDERS MATTERS104ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE104ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES104PART IV ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES105 SIGNATURES106 EXHIBIT INDEX1073Table of Contents This Annual Report on Form 10-K includes information regarding Penn National Gaming, Inc., a Pennsylvania corporation, and its subsidiaries (collectively"Penn"). Penn is subject to the reporting requirements of the U.S. Securities and Exchange Commission ("SEC") and is required to file with the SEC annualreports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Penn provided inthis Annual Report on Form 10-K has been derived from Penn's public filings. We have not independently verified this information. We have no reason to believethat this information derived from Penn's public filings is inaccurate in any material respect that has not been disclosed publically. We are providing this data forinformation purposes only. Penn's filings with the SEC can be found at www.sec.gov.In this Annual Report on Form 10-K, the terms "we," "us," "our," the "Company" and "GLPI" refer to Gaming and Leisure Properties, Inc. and subsidiaries,unless the context indicates otherwise.PART IITEM 1.    BUSINESSOverviewGLPI is a self-administered and self-managed Pennsylvania REIT. The Company was formed from the 2013 tax-free spin-off of the real estate assets ofPenn. GLPI was incorporated in Pennsylvania on February 13, 2013, as a wholly-owned subsidiary of Penn. On November 1, 2013, Penn contributed to GLPI,through a series of internal corporate restructurings, substantially all of the assets and liabilities associated with Penn's real property interests and real estatedevelopment business, as well as the assets and liabilities of Louisiana Casino Cruises, Inc. (d/b/a Hollywood Casino Baton Rouge) and Penn Cecil Maryland, Inc.(d/b/a Hollywood Casino Perryville), which are referred to as the "TRS Properties," and then spun-off GLPI to holders of Penn's common and preferred stock in atax-free distribution (the "Spin-Off"). GLPI owns and operates the TRS Properties through an indirect wholly-owned subsidiary, GLP Holdings, Inc.The Company elected on its United States ("U.S.") federal income tax return for its taxable year beginning on January 1, 2014 to be treated as a REIT andthe Company, together with GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. and Penn Cecil Maryland, Inc.as a "taxable REIT subsidiary" (a "TRS") effective on the first day of the first taxable year of GLPI as a REIT. As a result of the Spin-Off, GLPI owns substantiallyall of Penn's former real property assets and leases back these assets to Penn for use by its subsidiaries pursuant to a master lease (the "Penn Master Lease"). ThePenn Master Lease is a triple-net operating lease with an initial term of 15 years with no purchase option, followed by four 5-year renewal options (exercisable byPenn) on the same terms and conditions.The assets and liabilities of GLPI were recorded at their respective historical carrying values at the time of the Spin-Off in accordance with the provisions ofFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 505-60, "Spinoffs and Reverse Spinoffs."Prior to the Spin-Off, GLPI and Penn entered into a Separation and Distribution Agreement setting forth the mechanics of the Spin-Off, certainorganizational matters and other ongoing obligations of Penn and GLPI. Penn and GLPI or their respective subsidiaries, as applicable, also entered into a numberof other agreements prior to the Spin-Off to provide a framework for the restructuring and for the relationships between GLPI and Penn after the Spin-Off.In connection with the Spin-Off, Penn allocated its accumulated earnings and profits (as determined for U.S. federal income tax purposes) for periods priorto the consummation of the Spin-Off between Penn and GLPI. In connection with its election to be taxed as a REIT for U.S. federal income tax purposes for theyear ending December 31, 2014, GLPI declared a special dividend to its shareholders to distribute any accumulated earnings and profits relating to the realproperty assets and attributable to any pre-REIT years, including any earnings and profits allocated to GLPI in connection with the Spin-Off, to comply withcertain REIT qualification requirements (the "Purging Distribution"). The Purging Distribution, which was paid on February 18, 2014, totaled $1.05 billion andwas comprised of cash and GLPI common stock. Additionally, on December 19, 2014, the Company made a one-time distribution of $37.0 million to shareholdersin order to confirm the Company appropriately allocated its historical earnings and profits relative to the separation from Penn, in response to the Pre-FilingAgreement requested from the IRS. See Note 11 to the consolidated financial statements for further details on the Purging Distribution and the distribution relatedto the Pre-Filing Agreement.GLPI's primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements.Triple-net leases are leases in which the lessee pays rent to the lessor, as well as all taxes, insurance, and maintenance expenses that arise from the use of theproperty. As of December 31, 2015 , GLPI's portfolio consisted of 21 gaming and related facilities, including the TRS Properties and the real property associatedwith 18 gaming and related facilities operated by Penn and the real property associated with the Casino Queen in East St. Louis, Illinois. These4Table of Contentsfacilities are geographically diversified across 12 states and contain approximately 7.0 million of rentable square feet. As of December 31, 2015 , the Company'sproperties were 100% occupied.We expect to grow our portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms, includingour July 2015 announcement of our proposed acquisition of substantially all of the real estate assets of Pinnacle (as more fully described below) and our December2015 announcement of the resolution of the previously disclosed Meadows litigation and our entry into an amended purchase agreement with Cannery CasinoResorts LLC ("CCR"), the owner of the Meadows. The Pinnacle transaction is expected to close during April 2016, while the Meadows transaction is expected toclose during the second half of 2016. However, we cannot predict the actual dates on which the transactions will be completed because each transaction is subjectto conditions beyond our control.Additionally, we believe we have the ability to leverage the expertise our management team has developed over the years to secure additional avenues forgrowth beyond the gaming industry. Accordingly, we anticipate we will be able to effect strategic acquisitions unrelated to the gaming industry as well as otheracquisitions that may prove complementary to GLPI's gaming facilities.Proposed Acquisition of Pinnacle Real Estate AssetsOn July 20, 2015, GLPI, Gold Merger Sub, LLC, a direct, wholly owned subsidiary of GLPI ("Merger Sub"), and Pinnacle entered into a merger agreement(as it may be amended from time to time, the "Merger Agreement") providing for the merger of Pinnacle with and into Merger Sub, with Merger Sub surviving themerger as a wholly owned subsidiary of GLPI (the "Merger"). Following the consummation of the Merger, GLPI will own all of Pinnacle’s real property assets,other than Pinnacle’s Belterra Park property and excess land at certain locations. In order to effect the acquisition of Pinnacle’s real property assets (other than theBelterra Park property and excess land at certain locations), prior to the Merger, Pinnacle will cause certain assets relating to its operating business to be transferredto, and liabilities relating thereto to be assumed by a newly formed wholly owned subsidiary of Pinnacle ("OpCo"). Immediately following the separation, Pinnaclewill distribute to Pinnacle’s stockholders all of the issued and outstanding shares of common stock of OpCo owning Pinnacle’s operating assets and certain otherspecified assets. Then, upon satisfaction or waiver of the conditions to closing in the Merger Agreement on the closing date, Pinnacle will merge with and intoMerger Sub, as described in more detail in the joint proxy statement/prospectus filed with a Registration Statement on Form S-4 (No. 333-206649) initially filed byGLPI with the Securities and Exchange Commission on December 23, 2015, as most recently amended on February 16, 2016 (and as the same may be thereafteramended, the "Joint Proxy Statement/Prospectus"). Merger Sub, as the surviving company in the Merger, will then own substantially all of Pinnacle’s real estateassets that were retained or transferred to Pinnacle in the separation and will lease those assets back to OpCo pursuant to a triple-net 35 year (including extensionrenewals) master lease agreement (the "Pinnacle Master Lease Agreement") substantially in the form attached as Exhibit B to the Merger Agreement. A wholly-owned subsidiary of OpCo would operate the leased gaming facilities as a tenant under the Pinnacle Master Lease Agreement.At the effective time of the Merger, each share of Pinnacle common stock issued and outstanding immediately prior to the effective time of the Merger willbe converted into 0.85 shares of a share of GLPI common stock, with cash paid in lieu of the issuance of fractional shares of GLPI common stock. The exchangeratio will not be adjusted to reflect changes in the price of GLPI common stock or the price of Pinnacle common stock occurring prior to the completion of theMerger. The obligations of GLPI and Pinnacle to effect the Merger are subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement(including the applicable approvals of each company’s stockholders and gaming regulatory approvals). Upon completion of the Merger, the current directors andofficers of GLPI are expected to continue in their current positions, other than as may be publicly announced by GLPI in the normal course of business.In connection with the proposed Merger, GLPI and Pinnacle will each hold a special meeting of their respective stockholders. At the GLPI special meeting,GLPI stockholders will be asked to vote on (i) a proposal to approve the issuance of GLPI common stock to Pinnacle stockholders in the Merger and (ii) a proposalto approve one or more adjournments of the meeting to another date, time or place, if necessary or appropriate, to solicit additional proxies in favor of the proposalto approve the issuance of shares of GLPI common stock to Pinnacle stockholders in the Merger. At the Pinnacle special meeting, Pinnacle stockholders will beasked to vote on (i) a proposal to adopt the Merger Agreement, (ii) an advisory (non-binding) proposal to approve certain compensation that may be paid orbecome payable to the named executive officers of Pinnacle in connection with the Merger, and (iii) a proposal to approve one or more adjournments of themeeting to another date, time or place, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the Merger and the othertransactions contemplated by the Merger Agreement. The Joint Proxy Statement/Prospectus describes the foregoing proposals in more detail, as well as othermatters contemplated in connection with the proposed Merger.The Merger Agreement may be terminated, subject to certain exceptions, prior to the effective time of the Merger by either GLPI or Pinnacle under certainconditions, including if the Merger has not been consummated on or before March 31,5Table of Contents2016, subject to one three-month extension by GLPI, at the election of GLPI, if the only conditions not satisfied at such time related to regulatory and othergovernment approvals. The Company expects to exercise the extension.Tax StatusWe elected on our 2014 U.S. federal income tax return to be treated as a REIT and intend to continue to be organized and to operate in a manner that willpermit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute atleast 90% of our annual REIT taxable income to shareholders. As a REIT, we generally will not be subject to federal income tax on income that we distribute asdividends to our shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax, including any applicable alternativeminimum tax, on our taxable income at regular corporate income tax rates, and dividends paid to our shareholders would not be deductible by us in computingtaxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available fordistribution to shareholders. Unless we were entitled to relief under certain Internal Revenue Code (the "Code") provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT.Our TRS Properties are able to engage in activities resulting in income that is not qualifying income for a REIT. As a result, certain activities of theCompany which occur within our TRS Properties are subject to federal and state income taxes.TenantsAs of December 31, 2015 , all of the Company's rental properties, with the exception of the real property associated with the Casino Queen were leased to awholly-owned subsidiary of Penn under the Penn Master Lease.Penn is a leading, diversified, multi-jurisdictional owner and manager of gaming and pari-mutuel properties, and an established gaming provider with strongfinancial performance. The obligations under the Penn Master Lease are guaranteed by Penn and by all Penn subsidiaries that occupy and operate the facilitiesleased under the Penn Master Lease, or that own a gaming license, other license or other material asset necessary to operate any portion of the facilities. A defaultby Penn or its subsidiaries with regard to any facility will cause a default with regard to the entire Penn portfolio.We will seek to cultivate our relationships with tenants and gaming providers in order to expand the mixture of tenants operating our properties and, in doingso, to reduce our dependence on Penn. We expect that this objective will be achieved over time as part of our overall strategy to acquire new properties and furtherdiversify our overall portfolio of gaming properties. For example, in July 2015 as described above, we announced our proposed acquisition of substantially all ofthe real estate assets of Pinnacle and in December 2015 we announced the resolution of the previously disclosed Meadows litigation and our entry into an amendedpurchase agreement with CCR, the owner of the Meadows. The Pinnacle transaction is expected to close during April 2016, while the Meadows transaction isexpected to close during the second half of 2016. However, we cannot predict the actual dates on which the transactions will be completed because eachtransaction is subject to conditions beyond our control.The rent structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual 2% escalator if certain rent coverageratio thresholds are met, and a component that is based on the performance of the facilities, which is adjusted, subject to certain floors (i) every 5 years by anamount equal to 4% of the average change to net revenues of all facilities under the Penn Master Lease (other than Hollywood Casino Columbus and HollywoodCasino Toledo) during the preceding five years, and (ii) monthly by an amount equal to 20% of the net revenues of Hollywood Casino Columbus and HollywoodCasino Toledo during the preceding month. In addition to rent, all properties under the Penn Master Lease are required to pay the following: (1) all facilitymaintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, (3) taxes levied on or withrespect to the leased properties (other than taxes on the income of the lessor) and (4) all utilities and other services necessary or appropriate for the leasedproperties and the business conducted on the leased properties.At Penn's option, the Penn Master Lease may be extended for up to four 5-year renewal terms beyond the initial 15-year term, on the same terms andconditions. If Penn elects to renew the term of the Penn Master Lease, the renewal will be effective as to all, but not less than all, of the leased property thensubject to the Penn Master Lease, provided that the final renewal option shall only be exercisable with respect to certain of the barge-based facilities—i.e., facilitieswhere barges serve as foundations upon which buildings are constructed to serve as gaming or related facilities or serve ancillary purposes such as access platformsor shear barges to protect a gaming facility from floating debris—following an independent third party expert's review of the total useful life of the applicablebarged-based facility measured from the beginning of the initial term. If the final five-year renewal term would not cause the aggregate term to exceed 80% of theuseful life of such facility, the facility shall be included in the five-year renewal. In the event that a five-year renewal of such facility would cause it to exceed 80%of the estimated useful life, such facility shall be included in the renewal for the period of time equal to but not exceeding 80% of the estimated useful life.6Table of ContentsPenn will not have the ability to terminate its obligations under the Penn Master Lease prior to its expiration without the Company's consent. If the PennMaster Lease is terminated prior to its expiration other than with our consent, Penn may be liable for damages and incur charges such as continued payment of rentthrough the end of the lease term and maintenance costs for the leased property.The following table summarizes certain features of our properties as of December 31, 2015 : Location Type of Facility Approx.PropertySquareFootage (1) OwnedAcreage LeasedAcreage (2) HotelRoomsTenants Hollywood Casino LawrenceburgLawrenceburg, IN Dockside gaming 634,000 73.6 32.1 295Hollywood Casino AuroraAurora, IL Dockside gaming 222,189 0.4 2.1 —Hollywood Casino JolietJoliet, IL Dockside gaming 322,446 276.4 — 100Argosy Casino AltonAlton, IL Dockside gaming 241,762 0.2 3.6 —Hollywood Casino ToledoToledo, OH Land-based gaming 285,335 43.8 — —Hollywood Casino ColumbusColumbus, OH Land-based gaming 354,075 116.2 — —Hollywood Casino at Charles Town RacesCharles Town, WV Land-based gaming/Thoroughbred racing 511,249 298.6 — 153Hollywood Casino at Penn National RaceCourseGrantville, PA Land-based gaming/Thoroughbred racing 451,758 573.7 — —M ResortHenderson, NV Land-based gaming 910,173 87.6 — 390Hollywood Casino BangorBangor, ME Land-based gaming/Harness racing 257,085 6.7 27.6 152Zia Park Casino (3)Hobbs, NM Land-based gaming/Thoroughbred racing 109,067 317.4 — —Hollywood Casino Gulf CoastBay St. Louis, MS Land-based gaming 425,920 578.7 — 291Argosy Casino RiversideRiverside, MO Dockside gaming 450,397 37.9 — 258Hollywood Casino TunicaTunica, MS Dockside gaming 315,831 — 67.7 494Boomtown BiloxiBiloxi, MS Dockside gaming 134,800 1.5 1.0 —Hollywood Casino St. LouisMaryland Heights, MO Land-based gaming 645,270 247.8 — 502Hollywood Gaming at Dayton RacewayDayton, OH Land-based gaming/Standardbred racing 191,037 119.7 — —Hollywood Gaming at Mahoning ValleyRace CourseYoungstown, OH Land-based gaming/Thoroughbred racing 177,448 193.4 — —Casino QueenEast St. Louis, IL Land-based gaming 330,502 67.3 157 6,970,344 3,040.9 134.1 2,792TRS Properties Hollywood Casino Baton RougeBaton Rouge, LA Dockside gaming 120,517 28.9 — —Hollywood Casino PerryvillePerryville, MD Land-based gaming 97,961 36.4 — — 218,478 65.3 — —Total 7,188,822 3,106.2 134.1 2,792 (1) Square footage includes air conditioned space and excludes parking garages and barns.(2) Leased acreage reflects land subject to leases with third parties and includes land on which certain of the current facilities and ancillary supportingstructures are located as well as parking lots and access rights.(3) During the year ended December 31, 2014, Penn independently built a hotel at Zia Park Casino. This hotel is not owned by the Company.Hollywood Casino LawrenceburgWe own 73.6 acres and lease 32.1 acres in Lawrenceburg, Indiana, a portion of which serves as the dockside embarkation for the gaming vessel, and includesa Hollywood-themed casino riverboat, an entertainment pavilion, a 295-room hotel, two parking garages and an adjacent surface lot, with the other portion used forremote parking.7Table of ContentsHollywood Casino AuroraWe own a dockside barge structure and land-based pavilion in Aurora, Illinois. We own the land, which is approximately 0.4 acres, on which the pavilion islocated and a pedestrian walkway bridge. The property also includes a parking lot under an operating lease agreement and two parking garages under capital leaseagreements, together comprising 2.1 acres.Hollywood Casino JolietWe own 276.4 acres in Joliet, Illinois, which includes a barge-based casino, land-based pavilion, a 100-room hotel, a 1,100 space parking garage, surfaceparking areas and a recreational vehicle park.Argosy Casino AltonWe lease 3.6 acres in Alton, Illinois, a portion of which serves as the dockside boarding for the Alton Belle II, a riverboat casino. The dockside facilityincludes an entertainment pavilion and office space, as well as surface parking areas with 1,341 spaces. In addition, we own an office building property consistingof 0.2 acres.Hollywood Casino ToledoWe own a 43.8 acre site in Toledo, Ohio, where Hollywood Casino Toledo is located. The property includes the casino as well as structured and surfaceparking for approximately 3,300 spaces.Hollywood Casino ColumbusWe own 116.2 acres of land in Columbus, Ohio, where Hollywood Casino Columbus is located. The property includes the casino as well as structured andsurface parking for 4,616 spaces.Hollywood Casino at Charles Town RacesWe own 298.6 acres on various parcels in Charles Town and Ranson, West Virginia of which 155 acres comprise Hollywood Casino at Charles Town Races.The facility includes a 153-room hotel and a 3/4-mile all-weather lighted thoroughbred racetrack, a training track, two parking garages, an employee parking lot, anenclosed grandstand/clubhouse and housing facilities for over 1,300 horses.Hollywood Casino at Penn National Race CourseWe own 573.7 acres in Grantville, Pennsylvania, where Penn National Race Course is located on 181 acres. The facility includes a one-mile all-weatherlighted thoroughbred racetrack and a 7/8-mile turf track, a parking garage and surface parking spaces. The property also includes approximately 393 acressurrounding the Penn National Race Course that are available for future expansion or development.M ResortWe own 87.6 acres on the southeast corner of Las Vegas Boulevard and St. Rose Parkway in Henderson, Nevada, where the M Resort is located. The MResort property includes a 390-room hotel, a 4,700 space parking facility and other facilities.Hollywood Casino BangorWe own and lease the land on which the Hollywood Casino Bangor facility is located in Bangor, Maine, which consists of 6.7 acres, and includes a 152-room hotel and four-story parking. In addition, we lease 27.6 acres located at historic Bass Park, which is adjacent to the facility, and includes a one-half milestandardbred racetrack and a grandstand with over 12,000 square feet and seating for 3,500 patrons.Zia Park CasinoWe own 317.4 acres in Hobbs, New Mexico, where Zia Park Casino is located. The property also includes a one-mile quarter thoroughbred racetrack.Hollywood Casino Gulf CoastWe own 578.7 acres in the city of Bay St. Louis, Mississippi, including a 20-slip marina. The property includes a land-based casino, 18-hole golf course, a291-room hotel and other facilities.8Table of ContentsArgosy Casino RiversideWe own 37.9 acres in Riverside, Missouri, which includes a barge-based casino, a 258-room luxury hotel, an entertainment/banquet facility and a parkinggarage.Hollywood Casino TunicaWe lease 67.7 acres of land in Tunica, Mississippi. The property includes a single-level casino, a 494-room hotel, surface parking and other land-basedfacilities.Boomtown BiloxiWe lease 1.0 acres of land mostly used for parking and a welcome center and own an additional 1.5 acres. In addition our tenant has rights to 18.5 acres ofland, most of which is utilized for the gaming location and 4.5 acres of submerged tidelands at the casino site.Hollywood Casino St. LouisWe own 247.8 acres along the Missouri River in Maryland Heights, Missouri, which includes a 502-room hotel and structure and surface parking withapproximately 4,600 spaces.Hollywood Gaming at Dayton RacewayWe own 119.7 acres in Dayton, Ohio, where Penn opened Hollywood Gaming at Dayton Raceway on August 28, 2014. The property includes a land-basedcasino, a 5/8-mile all-weather standardbred racetrack and surface parking.Hollywood Gaming at Mahoning Valley Race CourseWe own 193.4 acres in Youngstown, Ohio, where Penn opened Hollywood Gaming at Mahoning Valley Race Course on September 17, 2014. The propertyincludes a land-based casino, a one-mile thoroughbred racetrack and surface parking.Casino QueenWe own 67.3 acres in East St. Louis, Illinois, which includes a 157-room hotel, a recreational vehicle park and surface parking areas.TRS PropertiesHollywood Casino Baton RougeHollywood Casino Baton Rouge is a dockside riverboat gaming facility operating in Baton Rouge, Louisiana. The riverboat features approximately 28,000square feet of gaming space with 956 gaming machines and 12 table games. The facility also includes a two-story, 58,000 square foot dockside building featuring avariety of amenities, including a grill, a 268-seat buffet, a deli, a premium players' lounge, a nightclub, a lobby bar, a public atrium, two meeting rooms and 1,490parking spaces.Hollywood Casino PerryvilleHollywood Casino Perryville is located directly off Interstate 95 in Cecil County, Maryland just 35 miles northeast of Baltimore and 70 miles fromWashington, D.C. Hollywood Casino Perryville is a Hollywood-themed facility which offers 34,329 square feet of gaming space with 850 slot machines, 12 tablegames and 10 poker tables. The facility also offers various food and beverage options, including a bar and grill, a gift shop and 1,600 parking spaces with valet andself-parking.CompetitionWe compete for real property investments with other REITs, investment companies, private equity and hedge fund investors, sovereign funds, lenders,gaming companies and other investors. Some of our competitors are significantly larger and have greater financial resources and lower costs of capital than wehave. Increased competition will make it more challenging to identify and successfully capitalize on acquisition opportunities that meet our investment objectives.Furthermore, in October 2015, a large hospitality company owning a portfolio of casino resorts announced plans to separate a substantial portion of its real estateassets and operations through the formation of a REIT. Another large global casino operator has declared a voluntary Chapter 11 reorganization in order tosignificantly reduce its debt with the intent of restructuring its operations into a REIT and separate operating company. There is also market speculationsurrounding the formation of additional gaming REITs. If any of these transactions materialize, we will face direct competition in the acquisition of gamingproperties.9Table of ContentsIn addition, revenues from our gaming properties are dependent on the ability of our gaming tenants and operators to compete with other gaming operators.The gaming industry is characterized by an increasingly high degree of competition among a large number of participants, including riverboat casinos, docksidecasinos, land-based casinos, video lottery, sweepstakes and poker machines not located in casinos, Native American gaming, emerging varieties of Internet gamingand other forms of gaming in the U.S. In a broader sense, our gaming tenants and operators face competition from all manner of leisure and entertainmentactivities, including: shopping, athletic events, television and movies, concerts and travel. Legalized gaming is currently permitted in various forms throughout theU.S., in several Canadian provinces and on various lands taken into trust for the benefit of certain Native Americans in the U.S. and Canada. Other jurisdictions,including states adjacent to states in which our gaming tenants and operators are located have legalized, and will expand gaming in the near future. In addition,established gaming jurisdictions could award additional gaming licenses or permit the expansion or relocation of existing gaming operations. New, relocated orexpanded operations by other persons will increase competition for our gaming tenants and operators and could have a material adverse impact on our gamingtenants and operators and us as landlord. Finally, the imposition of smoking bans and/or higher gaming tax rates have a significant impact on our gaming tenantsand operators' ability to compete with facilities in nearby jurisdictions.Hollywood Casino Perryville continued to face additional competition, led by the August 26, 2014 opening of the Horseshoe Casino Baltimore, located indowntown Baltimore. In addition Maryland Live!, at the Arundel Mills mall in Anne Arundel, Maryland, which opened on June 6, 2012, added table games onApril 11, 2013, and a 52 table poker room in late August 2013. Both facilities have and will continue to negatively impact Hollywood Casino Perryville's results ofoperations.Furthermore, in November 2012, voters approved legislation authorizing a sixth casino in Prince George's County. The 2012 law also changes the tax ratecasino operators pay the state, varying from casino to casino, allows all casinos in Maryland to be open 24 hours per day for the entire year, and permits casinos todirectly purchase slot machines in exchange for gaming tax reductions. In December 2013, the license for the sixth casino in Prince George's County was granted.The $1.3 billion casino resort, which is currently under construction and expected to open in the fourth quarter of 2016, will adversely impact Hollywood CasinoPerryville's financial results.SegmentsConsistent with how our Chief Operating Decision Maker (as such term is defined in ASC 280 "Segment Reporting") reviews and assesses our financialperformance, we have two reportable segments, GLP Capital, L.P. (a wholly-owned subsidiary of GLPI through which GLPI owns substantially all of its real estateassets) ("GLP Capital") and the TRS Properties. The GLP Capital reportable segment consists of the leased real property and represents the majority of ourbusiness. The TRS Properties reportable segment consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge. See "Item 7—Management'sDiscussion and Analysis of Financial Condition and Results of Operations" and "Item 8—Financial Statements and Supplementary Data—Note 13—SegmentInformation" for further information with respect to the Company's segments.ManagementNameAge PositionPeter M. Carlino69 Chairman of the Board and Chief Executive OfficerWilliam J. Clifford58 Chief Financial Officer and TreasurerSteven T. Snyder55 Senior Vice President of Corporate DevelopmentBrandon J. Moore41 Senior Vice President, General Counsel and SecretaryDesiree A. Burke50 Senior Vice President and Chief Accounting OfficerPeter M. Carlino.  Mr. Carlino is Chairman of our Board of Directors and Chief Executive Officer. Prior to the Spin-Off, Mr. Carlino served as Penn'sChief Executive Officer since April 1994. Subsequent to the Spin-Off, Mr. Carlino no longer serves as an officer of Penn, however, he continues in his role asPenn's Chairman of the Board of Directors. Since 1976, Mr. Carlino has been President of Carlino Capital Management Corp. (formerly known as CarlinoFinancial Corporation), a holding company that owns and operates various Carlino family businesses.William J. Clifford.  Mr. Clifford is our Chief Financial Officer and Treasurer. Prior to the Spin-off, Mr. Clifford served as Penn's Senior Vice President-Finance and Chief Financial Officer since October 2001. From March 1997 to July 2001, Mr. Clifford served as the Chief Financial Officer and Senior VicePresident of Finance with Sun International Resorts, Inc., Paradise Island, Bahamas. From November 1993 to February 1997, Mr. Clifford was Financial, Hoteland Operations Controller for Treasure Island Hotel and Casino in Las Vegas. From May 1989 to November 1993, Mr. Clifford was Controller for Golden NuggetHotel and Casino, Las Vegas. Prior to May 1989, Mr. Clifford held the positions of Controller for the Dunes Hotel and Casino, Las Vegas, Property OperationsAnalyst with Aladdin Hotel and Casino, Las Vegas, Casino Administrator10Table of Contentswith Las Vegas Hilton, Las Vegas, Senior Internal Auditor with Del Webb, Las Vegas, and Agent, Audit Division, of the Nevada Gaming Control Board, LasVegas and Reno.Steven T. Snyder.  Mr. Snyder is our Senior Vice President of Corporate Development. Mr. Snyder joined the Company in connection with the Spin-Offon November 1, 2013. Prior to the Spin-Off, he served as Penn's Senior Vice President of Corporate Development since 2003 and was responsible for identifyingand conducting internal and industry analysis of potential acquisitions, partnerships and other opportunities. He joined Penn as Vice President of CorporateDevelopment in May 1998 and held that position until his appointment to Senior Vice President in 2003. Prior to joining Penn, Mr. Snyder was a partner withHamilton Partners, Ltd., as well as Managing Director of Municipal and Corporate Investment Banking for Meridian Capital Markets. Mr. Snyder began his careerin finance at Butcher & Singer, where he served as First Vice President of Public Finance.Brandon J. Moore.  Mr. Moore is our Senior Vice President, General Counsel and Secretary. Mr. Moore joined the Company in January 2014. Previously,he served as Penn's Vice President, Senior Corporate Counsel since March 2010 where he was a member of the legal team responsible for a variety oftransactional, regulatory and general legal matters. Prior to joining Penn, Mr. Moore was with Ballard Spahr LLP, where he provided advanced legal counsel toclients on matters including merger and acquisition transactions, debt and equity financings, and various other matters.Desiree A. Burke. Ms. Burke joined the Company in April 2014 as our Senior Vice President and Chief Accounting Officer. Previously, Ms. Burke servedas Penn's Vice President and Chief Accounting Officer since November 2009. Additionally, she served as Penn's Vice President and Corporate Controller fromNovember 2005 to October 2009. Prior to her time at Penn National Gaming, Inc., Ms. Burke was the Executive Vice President/Director of Financial Reportingand Control for MBNA America Bank, N.A. She joined MBNA in 1994 and held positions of ascending responsibility in the finance department during her tenure.Ms. Burke is a CPA.Tax ConsiderationsWe elected to be treated as a REIT on our 2014 U.S. federal income tax return and we, together with an indirect wholly-owned subsidiary of the Company,GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. and Penn Cecil Maryland, Inc. as a "taxable REITsubsidiary" effective on the first day of the first taxable year of GLPI as a REIT. We intend to continue to be organized and to operate in a manner that will permitus to qualify as a REIT. Qualification and taxation as a REIT depends on our ability to meet on a continuing basis, through actual operating results, distributionlevels, and diversity of stock ownership, various qualification requirements imposed upon REITs by the Code. Our ability to qualify to be taxed as a REIT alsorequires that we satisfy certain tests, some of which depend upon the fair market values of assets that we own directly or indirectly. The material qualificationrequirements are summarized below. Such values may not be susceptible to a precise determination. Accordingly, no assurance can be given that the actual resultsof our operations for any taxable year will satisfy such requirements for qualification and taxation as a REIT. Additionally, while we intend to operate so that wecontinue to qualify to be taxed as a REIT, no assurance can be given that the Internal Revenue Service (the "IRS") will not challenge our qualification, or that wewill be able to operate in accordance with the REIT requirements in the future.Taxation of REITs in GeneralAs a REIT, generally we will be entitled to a deduction for dividends that we pay and therefore will not be subject to U.S. federal corporate income tax onour net REIT taxable income that is currently distributed to our shareholders. This treatment substantially eliminates the "double taxation" at the corporate andshareholder levels that generally results from an investment in a C corporation. A "C corporation" is a corporation that generally is required to pay tax at thecorporate level. Double taxation means taxation once at the corporate level when income is earned and once again at the shareholder level when the income isdistributed. In general, the income that we generate is taxed only at the shareholder level upon a distribution of dividends to our shareholders. We will nonethelessbe subject to U.S. federal tax in the following circumstances:•We will be taxed at regular corporate rates on any undistributed net taxable income, including undistributed net capital gains.•We may be subject to the "alternative minimum tax" on our items of tax preference, including any deductions of net operating losses.•If we have net income from prohibited transactions, which are, in general, sales or other dispositions of inventory or property held primarily for sale tocustomers in the ordinary course of business, other than foreclosure property, such income will be subject to a 100% tax.11Table of Contents•If we elect to treat property that we acquire in connection with a foreclosure of a mortgage loan or certain leasehold terminations as "foreclosureproperty," we may thereby avoid the 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction),but the income from the sale or operation of the property may be subject to corporate income tax at the highest applicable rate (currently 35%).•If we fail to satisfy the 75% gross income test and/or the 95% gross income test, as discussed below, but nonetheless maintain our qualification as aREIT because we satisfy other requirements, we will be subject to a 100% tax on an amount based on the magnitude of the failure, as adjusted to reflectthe profit margin associated with our gross income.•If we violate the asset tests (other than certain de minimis violations) or other requirements applicable to REITs, as described below, and yet maintainour qualification as a REIT because there is reasonable cause for the failure and other applicable requirements are met, we may be subject to a penaltytax. In that case, the amount of the penalty tax will be at least $50,000 per failure, and, in the case of certain asset test failures, will be determined as theamount of net income generated by the nonqualifying assets in question multiplied by the highest corporate tax rate (currently 35%) if that amountexceeds $50,000 per failure.•If we fail to distribute during each calendar year at least the sum of (i) 85% of our ordinary income for such year, (ii) 95% of our capital gain netincome for such year and (iii) any undistributed net taxable income from prior periods, we will be subject to a nondeductible 4% excise tax on theexcess of the required distribution over the sum of (a) the amounts that we actually distributed and (b) the amounts we retained and upon which we paidincome tax at the corporate level.•We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record-keeping requirements intended tomonitor our compliance with rules relating to the composition of a REIT's shareholders.•A 100% tax may be imposed on transactions between us and a TRS that do not reflect arm's-length terms.•If we acquire appreciated assets from a corporation that is not a REIT (i.e., a corporation taxable under subchapter C of the Code) in a transaction inwhich the adjusted tax basis of the assets in our hands is determined by reference to the adjusted tax basis of the assets in the hands of the subchapter Ccorporation, we may be subject to tax on such appreciation at the highest corporate income tax rate then applicable if we subsequently recognize gainon a disposition of any such assets during the five-year period following their acquisition from the subchapter C corporation.•The earnings of our TRS Properties will generally be subject to U.S. federal corporate income tax.In addition, we and our subsidiaries may be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, gross receiptsand other taxes on our assets and operations. We could also be subject to tax in situations and on transactions not presently contemplated.Requirements for Qualification—GeneralThe Code defines a REIT as a corporation, trust or association:1.that is managed by one or more trustees or directors;2.the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;3.that would be taxable as a domestic corporation but for its election to be subject to tax as a REIT;4.that is neither a financial institution nor an insurance company subject to specific provisions of the Code;5.the beneficial ownership of which is held by 100 or more persons;6.in which, during the last half of each taxable year, not more than 50% in value of the outstanding stock is owned, directly or indirectly, by five or fewer"individuals" (as defined in the Code to include specified tax-exempt entities); and7.that meets other tests described below, including with respect to the nature of its income and assets.12Table of ContentsThe Code provides that conditions (1) through (4) must be met during the entire taxable year, and that condition (5) must be met during at least 335 days of ataxable year of 12 months, or during a proportionate part of a shorter taxable year. Conditions (5) and (6) need not be met during a corporation's initial tax year as aREIT (which, in our case, was 2014). Our charter provides restrictions regarding the ownership and transfers of our stock, which are intended to assist us insatisfying the stock ownership requirements described in conditions (5) and (6) above. These restrictions, however, may not ensure that we will, in all cases, beable to satisfy the share ownership requirements described in conditions (5) and (6) above. If we fail to satisfy these share ownership requirements, except asprovided in the next sentence, our status as a REIT will terminate. If, however, we comply with the rules contained in applicable U.S. Department of the Treasury(the "Treasury") regulations that require us to ascertain the actual ownership of our shares and we do not know, or would not have known through the exercise ofreasonable diligence, that we failed to meet the requirements described in condition (6) above, we will be treated as having met this requirement.To monitor compliance with the stock ownership requirements, we generally are required to maintain records regarding the actual ownership of our stock. Todo so, we must demand written statements each year from the record holders of significant percentages of our stock pursuant to which the record holders mustdisclose the actual owners of the stock (i.e., the persons required to include our dividends in their gross income). We must maintain a list of those persons failing orrefusing to comply with this demand as part of our records. We could be subject to monetary penalties if we fail to comply with these record-keeping requirements.If, upon request by the Company, a shareholder fails or refuses to comply with the demands, such holder will be required by Treasury regulations to submit astatement with his, her or its tax return disclosing the actual ownership of our stock and other information.Qualified REIT SubsidiariesThe Code provides that a corporation that is a "qualified REIT subsidiary" shall not be treated as a separate corporation, and all assets, liabilities and items ofincome, deduction and credit of a "qualified REIT subsidiary" shall be treated as assets, liabilities and items of income, deduction and credit of the REIT. A"qualified REIT subsidiary" is a corporation, all of the capital stock of which is owned by the REIT, that has not elected to be a "taxable REIT subsidiary"(discussed below). In applying the requirements described herein, all of our "qualified REIT subsidiaries" will be ignored, and all assets, liabilities and items ofincome, deduction and credit of such subsidiaries will be treated as our assets, liabilities and items of income, deduction and credit. These subsidiaries, therefore,will not be subject to federal corporate income taxation, although they may be subject to state and local taxation.Taxable REIT SubsidiariesIn general, we may jointly elect with a subsidiary corporation, whether or not wholly-owned, to treat such subsidiary corporation as a TRS. We generallymay not own more than 10% of the securities of a taxable corporation, as measured by voting power or value, unless we and such corporation elect to treat suchcorporation as a TRS. The separate existence of a TRS is not ignored for U.S. federal income tax purposes. Accordingly, a TRS generally is subject to corporateincome tax on its earnings, which may reduce the cash flow that we and our subsidiaries generate in the aggregate and may reduce our ability to make distributionsto our shareholders.We are not treated as holding the assets of a TRS or as receiving any income that the subsidiary earns. Rather, the stock issued by the TRS to us is an asset inour hands, and we treat the dividends paid to us, if any, as income. This treatment can affect our income and asset test calculations, as described below. Because wedo not include the assets and income of TRSs on a look-through basis in determining our compliance with the REIT requirements, we may use such entities toundertake indirectly activities that the REIT rules might otherwise preclude us from doing directly or through pass-through subsidiaries. For example, we may useTRSs to perform services or conduct activities that give rise to certain categories of income or to conduct activities that, if conducted by us directly, would betreated in our hands as prohibited transactions.The TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level ofcorporate taxation. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT's tenants that are not conducted onan arm's-length basis. We intend that all of our transactions with our TRS, if any, will be conducted on an arm's-length basis.Income TestsAs a REIT, we must satisfy two gross income requirements on an annual basis. First, at least 75% of our gross income for each taxable year, excluding grossincome from sales of inventory or dealer property in "prohibited transactions," discharge of indebtedness and certain hedging transactions, generally must bederived from "rents from real property," gains from the sale of real estate assets, interest income derived from mortgage loans secured by real property (includingcertain types of mortgage-backed securities), dividends received from other REITs, and specified income from temporary investments. Second, at least 95% of ourgross income in each taxable year, excluding gross income from prohibited transactions, discharge of indebtedness13Table of Contentsand certain hedging transactions, must be derived from some combination of income that qualifies under the 75% gross income test described above, as well asother dividends, interest, and gain from the sale or disposition of stock or securities, which need not have any relation to real property. Income and gain fromcertain hedging transactions will be excluded from both the numerator and the denominator for purposes of both the 75% and 95% gross income tests.Rents received by a REIT will qualify as "rents from real property" in satisfying the gross income requirements described above only if several conditions aremet.•The amount of rent must not be based in whole or in part on the income or profits of any person. However, an amount received or accrued generally willnot be excluded from the term "rents from real property" solely by reason of being based on a fixed percentage or percentages of gross receipts or sales.•Rents received from a tenant will not qualify as "rents from real property" in satisfying the gross income tests if the REIT, or a direct or indirect owner of10% or more of the REIT, directly or constructively, owns 10% or more of such tenant (a "Related Party Tenant"). However, rental payments from ataxable REIT subsidiary will qualify as rents from real property even if we own more than 10% of the total value or combined voting power of the taxableREIT subsidiary if at least 90% of the property is leased to unrelated tenants and the rent paid by the taxable REIT subsidiary is substantially comparableto the rent paid by the unrelated tenants for comparable space.•Rent attributable to personal property leased in connection with a lease of real property will not qualify as "rents from real property" if such rent exceeds15% of the total rent received under the lease.•the REIT generally must not operate or manage the property or furnish or render services to tenants, except through an "independent contractor" who isadequately compensated and from whom the REIT derives no income, or through a taxable REIT subsidiary. The "independent contractor" requirement,however, does not apply to the extent the services provided by the REIT are "usually or customarily rendered" in connection with the rental of space foroccupancy only, and are not otherwise considered "rendered to the occupant." In addition, a de minimis rule applies with respect to non-customaryservices. Specifically, if the value of the non-customary service income with respect to a property (valued at no less than 150% of the direct costs ofperforming such services) is 1% or less of the total income derived from the property, then all rental income except the non-customary service incomewill qualify as "rents from real property." A taxable REIT subsidiary may provide services (including noncustomary services) to a REIT’s tenants without"tainting" any of the rental income received by the REIT, and will be able to manage or operate properties for third parties and generally engage in otheractivities unrelated to real estate.We do not anticipate receiving rent that is based in whole or in part on the income or profits of any person (except by reason of being based on a fixedpercentage or percentages of gross receipts or sales consistent with the rules described above). We also do not anticipate receiving more than a de minimis amountof rents from any Related Party Tenant or rents attributable to personal property leased in connection with real property that will exceed 15% of the total rentsreceived with respect to such real property. We may receive certain types of income that will not qualify under the 75% or 95% gross income tests. In particular,dividends received from a taxable REIT subsidiary will not qualify under the 75% test. We believe, however, that the aggregate amount of such items and othernon-qualifying income in any taxable year will not cause GLPI to exceed the limits on non-qualifying income under either the 75% or 95% gross income tests.We may directly or indirectly receive distributions from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributionsgenerally are treated as dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions will generally constitutequalifying income for purposes of the 95% gross income test, but not for purposes of the 75% gross income test. Any dividends that we receive from another REITor qualified REIT subsidiary, however, will be qualifying income for purposes of both the 95% and 75% gross income tests.We believe that we have and will continue to be in compliance with these gross income tests. If we fail to satisfy one or both of the 75% or 95% grossincome tests for any taxable year, we may still qualify to be taxed as a REIT for such year if we are entitled to relief under applicable provisions of the Code. Theserelief provisions will be generally available if (i) our failure to meet these tests was due to reasonable cause and not due to willful neglect and (ii) following ouridentification of the failure to meet the 75% or 95% gross income test for any taxable year, we file a schedule with the IRS setting forth each item of our grossincome for purposes of the 75% or 95% gross income test for such taxable year in accordance with Treasury regulations. It is not possible to state whether wewould be entitled to the benefit of these relief provisions in all circumstances. If these relief provisions are inapplicable to a particular set of circumstances, we willnot qualify to be taxed as a REIT. Even if these relief provisions apply, and we retain our status as a REIT, the Code imposes a tax based upon the amount bywhich we fail to satisfy the particular gross income test.14Table of ContentsAsset TestsAt the close of each calendar quarter, we must also satisfy four tests relating to the nature of our assets. First, at least 75% of the value of our total assetsmust be represented by some combination of "real estate assets," cash, cash items, U.S. government securities, and, under some circumstances, stock or debtinstruments purchased with new capital. For this purpose, real estate assets include interests in real property and stock of other corporations that qualify as REITs,as well as some kinds of mortgage-backed securities and mortgage loans. Assets that do not qualify for purposes of the 75% asset test are subject to the additionalasset tests described below.Second, the value of any one issuer's securities that we own may not exceed 5% of the value of our total assets.Third, we may not own more than 10% of any one issuer's outstanding securities, as measured by either voting power or value. The 5% and 10% asset testsdo not apply to securities of TRSs and qualified REIT subsidiaries and the 10% asset test does not apply to "straight debt" having specified characteristics and tocertain other securities described below. Solely for purposes of the 10% asset test, the determination of our interest in the assets of a partnership or limited liabilitycompany in which we own an interest will be based on our proportionate interest in any securities issued by the partnership or limited liability company, excludingfor this purpose certain securities described in the Code. The safe harbor under which certain types of securities are disregarded for purposes of the 10% valuelimitation includes (1) straight debt securities (including straight debt securities that provides for certain contingent payments); (2) any loan to an individual or anestate; (3) any rental agreement described in Section 467 of the Code, other than with a "related person"; (4) any obligation to pay rents from real property; (5)certain securities issued by a State or any political subdivision thereof, or the Commonwealth of Puerto Rico; (6) any security issued by a REIT; and (7) any otherarrangement that, as determined by the Secretary of the Treasury, is excepted from the definition of a security. In addition, for purposes of applying the 10% valuelimitation, (a) a REIT’s interest as a partner in a partnership is not considered a security; (b) any debt instrument issued by a partnership is not treated as a securityif at least 75% of the partnership’s gross income is from sources that would qualify for the 75% REIT gross income test; and (c) any debt instrument issued by apartnership is not treated as a security to the extent of the REIT’s interest as a partner in the partnership.Fourth, the aggregate value of all securities of TRSs that we hold, together with other non-qualified assets (such as furniture and equipment or other tangiblepersonal property, or non-real estate securities) may not, in the aggregate, exceed 25% of the value of our total assets. Beginning after December 31, 2017, theaggregate value of all securities of the TRSs that we hold may not exceed 20% of our total assets.However, certain relief provisions are available to allow REITs to satisfy the asset requirements or to maintain REIT qualification notwithstanding certainviolations of the asset and other requirements. For example, if we should fail to satisfy the asset tests at the end of a calendar quarter such a failure would not causeus to lose our REIT qualification if we (i) satisfied the asset tests at the close of the preceding calendar quarter and (ii) the discrepancy between the value of ourassets and the asset requirements was not wholly or partly caused by an acquisition of non-qualifying assets, but instead arose from changes in the relative marketvalues of our assets. If the condition described in (ii) were not satisfied, we still could avoid disqualification by eliminating any discrepancy within 30 days afterthe close of the calendar quarter in which it arose or by making use of the relief provisions described above.In the case of de minimis violations of the 10% and 5% asset tests, a REIT may maintain its qualification despite a violation of such requirements if (i) thevalue of the assets causing the violation does not exceed the lesser of 1% of the REIT's total assets and $10,000,000 and (ii) the REIT either disposes of the assetscausing the failure within six months after the last day of the quarter in which it identifies the failure, or the relevant tests are otherwise satisfied within that timeframe.Even if we did not qualify for the foregoing relief provisions, one additional provision allows a REIT which fails one or more of the asset requirements tonevertheless maintain its REIT qualification if (i) the REIT provides the IRS with a description of each asset causing the failure, (ii) the failure is due to reasonablecause and not willful neglect, (iii) the REIT pays a tax equal to the greater of (a) $50,000 per failure and (b) the product of the net income generated by the assetsthat caused the failure multiplied by the highest applicable corporate tax rate (currently 35%) and (iv) the REIT either disposes of the assets causing the failurewithin six months after the last day of the quarter in which it identifies the failure, or otherwise satisfies the relevant asset tests within that time frame.We believe that we have been and will continue to be in compliance with the asset tests described above.Annual Distribution RequirementsIn order to qualify to be taxed as a REIT, we are required to distribute dividends, other than capital gain dividends, to our shareholders in an amount at leastequal to:15Table of Contents(i)the sum of(a)90% of our REIT taxable income, computed without regard to our net capital gains and the deduction for dividends paid; and(b)90% of our after tax net income, if any, from foreclosure property (as described below); minus(ii)the excess of the sum of specified items of non-cash income over 5% of our REIT taxable income, computed without regard to our net capital gainand the deduction for dividends paid.We generally must make these distributions in the taxable year to which they relate, or in the following taxable year if declared before we timely file our taxreturn for the year and if paid with or before the first regular dividend payment after such declaration. These distributions will be treated as received by ourshareholders in the year in which paid. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us witha REIT-level tax deduction, the distributions must not be "preferential dividends." A dividend is not a preferential dividend if the distribution is (i) pro rata amongall outstanding shares of stock within a particular class and (ii) in accordance with any preferences among different classes of stock as set forth in ourorganizational documents.To the extent that we distribute at least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will be subject to tax at ordinary corporate taxrates on the retained portion. We may elect to retain, rather than distribute, some or all of our net long-term capital gains and pay tax on such gains. In this case, wecould elect for our shareholders to include their proportionate shares of such undistributed long-term capital gains in income, and to receive a corresponding creditfor their share of the tax that we paid. Our shareholders would then increase the adjusted basis of their stock by the difference between (i) the amounts of capitalgain dividends that we designated and that they include in their taxable income, minus (ii) the tax that we paid on their behalf with respect to that income.To the extent that in the future we may have available net operating losses carried forward from prior tax years, such losses may reduce the amount ofdistributions that we must make in order to comply with the REIT distribution requirements.If we fail to distribute during each calendar year at least the sum of (i) 85% of our ordinary income for such year, (ii) 95% of our capital gain net income forsuch year and (iii) any undistributed net taxable income from prior periods, we will be subject to a non-deductible 4% excise tax on the excess of such requireddistribution over the sum of (a) the amounts actually distributed, plus (b) the amounts of income we retained and on which we have paid corporate income tax.We expect that our REIT taxable income will be less than our cash flow because of depreciation and other non-cash charges included in computing REITtaxable income. Accordingly, we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the distribution requirementsdescribed above. However, from time to time, we may not have sufficient cash or other liquid assets to meet these distribution requirements due to timingdifferences between the actual receipt of income and actual payment of deductible expenses, and the inclusion of income and deduction of expenses in determiningour taxable income. In addition, we may decide to retain our cash, rather than distribute it, in order to repay debt, acquire assets, or for other reasons. If thesetiming differences occur, we may borrow funds to pay dividends or pay dividends through the distribution of other property (including shares of our stock) in orderto meet the distribution requirements, while preserving our cash.If our taxable income for a particular year is subsequently determined to have been understated, we may be able to rectify a resultant failure to meet thedistribution requirements for a year by paying "deficiency dividends" to shareholders in a later year, which may be included in our deduction for dividends paid forthe earlier year. In this case, we may be able to avoid losing REIT qualification or being taxed on amounts distributed as deficiency dividends, subject to the 4%excise tax described above. We will be required to pay interest based on the amount of any deduction taken for deficiency dividends.For purposes of the 90% distribution requirement and excise tax described above, any distribution must be paid in the taxable year to which they relate, or inthe following taxable year if such distributions are declared in October, November or December of the taxable year, are payable to shareholders of record on aspecified date in any such month, and are actually paid before the end of January of the following year. Such distributions are treated as both paid by us andreceived by our shareholders on December 31 of the year in which they are declared.In addition, at our election, a distribution for a taxable year may be declared before we timely file our tax return for the year, provided we pay suchdistribution with or before our first regular dividend payment after such declaration, and such payment is made during the 12-month period following the close ofsuch taxable year. Such distributions are taxable to our shareholders in the year in which paid, even though the distributions relate to our prior taxable year forpurposes of the 90% distribution requirement.16Table of ContentsIn order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, thedistributions must not be "preferential dividends." A dividend is not a preferential dividend if the distribution is (i) pro rata among all outstanding shares of stockwithin a particular class and (ii) in accordance with any preferences among different classes of stock as set forth in our organizational documentsWe believe that we have satisfied the annual distribution requirements for the year ending, December 31, 2015 . Although we intend to satisfy the annualdistribution requirements to continue to qualify as a REIT for the year ending December 31, 2016 and thereafter, economic, market, legal, tax or otherconsiderations could limit our ability to meet those requirements.Failure to QualifyIf we fail to satisfy one or more requirements for REIT qualification other than the income or asset tests, we could avoid disqualification as a REIT if ourfailure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. Relief provisions are also available for failuresof the income tests and asset tests, as described above in "—Income Tests" and "—Asset Tests."If we fail to qualify for taxation as a REIT in any taxable year, and the relief provisions described above do not apply, we would be subject to tax, includingany applicable alternative minimum tax, on our taxable income at regular corporate rates. We cannot deduct distributions to shareholders in any year in which weare not a REIT, nor would we be required to make distributions in such a year. In this situation, to the extent of current and accumulated earnings and profits (asdetermined for U.S. federal income tax purposes), distributions to shareholders would be taxable as regular corporate dividends. Such dividends paid to U.S.shareholders that are individuals, trusts and estates may be taxable at the preferential income tax rates (i.e., the 20% maximum U.S. federal rate) for qualifieddividends. In addition, subject to the limitations of the Code, corporate distributes may be eligible for the dividends received deduction. Unless we are entitled torelief under specific statutory provisions, we would also be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year duringwhich we lost our qualification. It is not possible to state whether, in all circumstances, we would be entitled to this statutory relief.Legislative or Other Actions Affecting REITsThe present U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action atany time. The REIT rules are constantly under review by persons involved in the legislative process and by the IRS and the Treasury which may result in statutorychanges as well as revisions to regulations and interpretations. Changes to the U.S. federal tax laws and interpretations thereof could adversely affect an investmentin our common stock.RegulationThe ownership, operation, and management of, and provision of certain products and services to, gaming and racing facilities are subject to pervasiveregulation. Gaming laws are generally based upon declarations of public policy designed to protect gaming consumers and the viability and integrity of the gamingindustry. Gaming laws also may be designed to protect and maximize state and local revenues derived through taxes and licensing fees imposed on gamingindustry participants as well as to enhance economic development and tourism. To accomplish these public policy goals, gaming laws establish procedures toensure that participants in the gaming industry, including landlords and other suppliers, meet certain standards of character and fitness. In addition, gaming lawsrequire gaming industry participants to:•ensure that unsuitable individuals and organizations have no role in gaming operations;•establish procedures designed to prevent cheating and fraudulent practices;•establish and maintain responsible accounting practices and procedures;•maintain effective controls over their financial practices, including establishment of minimum procedures for internal fiscal affairs and the safeguardingof assets and revenues;•maintain systems for reliable record keeping;•file periodic reports with gaming regulators;•ensure that contracts and financial transactions are commercially reasonable, reflect fair market value and are arms-length transactions; and17Table of Contents•establish programs to promote responsible gaming.These regulations impact our business in three important ways: (1) our ownership and operation of the TRS Properties; (2) our ownership of land andbuildings in which gaming activities are operated by third party tenants pursuant to long-term leases; and (3) the operations of our gaming tenants. Our ownershipand operation of the TRS Properties subject GLPI, its subsidiaries and its officers and directors to the jurisdiction of the gaming regulatory agencies in Louisianaand Maryland. Further, many gaming and racing regulatory agencies in the jurisdictions in which our gaming tenants operate require GLPI and its affiliates tomaintain a license as a key business entity or supplier because of its status as landlord, including Illinois, Indiana, Missouri, Mississippi, Pennsylvania and Ohio.Our businesses are subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, butare not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, health care, currency transactions, taxation,zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new lawsand regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities couldadversely affect our operating results.InsuranceWe have comprehensive liability, property and business interruption insurance at our TRS Properties. In regards to our properties subject to triple-net leases,the lease agreements require our tenants to have their own comprehensive liability, property and business interruption insurance policies, including protection forour insurable interests as the landlord.Environmental MattersOur properties are subject to environmental laws regulating, among other things, air emissions, wastewater discharges and the handling and disposal ofwastes, including medical wastes. Certain of the properties we own utilize above or underground storage tanks to store heating oil for use at the properties. Otherproperties were built during the time that asbestos-containing building materials were routinely installed in residential and commercial structures. Our triple-netleases obligate the tenants thereunder to comply with applicable environmental laws and to indemnify us if their noncompliance results in losses or claims againstus, and we expect that any future leases will include the same provisions for other operators. An operator's failure to comply could result in fines and penalties orthe requirement to undertake corrective actions which may result in significant costs to the operator and thus adversely affect their ability to meet their obligationsto us.Pursuant to U.S. federal, state and local environmental laws and regulations, a current or previous owner or operator of real property may be required toinvestigate, remove and/or remediate a release of hazardous substances or other regulated materials at, or emanating from, such property. Further, under certaincircumstances, such owners or operators of real property may be held liable for property damage, personal injury and/or natural resource damage resulting from orarising in connection with such releases. Certain of these laws have been interpreted to provide for joint and several liability unless the harm is divisible and thereis a reasonable basis for allocation of responsibility. We also may be liable under certain of these laws for damage that occurred prior to our ownership of aproperty or at a site where we sent wastes for disposal. The failure to properly remediate a property may also adversely affect our ability to lease, sell or rent theproperty or to borrow funds using the property as collateral.In connection with the ownership of our real property, we could be legally responsible for environmental liabilities or costs relating to a release of hazardoussubstances or other regulated materials at or emanating from such property. In order to assess the potential for such liability, we conduct routine due diligence ofenvironmental assessments prior to acquisition. We are not aware of any environmental issues that are expected to have a material impact on the operations of anyof our properties.Pursuant to the Penn Master Lease and a Separation and Distribution Agreement between Penn and GLPI, any liability arising from or relating toenvironmental liabilities arising from the businesses and operations of Penn's real property holdings prior to the Spin-Off (other than any liability arising from orrelating to the operation or ownership of the TRS Properties and except to the extent first discovered after the end of the term of the Penn Master Lease) wasretained by Penn and Penn will indemnify GLPI (and its subsidiaries, directors, officers, employees and agents and certain other related parties) against any lossesarising from or relating to such environmental liabilities. There can be no assurance that Penn will be able to fully satisfy its indemnification obligations.Moreover, even if we ultimately succeed in recovering from Penn any amounts for which we are held liable, we may be temporarily required to bear these losseswhile seeking recovery from Penn.18Table of ContentsEmployeesAs of December 31, 2015 , we had 792 full and part-time employees. Substantially all of these employees are employed at Hollywood Casino Baton Rougeand Hollywood Casino Perryville. The Company believes its relations with its employees are good.Some of our employees at Hollywood Casino Perryville are currently represented by labor unions. The Seafarers Entertainment and Allied Trade Unionrepresents 208 of our employees at Hollywood Casino Perryville under an agreement that expires in February 2020. Additionally, Local No. 27 United Food andCommercial Workers and United Industrial Service Transportation Professional and Government Workers of North America represent certain employees undercollective bargaining agreements that expire in 2020, neither of which represents more than 50 of our employees at Hollywood Casino Perryville.Available InformationFor more information about us, visit our website at www.glpropinc.com. The contents of our website are not part of this Annual Report on Form 10-K. Ourelectronic filings with the SEC (including all annual reports on Form 10-K and Form 10-K/A, quarterly reports on Form 10-Q and Form 10-Q/A, and currentreports on Form 8-K, and any amendments to these reports), including the exhibits, are available free of charge through our website as soon as reasonablypracticable after we electronically file them with or furnish them to the SEC.ITEM 1A.    RISK FACTORSRisk Factors Relating to Our BusinessWe are dependent on Penn (including its subsidiaries) until we substantially diversify our portfolio, and an event that has a material adverse effect on Penn'sbusiness, financial position or results of operations could have a material adverse effect on our business, financial position or results of operations.A subsidiary of Penn is the lessee of substantially all of our properties pursuant to the Penn Master Lease and accounts for a significant portion of ourrevenues. Additionally, because the Penn Master Lease is a triple-net lease, we depend on Penn to pay all insurance, taxes, utilities and maintenance and repairexpenses in connection with these leased properties and to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arisingin connection with its business. There can be no assurance that Penn will have sufficient assets, income and access to financing to enable it to satisfy its paymentobligations under the Penn Master Lease. The inability or unwillingness of Penn to meet its subsidiary's rent obligations and other obligations under the PennMaster Lease could materially adversely affect our business, financial position or results of operations, including our ability to pay dividends to our shareholders asrequired to maintain our status as a REIT. For these reasons, if Penn were to experience a material adverse effect on its gaming business, financial position orresults of operations, our business, financial position or results of operations could also be materially adversely affected.Due to our dependence on rental payments from Penn and its tenant subsidiary as our main source of revenues, we may be limited in our ability to enforceour rights under the Penn Master Lease or to terminate the lease with respect to a particular property. Failure by Penn's tenant subsidiary to comply with the termsof the Penn Master Lease or to comply with the gaming regulations to which the leased properties are subject could require us to find another lessee for such leasedproperty and there could be a decrease or cessation of rental payments by Penn. In such event, we may be unable to locate a suitable lessee at similar rental rates orat all, which would have the effect of significantly reducing our rental revenues.Following the completion of the Pinnacle transaction, we will be significantly dependent on two tenants and their respective subsidiaries and substantially allof our revenues will be based on the revenue derived under the master leases with Pinnacle and Penn. We will continue to be subject to the risks described above.Our pursuit of investments in, and acquisitions or development of, additional properties may be unsuccessful or fail to meet our expectations.We operate in a highly competitive industry and face competition from other REITs, investment companies, private equity and hedge fund investors,sovereign funds, lenders, gaming companies (including gaming companies considering REIT structures) and other investors, some of whom are significantly largerand have greater resources and lower costs of capital. Increased competition will make it more challenging to identify and successfully capitalize on acquisitionopportunities that meet our investment objectives. If we cannot identify and purchase a sufficient quantity of gaming properties and other properties at favorableprices or if we are unable to finance acquisitions on commercially favorable terms, our business, financial position or results of operations could be materiallyadversely affected. Additionally, the fact that we must distribute 90% of our net taxable income in order to maintain our qualification as a REIT may limit ourability to rely upon rental19Table of Contentspayments from our leased properties or subsequently acquired properties in order to finance acquisitions. As a result, if debt or equity financing is not available onacceptable terms, further acquisitions might be limited or curtailed and completing proposed acquisitions may be adversely impacted. Furthermore, fluctuations inthe price of our common stock may impact our ability to finance additional acquisitions through the issuance of common stock and/or cause significant dilution.Investments in and acquisitions of gaming properties and other properties we might seek to acquire entail risks associated with real estate investmentsgenerally, including that the investment's performance will fail to meet expectations, that the cost estimates for necessary property improvements will proveinaccurate or that the tenant, operator or manager will underperform. Real estate development projects present other risks, including construction delays or costoverruns that increase expenses, the inability to obtain required zoning, occupancy and other governmental approvals and permits on a timely basis, and theincurrence of significant development costs prior to completion of the project.We may not complete the acquisition of substantially all of Pinnacle’s real property assets within the time frame we anticipate or at all, which could have anegative effect on our business and our results of operations.On July 20, 2015, we entered into a definitive agreement under which we will acquire substantially all of Pinnacle’s real property assets. In connection withthe acquisition, Pinnacle has agreed that it will effect the separation of its real property assets and gaming and other operating assets and effect a pro ratadistribution to its stockholders of common stock representing a 100% interest in a newly formed public company that will own Pinnacle’s gaming operating assetsand other specified assets (the "Pinnacle Spin-Off"). Immediately following the Pinnacle Spin-Off, we will acquire substantially all of Pinnacle’s real propertyassets through the merger of Pinnacle with and into one of our wholly-owned subsidiaries.The acquisition is subject to a number of closing conditions, such as the approval of holders of a majority of the outstanding shares of Pinnacle commonstock; the approval of the issuance of shares of our common stock as merger consideration by a majority vote of the holders of our common stock; the absence ofany governmental order or law prohibiting the consummation of the transactions, including the Pinnacle Spin-Off; the effectiveness of the registration statementfor our common stock to be issued as merger consideration; the effectiveness of the Pinnacle Spin-Off registration statement and completion of the Pinnacle Spin-Off, and the receipt of the required anti-trust and other regulatory approvals. These conditions may not be satisfied or may take longer than expected to be satisfied.The transaction is also subject to other risks and uncertainties.We have already devoted substantial time and resources and incurred substantial costs in connection with the transaction, many of which must be paid even ifthe acquisition is not completed. In addition, we will generally be obligated to pay a termination fee of $150 million to Pinnacle if the acquisition is terminatedbecause the required regulatory approvals were not obtained. We also could be required to pay an expense reimbursement fee of up to $20 million to Pinnacle if theacquisition is terminated because our shareholders fail to approve the issuance of our common stock in connection with the Merger. The payment of any of thesecosts could have an adverse effect on our financial condition, results of operations or cash flows.We cannot provide any assurance that the acquisition will be completed or that there will not be a delay in the completion of the acquisition. Furthermore, ourability to raise the amount of capital necessary to fund the acquisition of the Pinnacle real estate assets is subject to market and economic conditions. If theacquisition is not consummated, our reputation in our industry and in the investment community could be damaged, and the market price of our common stockcould decline.If the acquisition of substantially all of Pinnacle’s real property assets is completed, we may not achieve the intended benefits and the acquisition may disruptour current plans or operations.There can be no assurance that we will be able to successfully realize the expected benefits of the acquisition. Following the completion of the acquisition,we will have significant financial exposure to Pinnacle’s performance of its contractual obligations to us, and adverse changes in Pinnacle’s business or finances,over which we will have no control other than the limited contractual protections afforded to us as a landlord, could adversely affect us. We also may not be able tofinance the acquisition on attractive terms, which could result in increased costs, substantial dilution to our shareholders and have an adverse effect on our financialcondition, results of operations or cash flows. In addition, our business may be negatively impacted following the acquisition if we are unable to effectivelymanage our expanded operations.The transactions contemplated by the Merger Agreement are subject to conditions, including certain conditions that may not be satisfied, or completed on atimely basis, if at all. Failure to complete the transactions contemplated by the Merger Agreement, including the Merger, could have material and adverseeffects on us.Completion of the Merger is subject to a number of conditions, including the approval by GLPI shareholders of the share issuance proposal, approval byPinnacle stockholders of the Merger Agreement proposal and consummation of the spin-off,20Table of Contentswhich make the completion and timing of the completion of the transactions uncertain. Also, either GLPI or Pinnacle may terminate the Merger Agreement if theMerger has not been consummated by March 31, 2016 or, in GLPI’s sole discretion—if the only conditions to closing that have not been satisfied or waived by thatdate are those related to regulatory approvals, consents or clearances, an outstanding judgment, injunction, order or law of a governmental authority prohibiting orenjoining the transactions or an action pending before, or threatened in writing by, the U.S. Antitrust Division of the Department of Justice or the Federal TradeCommission that would prevent the performance of the transactions—June 30, 2016, except that this right to terminate the Merger Agreement will not be availableto any party whose material breach of a representation, warranty, covenant or other agreement of such party under the Merger Agreement resulted in the failure ofthe transactions to be consummated on or before that date.If the transactions contemplated by the Merger Agreement are not completed on a timely basis, or at all, our ongoing business may be adversely affected and,without realizing any of the benefits of having completed the transactions, we will be subject to a number of risks, including the following: • we will be required to pay our costs relating to the transactions, such as legal, accounting, financial advisory and printing fees, whetheror not the transactions are completed; • time and resources committed by our management to matters relating to the transactions could otherwise have been devoted to pursuingother beneficial opportunities; and • the market price of our common stock could decline to the extent that the current market price reflects a market assumption that thetransactions will be completed.We will be subject to business uncertainties while the Merger is pending, which could adversely affect our business.In connection with the pendency of the transactions, it is possible that certain persons with whom we have a business relationship may delay or defer certainbusiness decisions or might decide to seek to terminate, change or renegotiate their relationships with us, as the case may be, as a result of the transactions, whichcould negatively affect our revenues, earnings and cash flows, as well as the market price of our common stock, regardless of whether the Merger is completed.Under the terms of the Merger Agreement, Pinnacle and GLPI are subject to certain restrictions on the conduct of their business prior to the effective time ofthe Merger, which may adversely affect their respective abilities to execute certain of their business strategies, including, the ability in certain cases to enter intocontracts, acquire or dispose of assets, incur indebtedness or incur capital expenditures. Such limitations could negatively affect Pinnacle’s businesses andoperations prior to the completion of the transactions.The Merger is subject to the receipt of approvals, consents or clearances from regulatory authorities that may impose conditions that could have an adverseeffect on us or, if not obtained, could prevent completion of the transactions.Completion of the Merger is conditioned upon the receipt of certain governmental approvals, including, without limitation, gaming regulatory approvals.Although each party has agreed to use their respective reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance that theseapprovals will be obtained and that the other conditions to completing the Merger will be satisfied. In addition, the governmental authorities from which theregulatory approvals are required may impose conditions on the completion of the Merger or require changes to the terms of the Merger or other agreements to beentered into in connection with the Merger Agreement. Such conditions or changes and the process of obtaining regulatory approvals could have the effect ofdelaying or impeding consummation of the transaction or of imposing additional costs or limitations on GLPI or Pinnacle following completion of the Merger, anyof which might have an adverse effect on GLPI or Pinnacle following completion of the Merger. Under the terms of the Merger Agreement, however, (i) subject tocertain conditions, Pinnacle is not required to agree to amendments to the Pinnacle Master Lease Agreement or take certain divestiture actions and (ii) GLPI is notrequired to take any divesture actions that would be expected to result in a loss of $150 million or more. One or more divesture actions, in the aggregate, that wouldreasonably be expected to result in a loss of $150 million or more is referred to in this Form 10-K as a "Regulatory MAE." For additional information about theregulatory approvals process, see "The Merger—Regulatory Approvals" section of the Joint Proxy Statement/Prospectus.The completion of the transactions may trigger change in control or other provisions in certain agreements to which Pinnacle is a party. If GLPI and Pinnacleare unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating theagreements or seeking monetary damages. Even if GLPI and Pinnacle are able to negotiate waivers, the counterparties may require a fee for such waivers or seek torenegotiate the agreements on terms less favorable to Pinnacle.21Table of ContentsWe are subject to provisions under the Merger Agreement that, in specified circumstances, could require us to pay a termination fee of up to $150 million toPinnacle.As discussed in the risk factor above, completion of the Merger is conditioned upon the receipt of certain governmental approvals. If regulatory approvals arenot obtained as a result of a Regulatory MAE and the Merger Agreement is terminated by GLPI or Pinnacle under certain conditions, then, so long as the primarycause of such termination was not an adverse suitability finding under gaming laws with respect to the business of OpCo and its affiliates, GLPI will be required topay Pinnacle a termination fee of $150 million, less any expense payments previously paid. In addition, GLPI will be required to pay Pinnacle a termination fee of$150 million, less any expense payments previously paid, if the Merger Agreement is terminated by either GLPI or Pinnacle because there is a permanentinjunction restraining, enjoining or otherwise prohibiting the consummation of the Merger and the injunction has become final and nonappelable, so long as theprimary cause of such termination was not an adverse suitability finding under gaming laws with respect to the business of OpCo and its affiliates. For moreinformation, see the section titled "The Merger Agreement—Expenses and Termination Fees Relating to the Termination of the Merger Agreement" of the JointProxy Statement/Prospectus.If such a termination fee is payable under any such circumstance, the payment of this fee could have material and adverse consequences to the financialcondition and operations of GLPI.Following the Merger, the market price of GLPI common stock may be volatile, and holders of GLPI’s common stock could lose a significant portion of theirinvestment due to drops in the market price of GLPI’s common stock following completion of the transactions.The market price of GLPI’s common stock may be volatile, and following completion of the Merger, shareholders may not be able to resell their shares ofGLPI common stock at or above the price at which they acquired the common stock pursuant to the Merger Agreement or otherwise due to fluctuations in itsmarket price, including changes in price caused by factors unrelated to GLPI’s performance or prospects.Specific factors that may have a significant effect on the market price for GLPI’s common stock include, among others, the following: • changes in stock market analyst recommendations or earnings estimates regarding GLPI’s common stock or other comparable REITs; • actual or anticipated fluctuations in GLPI’s revenue stream or future prospects; • reaction to public announcements by GLPI following the Merger; • strategic actions taken by GLPI or its competitors, such as acquisitions; • failure of GLPI to achieve the perceived benefits of the Merger, including financial results, as rapidly as or to the extent anticipated byfinancial or industry analysts; • new laws or regulations or new interpretations of existing laws or regulations applicable to GLPI’s business and operations or thegaming industry; • changes in tax or accounting standards, policies, guidance, interpretations or principles; • adverse conditions in the financial markets or general U.S. or international economic conditions, including those resulting from war,incidents of terrorism and responses to such events; and • sales of GLPI common stock by Pinnacle stockholders, members of GLPI’s management team or other significant shareholders.Under the separation agreement, Pinnacle will have to indemnify us for certain liabilities. However, there can be no assurance that these indemnities will besufficient to insure us against the full amount of such liabilities, or that Pinnacle’s ability to satisfy its indemnification obligation will not be impaired in thefuture.Under the separation agreement, Pinnacle will agree to indemnify us for certain liabilities. However, third parties could seek to hold us responsible for any ofthe liabilities that Pinnacle will agree to retain, and there can be no assurance that Pinnacle will be able to fully satisfy its indemnification obligations. Even if weultimately succeed in recovering from Pinnacle22Table of Contentsany amounts for which we are held liable, we may be temporarily required to bear these losses while seeking recovery from Pinnacle.We are expected to incur substantial expenses related to the completion of the Pinnacle transactions.We are expected to incur substantial expenses in connection with the completion of the transactions. While we have assumed that a certain level of expenseswould be incurred, there are many factors beyond our control that could affect the total amount or the timing of the expenses.We are dependent on the gaming industry and may be susceptible to the risks associated with it, which could materially adversely affect our business, financialposition or results of operations.As the owner of gaming facilities, we are impacted by the risks associated with the gaming industry. Therefore, our success is to some degree dependent onthe gaming industry, which could be adversely affected by economic conditions in general, changes in consumer trends and preferences and other factors overwhich we and our tenants have no control. As we are subject to risks inherent in substantial investments in a single industry, a decrease in the gaming businesswould likely have a greater adverse effect on our revenues than if we owned a more diversified real estate portfolio, particularly because a component of the rentunder the Penn Master Lease is based, over time, on the performance of the gaming facilities operated by Penn on our properties.The gaming industry is characterized by an increasing number of gaming facilities with an increasingly high degree of competition among a large number ofparticipants, including riverboat casinos, dockside casinos, land-based casinos, video lottery, sweepstakes and poker machines not located in casinos, NativeAmerican gaming and other forms of gaming in the U.S. Furthermore, competition from internet lotteries, sweepstakes, and other internet wagering gamingservices, which allow their customers to wager on a wide variety of sporting events and play Las Vegas-style casino games from home or in non-casino settings,could divert customers from our properties and thus adversely affect our TRS Properties and the business of our tenants and, indirectly, our business. Such internetwagering services are often illegal under federal law but operate exclusively in certain states and from overseas locations, and are accessible to certain domesticgamblers. Currently, there are proposals that would legalize internet poker and other varieties of internet gaming in a number of states and at the federal level.Several states, including Nevada, New Jersey and Delaware, have enacted legislation authorizing intrastate internet gaming and internet gaming operations havebegun in these states. Expansion of internet gaming in other jurisdictions (both legal and illegal) could further compete with our traditional operations, which couldhave an adverse impact on our business and result of operations.The operations of our TRS Properties and of our tenants in our leased facilities are subject to disruptions or reduced patronage as a result of severe weatherconditions, natural disasters and other casualty events. Because many of our facilities are located on or adjacent to bodies of water, they are subject to risks inaddition to those associated with land-based facilities, including loss of service due to casualty, forces of nature, mechanical failure, extended or extraordinarymaintenance, flood, hurricane or other severe weather conditions. A component of the rent under the Penn Master Lease is based, over time, on the performance ofthe gaming facilities operated by Penn on our properties; consequently, a casualty that leads to the loss of use of a casino facility subject to the Penn Master Leasefor an extended period may negatively impact our revenues.We face extensive regulation from gaming and other regulatory authorities.The ownership, operation, and management of gaming and racing facilities are subject to pervasive regulation. These regulations impact both our ownershipand operation of the TRS Properties and the operations of our gaming tenants. Our ownership and operation of the TRS Properties subject GLPI and its officersand directors to the jurisdiction of the gaming regulatory agencies in Louisiana and Maryland. Further, many gaming and racing regulatory agencies in thejurisdictions in which our tenants operate require GLPI and its affiliates to maintain a license as a key business entity or supplier because of GLPI's status aslandlord.In many jurisdictions, gaming laws can require certain of our shareholders to file an application, be investigated, and qualify or have his, her or its suitabilitydetermined by gaming authorities. Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. Subject tocertain administrative proceeding requirements, the gaming regulators have the authority to deny any application or limit, condition, restrict, revoke or suspend anylicense, registration, finding of suitability or approval, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable bythe gaming authorities.Many jurisdictions also require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gaming companyand, in some jurisdictions, non-voting securities, typically 5%, to report the acquisition to gaming authorities, and gaming authorities may require such holders toapply for qualification or a finding of suitability, subject to limited exceptions for "institutional investors" that hold a company's voting securities for investmentpurposes only.23Table of ContentsSome jurisdictions may also limit the number of gaming licenses in which a person may hold an ownership or a controlling interest.Additionally, substantially all material loans, significant acquisitions, leases, sales of securities and similar financing transactions by GLPI and itssubsidiaries must be reported to and in some cases approved by gaming authorities. Neither GLPI nor any of its subsidiaries may make a public offering ofsecurities without the prior approval of certain gaming authorities. Changes in control through merger, consolidation, stock or asset acquisitions, management orconsulting agreements, or otherwise are subject to receipt of prior approval of gaming authorities. Entities seeking to acquire control of GLPI or one of itssubsidiaries must satisfy gaming authorities with respect to a variety of stringent standards prior to assuming control.Required regulatory approvals can delay or prohibit transfers of our gaming properties, which could result in periods in which we are unable to receive rentfor such properties.The tenants of our gaming properties are operators of gaming facilities, which operators must be licensed under applicable state law. Prior to the transfer ofgaming facilities, the new operator generally must become licensed under state law. In the event that the Penn Master Lease or any future lease agreement we enterinto is terminated or expires and a new tenant is found, any delays in the new tenant receiving regulatory approvals from the applicable state government agencies,or the inability to receive such approvals, may prolong the period during which we are unable to collect the applicable rent.Our charter restricts the ownership and transfer of our outstanding stock, which may have the effect of delaying, deferring or preventing a transaction orchange of control of our company.In order for GLPI to qualify to be taxed as a REIT, not more than 50% in value of its outstanding shares of stock may be owned, actually or constructively,by five or fewer individuals at any time during the last half of each taxable year after the first year for which GLPI elected to qualify to be taxed as a REIT (2014).Additionally, at least 100 persons must beneficially own GLPI stock during at least 335 days of a taxable year (other than the first taxable year for which GLPIelects to be taxed as a REIT). GLPI's charter, with certain exceptions, authorizes the Board of Directors to take such actions as are necessary and desirable topreserve GLPI's qualification as a REIT. GLPI's charter also provides that, subject to certain exceptions exempted by the Board of Directors, no person maybeneficially or constructively own more than 7% in value or in number, whichever is more restrictive, of GLPI's outstanding shares of all classes and series ofstock. The constructive ownership rules are complex and may cause shares of stock owned directly or constructively by a group of related individuals or entities tobe constructively owned by one individual or entity. These ownership limits could delay or prevent a transaction or a change in control of GLPI that might involvea premium price for shares of GLPI stock or otherwise be in the best interests of GLPI shareholders. The acquisition of less than 7% of our outstanding stock by anindividual or entity could cause that individual or entity to own beneficially or constructively in excess of 7% in value of our outstanding stock, and thus violateour charter's ownership limit. Our charter prohibits any person from owning shares of our stock that would result in our being "closely held" under Section 856(h)of the Code. Any attempt to own or transfer shares of our stock in violation of these restrictions may result in the transfer being automatically void. GLPI's charteralso provides that shares of GLPI's capital stock acquired or held in excess of the ownership limit will be transferred to a trust for the benefit of a designatedcharitable beneficiary, and that any person who acquires shares of GLPI's capital stock in violation of the ownership limit will not be entitled to any dividends onthe shares or be entitled to vote the shares or receive any proceeds from the subsequent sale of the shares in excess of the lesser of the market price on the day theshares were transferred to the trust or the amount realized from the sale. GLPI or its designee will have the right to purchase the shares from the trustee at thiscalculated price as well. A transfer of shares of GLPI's capital stock in violation of the limit may be void under certain circumstances. GLPI's 7% ownershiplimitation may have the effect of delaying, deferring or preventing a change in control of GLPI, including an extraordinary transaction (such as a merger, tenderoffer or sale of all or substantially all of our assets) that might provide a premium price for GLPI's shareholders. To assist GLPI in complying with applicablegaming laws, our charter also provides that capital stock of GLPI that is owned or controlled by an unsuitable person or an affiliate of an unsuitable person will betransferred to a trust for the benefit of a designated charitable beneficiary, and that any such unsuitable person or affiliate will not be entitled to any dividends onthe shares or be entitled to vote the shares or receive any proceeds from the subsequent sale of the shares in excess of the lesser of the price paid by the unsuitableperson or affiliate for the shares or the amount realized from the sale, in each case less a discount in a percentage (up to 100%) to be determined by our Board ofDirectors in its sole and absolute discretion. The shares shall additionally be redeemable by GLPI, out of funds legally available for that redemption, to the extentrequired by the gaming authorities making the determination of unsuitability or to the extent determined to be necessary or advisable by our Board of Directors, ata redemption price equal to the lesser of (i) the market price on the date of the redemption notice, (ii) the market price on the redemption date, or (iii) the actualamount paid for the shares by the owner thereof, in each case less a discount in a percentage (up to 100%) to be determined by our Board of Directors in its soleand absolute discretion.24Table of ContentsPennsylvania law and provisions in our charter and bylaws may delay or prevent takeover attempts by third parties and therefore inhibit GLPI's shareholdersfrom realizing a premium on their stock.GLPI's charter and bylaws, in addition to Pennsylvania law, contain provisions that are intended to deter coercive takeover practices and inadequate takeoverbids and to encourage prospective acquirors to negotiate with GLPI's Board of Directors rather than to attempt a hostile takeover. GLPI's charter and bylaws,among other things (i) permit the Board of Directors, without further action of the shareholders, to issue and fix the terms of preferred stock, which may have rightssenior to those of the common stock; (ii) establish certain advance notice procedures for shareholder proposals, and require all director candidates to berecommended by the nominating committee of the Board of Directors; (iii) classify our Board of Directors into three separate classes with staggered terms;(iv) provide that a director may only be removed by shareholders for cause and upon the vote of 75% of the shares entitled to vote; (v) not permit direct nominationby shareholders of nominees for election to the Board of Directors, but instead permit shareholders to recommend potential nominees to the compensation andgovernance committee; (vi) require shareholders to have beneficially owned at least 1% of the outstanding GLPI common stock in order to recommend a personfor nomination for election to the Board of Directors, or to present a shareholder proposal, for action at a shareholders meeting; and (vii) provide for supermajorityapproval requirements for amending or repealing certain provisions in our charter and in order to approve an amendment or repeal of any provision of our bylawsthat has not been proposed by our Board of Directors.In addition, specific anti-takeover provisions in Pennsylvania law could make it more difficult for a third party to attempt a hostile takeover. Theseprovisions require (i) approval of certain transactions by a majority of the voting stock other than that held by the potential acquirer; (ii) the acquisition at "fairvalue" of all the outstanding shares not held by an acquirer of 20% or more; (iii) a five-year moratorium on certain "business combination" transactions with an"interested shareholder;" (iv) the loss by interested shareholders of their voting rights over "control shares;" (v) the disgorgement of profits realized by aninterested shareholder from certain dispositions of GLPI shares; and (vi) severance payments for certain employees and prohibiting termination of certain laborcontracts.GLPI's believes these provisions will protect its shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiatewith GLPI's Board of Directors and by providing GLPI's Board of Directors with more time to assess any acquisition proposal. These provisions are not intendedto make GLPI immune from takeovers or to prevent a transaction from occurring. However, these provisions will apply even if the offer may be consideredbeneficial by some shareholders and could delay or prevent an acquisition that GLPI's Board of Directors determines is not in the best interests of GLPI. Theseprovisions may also prevent or discourage attempts to remove and replace incumbent directors.Our management team, including chairman and chief executive officer, Peter M. Carlino, and chief financial officer, William J. Clifford, has limitedexperience operating a REIT.The requirements for qualifying as a REIT are highly technical and complex. Our management team, including chairman and chief executive officer, PeterM. Carlino, and chief financial officer, William J. Clifford, has limited experience in complying with the income, asset and other limitations imposed by the REITprovisions of the Code. Any failure to comply with those provisions in a timely manner could prevent GLPI from qualifying as a REIT or could force GLPI to payunexpected taxes and penalties. In such event, GLPI's net income would be reduced and GLPI could incur a loss, which could materially harm its business,financial position or results of operations. In addition, there is no assurance that their past experience with the acquisition, development and disposition of gamingfacilities will be sufficient to enable them to successfully manage GLPI's portfolio of properties as required by its business plan or the REIT provisions of theCode.If we lose our key management personnel, we may not be able to successfully manage our business and achieve our objectives.Our success depends in large part upon the leadership and performance of our executive management team, particularly Peter M. Carlino, our chief executiveofficer, and William J. Clifford, our chief financial officer. If we lose the services of Messrs. Carlino or Clifford, we may not be able to successfully manage ourbusiness or achieve our business objectives. Furthermore, the Company does not have any employment agreements in place with the members of its executivemanagement team at this time.We may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decreaseanticipated future revenues or cause us to incur unanticipated expense.While the Penn Master Lease requires, and new lease agreements are expected to require, that comprehensive insurance and hazard insurance be maintainedby the tenants, a tenant's failure to comply could lead to an uninsured or underinsured loss and there can be no assurance that we will be able to recover suchuninsured or underinsured amounts from such tenant. Futher, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanesand floods, that may be uninsurable or not economically insurable. Insurance coverage may not be sufficient to pay the full current market value or25Table of Contentscurrent replacement cost of a loss. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make itinfeasible to use insurance proceeds to replace the property after such property has been damaged or destroyed. Under such circumstances, the insurance proceedsreceived might not be adequate to restore the economic position with respect to such property.If we experience a loss that is uninsured or that exceeds our policy coverage limits, we could lose the capital invested in the damaged properties as well asthe anticipated future cash flows from those properties. In addition, if the damaged properties were subject to recourse indebtedness, we could continue to be liablefor the indebtedness even if these properties were irreparably damaged.In addition, even if damage to our properties is covered by insurance, a disruption of our business caused by a casualty event may result in the loss ofbusiness or tenants. The business interruption insurance we carry may not fully compensate us for the loss of business or tenants due to an interruption caused by acasualty event. Further, if one of our tenants has insurance but is underinsured, that tenant may be unable to satisfy its payment obligations under its lease with us.A disruption in the financial markets may make it more difficult to evaluate the stability, net assets and capitalization of insurance companies and anyinsurer's ability to meet its claim payment obligations. A failure of an insurance company to make payments to us upon an event of loss covered by an insurancepolicy could adversely affect our business, financial condition and results of operations.The price of our common stock may fluctuate significantly.Our stock price may fluctuate in response to a number of events and factors, such as variations in operating results, changes in market interest rates, actionsby various regulatory agencies and legislatures, operating competition, market perceptions, progress with respect to potential acquisitions, changes in financialestimates and recommendations by securities analysts, the actions of rating agencies, the operating and stock price performance of other companies that investorsmay deem comparable to us, and news reports relating to trends in our markets or general economic conditions.Environmental compliance costs and liabilities associated with real estate properties owned by us may materially impair the value of those investments.As an owner of real property, we are subject to various federal, state and local environmental and health and safety laws and regulations. Although we willnot operate or manage most of our property, we may be held primarily or jointly and severally liable for costs relating to the investigation and clean-up of anyproperty from which there has been a release or threatened release of a regulated material as well as other affected properties, regardless of whether we knew of orcaused the release.In addition to these costs, which are typically not limited by law or regulation and could exceed the property's value, we could be liable for certain othercosts, including governmental fines and injuries to persons, property or natural resources. Further, some environmental laws create a lien on the contaminated sitein favor of the government for damages and the costs the government incurs in connection with such contamination.Although we intend to require our operators and tenants to undertake to indemnify us for certain environmental liabilities, including environmental liabilitiesthey cause, the amount of such liabilities could exceed the financial ability of the tenant or operator to indemnify us. The presence of contamination or the failureto remediate contamination may adversely affect our ability to sell or lease the real estate or to borrow using the real estate as collateral.Risk Factors Relating to the Status of GLPI as a REITIf GLPI does not qualify to be taxed as a REIT, or fails to remain qualified as a REIT, GLPI will be subject to U.S. federal income tax as a regular corporationand could face a substantial tax liability, which would reduce the amount of cash available for distribution to shareholders of GLPI.GLPI elected on its 2014 U.S. federal income tax return to be treated as a REIT and intends to continue to be organized and to operate in a manner that willpermit it to qualify as a REIT. GLPI currently operates, and intends to continue to operate, in a manner that will allow GLPI to continue to qualify to be taxed as aREIT for U.S. federal income tax purposes. GLPI received an opinion from its special tax advisors, Wachtell, Lipton, Rosen & Katz and KPMG LLP (collectivelythe "Special Tax Advisors"), with respect to its qualification as a REIT in connection with the Spin-Off. Investors should be aware, however, that opinions ofadvisors are not binding on the IRS or any court. The opinions of the Special Tax Advisors represent only the view of the Special Tax Advisors based on theirreview and analysis of existing law and on certain representations as to factual matters and covenants made by GLPI, including representations relating to thevalues of GLPI's assets and the sources of GLPI's income. The opinions are expressed as of the date issued. The Special Tax Advisors have no obligation to adviseGLPI or the holders of GLPI common stock of any subsequent change in the matters stated, represented or assumed or of any26Table of Contentssubsequent change in applicable law. Furthermore, both the validity of the opinions of Special Tax Advisors and GLPI's qualification as a REIT will depend onGLPI's satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis, the results of whichwill not be monitored by the Special Tax Advisors. GLPI's ability to satisfy the asset tests depends upon GLPI's analysis of the characterization and fair marketvalues of its assets, some of which are not susceptible to a precise determination, and for which GLPI will not obtain independent appraisals.Penn has received a private letter ruling from the IRS with respect to certain issues relevant to GLPI's qualification as a REIT. In general, the ruling provides,subject to the terms and conditions contained therein, that (1) certain of the assets to be held by GLPI after the Spin-Off and (2) the methodology for calculating acertain portion of rent received by GLPI pursuant to the Penn Master Lease will not adversely affect GLPI's qualification as a REIT. Although GLPI may generallyrely upon the ruling, no assurance can be given that the IRS will not challenge GLPI's qualification as a REIT on the basis of other issues or facts outside the scopeof the ruling.If GLPI were to fail to qualify to be taxed as a REIT in any taxable year, it would be subject to U.S. federal income tax, including any applicable alternativeminimum tax, on its taxable income at regular corporate rates, and dividends paid to GLPI shareholders would not be deductible by GLPI in computing its taxableincome. Any resulting corporate liability could be substantial and would reduce the amount of cash available for distribution to its shareholders, which in turncould have an adverse impact on the value of GLPI common stock. Unless GLPI were entitled to relief under certain Code provisions, GLPI also would bedisqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which GLPI failed to qualify to be taxed as a REIT.Qualifying as a REIT involves highly technical and complex provisions of the Code.Qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrativeauthorities exist. Even a technical or inadvertent violation could jeopardize GLPI's REIT qualification. GLPI's qualification as a REIT will depend on itssatisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. In addition, GLPI's ability tosatisfy the requirements to qualify to be taxed as a REIT may depend in part on the actions of third parties over which it has no control or only limited influence.GLPI could fail to qualify to be taxed as a REIT if income it receives from Penn or its subsidiaries is not treated as qualifying income.Under applicable provisions of the Code, GLPI will not be treated as a REIT unless it satisfies various requirements, including requirements relating to thesources of its gross income. Rents received or accrued by GLPI from Penn or its subsidiaries will not be treated as qualifying rent for purposes of theserequirements if the Penn Master Lease is not respected as a true lease for U.S. federal income tax purposes and is instead treated as a service contract, joint ventureor some other type of arrangement. If the Penn Master Lease is not respected as a true lease for U.S. federal income tax purposes, GLPI may fail to qualify to betaxed as a REIT. Furthermore, GLPI's qualification as a REIT will depend on GLPI's satisfaction of certain asset, income, organizational, distribution, shareholderownership and other requirements on a continuing basis. GLPI's ability to satisfy the asset tests depends upon GLPI's analysis of the characterization and fairmarket values of its assets, some of which are not susceptible to a precise determination, and for which GLPI will not obtain independent appraisals.In addition, subject to certain exceptions, rents received or accrued by GLPI from Penn or its subsidiaries will not be treated as qualifying rent for purposesof these requirements if GLPI or an actual or constructive owner of 10% or more of GLPI stock actually or constructively owns 10% or more of the total combinedvoting power of all classes of Penn stock entitled to vote or 10% or more of the total value of all classes of Penn stock. GLPI's charter provides for restrictions onownership and transfer of its shares of stock, including restrictions on such ownership or transfer that would cause the rents received or accrued by GLPI fromPenn or its subsidiaries to be treated as non-qualifying rent for purposes of the REIT gross income requirements. Nevertheless, there can be no assurance that suchrestrictions will be effective in ensuring that rents received or accrued by GLPI from Penn or its subsidiaries will not be treated as qualifying rent for purposes ofREIT qualification requirements.Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.The maximum U.S. federal income tax rate applicable to income from "qualified dividends" payable by U.S. corporations to U.S. shareholders that areindividuals, trusts and estates is currently 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rates. Although these rules do notadversely affect the taxation of REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are individuals, trustsor estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which couldadversely affect the value of the stock of REITs, including GLPI's stock.27Table of ContentsREIT distribution requirements could adversely affect GLPI's ability to execute its business plan.GLPI generally must distribute annually at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excludingany net capital gains, in order for GLPI to qualify to be taxed as a REIT (assuming that certain other requirements are also satisfied) so that U.S. federal corporateincome tax does not apply to earnings that GLPI distributes. To the extent that GLPI satisfies this distribution requirement and qualifies for taxation as a REIT butdistributes less than 100% of its REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, GLPI will besubject to U.S. federal corporate income tax on its undistributed net taxable income. In addition, GLPI will be subject to a 4% nondeductible excise tax if the actualamount that GLPI distributes to its shareholders in a calendar year is less than a minimum amount specified under U.S. federal income tax laws. GLPI intends tomake distributions to its shareholders to comply with the REIT requirements of the Code.From time to time, GLPI may generate taxable income greater than its cash flow as a result of differences in timing between the recognition of taxableincome and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves or required debt or amortization payments. IfGLPI does not have other funds available in these situations, GLPI could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices ordistribute amounts that would otherwise be invested in future acquisitions to make distributions sufficient to enable GLPI to pay out enough of its taxable incometo satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase GLPI'scosts or reduce its equity. Thus, compliance with the REIT requirements may hinder GLPI's ability to grow, which could adversely affect the value of GLPI stock.Restrictions in GLPI's indebtedness following the Spin-Off, including restrictions on GLPI's ability to incur additional indebtedness or make certain distributions,could preclude it from meeting the 90% distribution requirement. Decreases in funds from operations due to unfinanced expenditures for acquisitions of propertiesor increases in the number of shares of GLPI common stock outstanding without commensurate increases in funds from operations each would adversely affect theability of GLPI to maintain distributions to its shareholders. Moreover, the failure of Penn to make rental payments under the Penn Master Lease would materiallyimpair the ability of GLPI to make distributions. Consequently, there can be no assurance that GLPI will be able to make distributions at the anticipateddistribution rate or any other rate.Even if GLPI remains qualified as a REIT, GLPI may face other tax liabilities that reduce its cash flow.Even if GLPI remains qualified for taxation as a REIT, GLPI may be subject to certain U.S. federal, state, and local taxes on its income and assets, includingtaxes on any undistributed income and state or local income, property and transfer taxes. For example, GLPI holds certain of its assets and conducts relatedactivities through TRS subsidiary corporations that are subject to federal, state, and local corporate-level income taxes as regular C corporations as well as state andlocal gaming taxes. In addition, GLPI may incur a 100% excise tax on transactions with a TRS if they are not conducted on an arm's-length basis. Any of thesetaxes would decrease cash available for distribution to GLPI shareholders.Complying with REIT requirements may cause GLPI to forego otherwise attractive acquisition opportunities or liquidate otherwise attractive investments.To qualify to be taxed as a REIT for U.S. federal income tax purposes, GLPI must ensure that, at the end of each calendar quarter, at least 75% of the valueof its assets consists of cash, cash items, government securities and "real estate assets" (as defined in the Code), including certain mortgage loans and securities.The remainder of GLPI's investments (other than government securities, qualified real estate assets and securities issued by a TRS) generally cannot include morethan 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, ingeneral, no more than 5% of the value of GLPI's total assets (other than government securities, qualified real estate assets and securities issued by a TRS) canconsist of the securities of any one issuer, and no more than 20% of the value of GLPI's total assets can be represented by securities of one or more TRSs. If GLPIfails to comply with these requirements at the end of any calendar quarter, it must correct the failure within 30 days after the end of the calendar quarter or qualifyfor certain statutory relief provisions to avoid losing its REIT qualification and suffering adverse tax consequences. As a result, GLPI may be required to liquidateor forego otherwise attractive investments. These actions could have the effect of reducing GLPI's income and amounts available for distribution to GLPIshareholders.In addition to the asset tests set forth above, to qualify to be taxed as a REIT GLPI must continually satisfy tests concerning, among other things, the sourcesof its income, the amounts it distributes to GLPI shareholders and the ownership of GLPI stock. GLPI may be unable to pursue investments that would beotherwise advantageous to GLPI in order to satisfy the source-of-income or asset-diversification requirements for qualifying as a REIT. Thus, compliance with theREIT requirements may hinder GLPI's ability to make certain attractive investments.28Table of ContentsComplying with REIT requirements may limit GLPI's ability to hedge effectively and may cause GLPI to incur tax liabilities.The REIT provisions of the Code substantially limit GLPI's ability to hedge its assets and liabilities. Income from certain hedging transactions that GLPImay enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets or from transactions tomanage risk of currency fluctuations with respect to any item of income or gain that satisfy the REIT gross income tests (including gain from the termination ofsuch a transaction) does not constitute "gross income" for purposes of the 75% or 95% gross income tests that apply to REITs, provided that certain identificationrequirements are met. To the extent that GLPI enters into other types of hedging transactions or fails to properly identify such transaction as a hedge, the income islikely to be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, GLPI may be required to limit its use ofadvantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of GLPI's hedging activities because the TRS may besubject to tax on gains or expose GLPI to greater risks associated with changes in interest rates that GLPI would otherwise want to bear. In addition, losses in theTRS will generally not provide any tax benefit, except that such losses could theoretically be carried back or forward against past or future taxable income in theTRS.GLPI paid the Purging Distribution in common stock and cash and may pay taxable dividends on GLPI common stock in common stock and cash. GLPI'sshareholders may sell shares of GLPI common stock to pay tax on such dividends, placing downward pressure on the market price of GLPI common stock.GLPI paid the Purging Distribution in a combination of cash and GLPI stock. Penn has received a private letter ruling from the IRS with respect to certainissues relevant to GLPI's payment of the Purging Distribution in a combination of cash and GLPI stock. In general, the ruling provides, subject to the terms andconditions contained therein, that (1) the Purging Distribution will be treated as a dividend that will first reduce GLPI's accumulated earnings and profits (asdetermined for U.S. federal income tax purposes) attributable to pre-REIT years in satisfaction of the REIT annual distribution requirement and (2) the amount ofany GLPI stock received by any GLPI shareholder as part of the Purging Distribution will be considered to equal the amount of cash that could have been receivedinstead. In the Purging Distribution, a shareholder of GLPI common stock will be required to report dividend income as a result of the Purging Distribution eventhough GLPI distributed no cash or only nominal amounts of cash to such shareholder.GLPI currently intends to pay dividends (other than the Purging Distribution) in cash only, and not in-kind. However, if for any taxable year, GLPI hassignificant amounts of taxable income in excess of available cash flow, GLPI may declare dividends in-kind in order to satisfy the REIT annual distributionrequirements. GLPI may distribute a portion of its dividends in the form of its stock or its debt instruments. In either event, a shareholder of GLPI common stockwill be required to report dividend income as a result of such distributions even though GLPI distributed no cash or only nominal amounts of cash to suchshareholder.The IRS has issued private letter rulings to other REITs (and, with respect to the Purging Distribution and as described above, to Penn) treating certaindistributions that are paid partly in cash and partly in stock as taxable dividends that would satisfy the REIT annual distribution requirement and qualify for thedividends paid deduction for U.S. federal income tax purposes. Those rulings may be relied upon only by taxpayers to whom they were issued, but GLPI couldrequest a similar ruling from the IRS. GLPI cannot rely on the private letter ruling Penn received from the IRS, as described above, with respect to the payment ofdividends other than the Purging Distribution. In addition, the IRS previously issued a revenue procedure authorizing publicly traded REITs to make electivecash/stock dividends, but that revenue procedure does not apply to GLPI's taxable year beginning on January 1, 2014 and future taxable years. Accordingly, it isunclear whether and to what extent GLPI will be able to make taxable dividends (other than the Purging Distribution) payable in-kind.If GLPI makes any taxable dividend payable in cash and common stock, taxable shareholders receiving such dividends will be required to include the fullamount of the dividend as ordinary income to the extent of GLPI's current and accumulated earnings and profits, as determined for U.S. federal income taxpurposes. As a result, shareholders may be required to pay income tax with respect to such dividends in excess of the cash dividends received. If a U.S. shareholdersells the GLPI stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to thedividend, depending on the market price of the stock at the time of the sale. Furthermore, with respect to certain non-U.S. shareholders, GLPI may be required towithhold federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in GLPI stock. If, in any taxabledividend payable in cash and GLPI stock, a significant number of GLPI shareholders determine to sell shares of GLPI stock in order to pay taxes owed ondividends, it may be viewed as economically equivalent to a dividend reduction and put downward pressure on the market price of GLPI stock.29Table of ContentsGLPI could be subject to tax on any unrealized net built-in gains in the assets held before electing to be treated as a REIT.GLPI owns appreciated assets that were held by a C corporation before GLPI elected to be treated as a REIT and were acquired by GLPI in a transaction inwhich the adjusted tax basis of the assets in GLPI's ownership is determined by reference to the adjusted tax basis of the assets in the hands of the C corporation. IfGLPI disposes of any such appreciated assets during the five-year period following GLPI's acquisition of the assets from the C corporation (i.e., during the five-year period following GLPI's qualification as a REIT), GLPI will be subject to tax at the highest corporate tax rates on any gain from such assets to the extent ofthe excess of the fair market value of the assets on the date that they were acquired by GLPI (i.e., at the time that GLPI became a REIT) over the adjusted tax basisof such assets on such date, which are referred to as built-in gains. GLPI would be subject to this tax liability even if it continues to qualify and maintains its statusas a REIT. Any recognized built-in gain will retain its character as ordinary income or capital gain and will be taken into account in determining REIT taxableincome and GLPI's distribution requirement. Any tax on the recognized built-in gain will reduce REIT taxable income. GLPI may choose not to sell in a taxabletransaction appreciated assets it might otherwise sell during the five-year period in which the built-in gain tax applies in order to avoid the built-in gain tax.However, there can be no assurances that such a taxable transaction will not occur. If GLPI sells such assets in a taxable transaction, the amount of corporate taxthat GLPI will pay will vary depending on the actual amount of net built-in gain or loss present in those assets as of the time GLPI became a REIT. The amount oftax could be significant.Risks Related to Our Capital StructureWe may have future capital needs and may not be able to obtain additional financing on acceptable terms.As of December 31, 2015 , we had indebtedness of $2.54 billion , with an additional $509.1 million available for borrowing under our revolving creditfacility. We may incur additional indebtedness in the future to refinance our existing indebtedness or to finance newly-acquired properties, such as the proposedPinnacle transaction. Any significant additional indebtedness could require a substantial portion of our cash flow to make interest and principal payments due onour indebtedness. Greater demands on our cash resources may reduce funds available to us to pay dividends, make capital expenditures and acquisitions, or carryout other aspects of our business strategy. Increased indebtedness can also limit our ability to adjust rapidly to changing market conditions, make us morevulnerable to general adverse economic and industry conditions and create competitive disadvantages for us compared to other companies with relatively lowerdebt levels and/or borrowing costs. Increased future debt service obligations may limit our operational flexibility, including our ability to acquire properties,finance or refinance our properties, contribute properties to joint ventures or sell properties as needed.We may be unable to obtain additional financing or financing on favorable terms or our operating cash flow may be insufficient to satisfy our financialobligations under indebtedness outstanding from time to time (if any). Among other things, the absence of an investment grade credit rating or any credit ratingdowngrade could increase our financing costs and could limit our access to financing sources. If financing is not available when needed, or is available onunfavorable terms, we may be unable to develop new or enhance our existing properties, complete acquisitions or otherwise take advantage of businessopportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.We expect to incur more indebtedness in connection with the Pinnacle transaction.Our expected increase in indebtedness could have important consequences, including the following: • it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt servicerequirements and general corporate or other purposes; • a material portion of our cash flows will be dedicated to the payment of principal and interest on our indebtedness, includingindebtedness it may incur in the future, and will not be available for other purposes, including to pay dividends and make acquisitions; • it could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us ata competitive disadvantage compared to our competitors that have less debt or are less leveraged; • it could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us fromcarrying out activities that are important to our growth; • it could increase our interest expense if interest rates in general increase because our indebtedness under the senior unsecured creditfacility bears interest at floating rates;30Table of Contents • it could limit our ability to take advantage of strategic business opportunities; and • it could make it more difficult for us to satisfy our obligations with respect to our indebtedness, including under the notes, and anyfailure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, couldresult in an event of default under the indenture governing the notes or under the agreements governing our other indebtedness which, ifnot cured or waived, could result in the acceleration of our indebtedness under the senior credit facility and under the notes.GLPI cannot assure you that its business will generate sufficient cash flow from operations, or that future borrowings will be available to GLPI under itssenior unsecured credit facility or from other debt financing, in an amount sufficient to enable GLPI to pay its indebtedness, including the notes, or to fund its otherliquidity needs. If GLPI does not generate sufficient cash flow from operations to satisfy its debt service obligations, including payments on the notes, GLPI mayhave to undertake alternative financing plans, such as refinancing or restructuring its indebtedness, selling assets or seeking to raise additional capital, including byissuing equity securities or securities convertible into equity securities. GLPI’s ability to restructure or refinance its indebtedness will depend on the capital marketsand its financial condition at such time. Any refinancing of GLPI’s indebtedness could be at higher interest rates and may require GLPI to comply with moreonerous covenants, which could further restrict its business operations. GLPI’s inability to generate sufficient cash flow to satisfy its debt service requirements,including the inability to service the notes, or to refinance its obligations on commercially reasonable terms, would have an adverse effect, which could be material,on its business, financial position and results of operations, as well as on GLPI’s ability to satisfy its obligations in respect of the notes. To the extent that GLPIwill incur additional indebtedness or such other obligations, the risks associated with GLPI’s leverage, including its possible inability to service its debt, wouldincrease.We may be subject to significant dilution caused by the additional issuance of equity securities.If and when additional funds are raised through the issuance of equity securities, including those expected to be raised in connection with the Pinnacleacquisition, our shareholders may experience significant dilution. Additionally, sales of substantial amounts of our common stock in the public market, or theperception that such sales could occur, could adversely affect the market price of our common stock, may make it more difficult for our shareholders to sell theirGLPI common stock at a time and price that they deem appropriate and could impair our future ability to raise capital through an offering of our equity securities.Adverse changes in our credit rating may affect our borrowing capacity and borrowing terms.Our outstanding debt is periodically rated by nationally recognized credit rating agencies. The credit ratings are based upon our operating performance,liquidity and leverage ratios, overall financial position, and other factors viewed by the credit rating agencies as relevant to both our industry and the economicoutlook. Our credit rating may affect the amount of capital we can access, as well as the terms of any financing we obtain. Because we rely in part on debtfinancing to fund growth, adverse changes in our credit rating may have a negative effect on our future growth.If we cannot obtain additional capital, our growth may be limited.As described above, in order to qualify and maintain our qualification as a REIT each year, we are required to distribute at least 90% of our REIT taxableincome, excluding net capital gains, to our shareholders. As a result, our retained earnings available to fund acquisitions, development, or other capitalexpenditures are nominal, and we rely upon the availability of additional debt or equity capital to fund these activities. Our long-term ability to grow throughacquisitions or development, which is an important component of our strategy, will be limited if we cannot obtain additional debt financing or raise equity capital.Market conditions may make it difficult to obtain debt financing or raise equity capital, and we cannot assure you that we will be able to obtain additional debt orequity financing or that we will be able to obtain such capital on favorable terms.An increase in market interest rates could increase our interest costs on existing and future debt and could adversely affect our stock price.If interest rates increase, so could our interest costs for any new debt and our variable rate debt obligations. This increased cost could make the financing ofany acquisition more costly, as well as lower our current period earnings. Rising interest rates could limit our ability to refinance existing debt when it matures orcause us to pay higher interest rates upon refinancing. In addition, an increase in interest rates could decrease the access third parties have to credit, therebydecreasing the amount they are willing to pay for our assets and consequently limiting our ability to reposition our portfolio promptly in response to changes ineconomic or other conditions.31Table of ContentsFurther, the dividend yield on our common stock, as a percentage of the price of such common stock, will influence the price of such common stock. Thus,an increase in market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield, which would adversely affect themarket price of our common stock.Covenants in our debt agreements may limit our operational flexibility, and a covenant breach or default could materially adversely affect our business,financial position or results of operations.The agreements governing our indebtedness contain customary covenants, including restrictions on our ability to grant liens on our assets, incurindebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations and pay certain dividends and other restricted payments. We have tocomply with the following financial covenants: a maximum total debt to total asset value ratio of 60% (subject to increase to 65% for specified periods inconnection with certain acquisitions), a minimum fixed charge coverage ratio of 2 to 1, a maximum senior secured debt to total asset value ratio of 40% and amaximum unsecured debt to unencumbered asset value ratio of 60%. These restrictions may limit our operational flexibility. Covenants that limit our operationalflexibility as well as defaults under our debt instruments could have a material adverse effect on our business, financial position or results of operations.Risk Factors Relating to Our Spin-Off from PennWe may be unable to achieve some or all the benefits that we expect to achieve from the Spin-Off.As a publicly traded company independent from Penn, GLPI has had the ability to pursue transactions with other gaming operators that would not pursuetransactions with Penn as a current competitor and will have the ability to fund acquisitions with its equity on significantly more favorable terms than those thatwould be available to Penn, to diversify into different businesses in which Penn, as a practical matter, could not diversify, such as hotels, entertainment facilitiesand office space, and to pursue certain transactions that Penn otherwise would be disadvantaged by or precluded from pursuing due to regulatory constraints.However, we may not be able to achieve some or all of the benefits that we expect to achieve as a company independent from Penn in the time we expect, if at all.If the Spin-Off, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes,GLPI could be subject to significant tax liabilities and, in certain circumstances, GLPI could be required to indemnify Penn for material taxes pursuant toindemnification obligations under the Tax Matters Agreement.Penn has received a private letter ruling from the IRS substantially to the effect that, among other things, the Spin-Off, together with the required complianceexchanges and certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and/or368(a)(1)(D) of the Code (the "IRS Ruling"). The IRS Ruling does not address certain requirements for tax-free treatment of the Spin-Off under Section 355, andPenn received from its tax advisors a tax opinion substantially to the effect that, with respect to such requirements on which the IRS will not rule, suchrequirements have been satisfied. The IRS Ruling, and the tax opinions that Penn received from its tax advisors, relied on, among other things, certainrepresentations, assumptions and undertakings, including those relating to the past and future conduct of GLPI's business, and the IRS Ruling and the opinionswould not be valid if such representations, assumptions and undertakings were incorrect in any material respect.Notwithstanding the IRS Ruling and the tax opinions, the IRS could determine the Spin-Off should be treated as a taxable transaction for U.S. federal incometax purposes if it determines any of the representations, assumptions or undertakings that were included in the request for the IRS Ruling are false or have beenviolated or if it disagrees with the conclusions in the opinions that are not covered by the IRS Ruling.Under a Tax Matters Agreement that GLPI entered into with Penn, GLPI generally is required to indemnify Penn against any tax resulting from the Spin-Offto the extent that such tax resulted from (i) an acquisition of all or a portion of the equity securities or assets of GLPI, whether by merger or otherwise, (ii) otheractions or failures to act by GLPI, or (iii) any of GLPI's representations or undertakings being incorrect or violated. GLPI's indemnification obligations to Penn andits subsidiaries, officers and directors will not be limited by any maximum amount. If GLPI is required to indemnify Penn or such other persons under thecircumstance set forth in the Tax Matters Agreement, GLPI may be subject to substantial liabilities.The historical financial information included in this filing may not be a reliable indicator of future results.The historical financial statements for the years ended December 31, 2015 and 2014 included herein reflect a full year of operations for the real estate entityand the businesses in the TRS, whereas financial results for the year ended December 31, 2013 reflect a full year of operations for the businesses in the TRS and apartial year from November 1, 2013 to December 31, 2013 for the real estate entity. The financial results for the years ended December 31, 2012 and 2011included in Item 6 reflect32Table of Contentsonly the operations of the TRS Properties. The historical financial statements included herein do not reflect what the business, financial position or results ofoperations of GLPI may be in the future.The ownership by our executive officers and directors of common shares, options or other equity awards of Penn may create, or may create the appearance of,conflicts of interest.Because of their current or former positions with Penn, substantially all of our executive officers, including our chief executive officer and chief financialofficer, and certain directors own common shares of Penn, options to purchase common shares of Penn or other Penn equity awards as well as common shares,options to purchase common shares and/or other equity awards in GLPI. The individual holdings of common shares, options to purchase common shares or otherequity awards of Penn and GLPI may be significant for some of these persons compared to their total assets. These equity interests may create, or appear to create,conflicts of interest when these directors and officers are faced with decisions that could benefit or affect the equity holders of Penn in ways that do not benefit oraffect us in the same manner.Peter M. Carlino, our Chairman and Chief Executive Officer, and David A. Handler, one of our independent directors, also serve on the Penn Board ofDirectors which may create conflicts of interest and/or create regulatory obstacles for the Company in its pursuit of additional properties.Peter M. Carlino serves as Chairman of Penn and the Chairman and Chief Executive Officer of GLPI. In addition, David A. Handler, one of our directors,serves as a director at Penn. These overlapping positions could create, or appear to create, potential conflicts of interest when our or Penn's management anddirectors pursue the same corporate opportunities, such as greenfield development opportunities, or face decisions that could have different implications for us andPenn. For example, potential conflicts of interest could arise in connection with the negotiation or the resolution of any dispute between us and Penn (or itssubsidiaries) regarding the terms of the agreements governing the separation and the relationship (e.g. Penn Master Lease) thereafter. Potential conflicts of interestcould also arise if we and Penn enter into any commercial arrangements with each other in the future. We have established a mechanism in our CorporateGovernance Guidelines to address potential conflicts through the use of an independent director but there can be no assurance that this process will completelyeliminate conflicts resulting from overlapping directors. In addition to potential conflicts of interest, the overlapping director position could create obstacles toengaging in certain transactions in close proximity to existing Penn properties and there can be no assurance that the Company will be able to overcome suchobstacles.Potential indemnification liabilities of GLPI pursuant to the Separation and Distribution Agreement could materially adversely affect GLPI.The Separation and Distribution Agreement between GLPI and Penn provides for, among other things, the principal corporate transactions required to effectthe separation, certain conditions to the separation and provisions governing the relationship between GLPI and Penn with respect to, and resulting from theseparation.Among other things, the Separation and Distribution Agreement provides for indemnification obligations designed to make GLPI financially responsible forsubstantially all liabilities that may result relating to or arising out of its business. If GLPI is required to indemnify Penn under the circumstances set forth in theSeparation and Distribution Agreement, GLPI may be subject to substantial liabilities.In connection with the Spin-Off, Penn will indemnify us for certain liabilities. However, there can be no assurance that these indemnities will be sufficient toinsure us against the full amount of such liabilities, or that Penn's ability to satisfy its indemnification obligation will not be impaired in the future.Pursuant to the Separation and Distribution Agreement, Penn has agreed to indemnify us for certain liabilities. However, third parties could seek to hold usresponsible for any of the liabilities that Penn agreed to retain, and there can be no assurance that Penn will be able to fully satisfy its indemnification obligations.Moreover, even if we ultimately succeed in recovering from Penn any amounts for which we are held liable, we may be temporarily required to bear these losseswhile seeking recovery from Penn and such recovery could have a material adverse impact on Penn's financial condition and ability to pay rent due under the PennMaster Lease.A court could deem the distribution to be a fraudulent conveyance and void the transaction or impose substantial liabilities upon us.A court could deem the distribution of GLPI common shares or certain internal restructuring transactions undertaken by Penn in connection with the Spin-Off, or the Purging Distribution by GLPI, to be a fraudulent conveyance or transfer. Fraudulent conveyances or transfers are defined to include transfers made orobligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonablyequivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as33Table of Contentsthey become due. In such circumstances, a court could void the transactions or impose substantial liabilities upon us, which could adversely affect our financialcondition and our results of operations. Among other things, the court could require our shareholders to return to Penn some or all of the shares of our commonstock issued in the distribution, to return some of the Purging Distribution to GLPI, or require us to fund liabilities of other companies involved in the restructuringtransactions for the benefit of creditors. Whether a transaction is a fraudulent conveyance or transfer will vary depending upon the jurisdiction whose law is beingapplied.The Spin-Off agreements are not the result of negotiations between unrelated third parties.The agreements that we entered into with Penn in connection with the Spin-Off, including the Separation and Distribution Agreement, Penn Master Lease,Tax Matters Agreement, Employee Matters Agreement and Transition Services Agreement, were negotiated in the context of the Spin-Off while we were still awholly-owned subsidiary of Penn. Accordingly, during the period in which the terms of those agreements were negotiated, we did not have an independent boardof directors or a management team independent of Penn. As a result, although those agreements are generally intended to reflect arm's-length terms, the terms ofthose agreements may not reflect terms that would have resulted from arm's-length negotiations between unaffiliated third parties. Accordingly, there can be noassurance that the terms of these agreements will be as favorable for GLPI as would have resulted from negotiations with one or more unrelated third parties.ITEM 1B.    UNRESOLVED STAFF COMMENTSNone.ITEM 2.     PROPERTIESRental PropertiesAs of December 31, 2015 , all but one of the Company's 19 rental properties were leased to a subsidiary of Penn under the Penn Master Lease, a triple-netoperating lease with an initial term of 15 years with no purchase option, followed by four 5-year renewal options (exercisable by Penn) on the same terms andconditions. The Casino Queen lease is also a triple-net operating lease with terms similar to those of the Penn Master Lease.In addition, see Item 1 for further information pertaining to our rental properties.TRS PropertiesHollywood Casino Baton RougeHollywood Casino Baton Rouge is a dockside riverboat casino located on approximately 20.1 acres, which we own, on the east bank of the Mississippi Riverin the East Baton Rouge Downtown Development District. The property site serves as the dockside embarkation for Hollywood Casino Baton Rouge and features atwo-story building. We also own approximately 4.8 acres of land that are used primarily for offices, warehousing, and parking, and approximately 4 acres ofadjacent land which features a railroad underpass that provides unimpeded access to the casino property.Hollywood Casino PerryvilleWe own 36.4 acres of land in Perryville, Maryland where Hollywood Casino Perryville is located. The property is located directly off Interstate 95 in CecilCounty, Maryland just 35 miles northeast of Baltimore and 70 miles from Washington, D.C.See Item 1 for further information pertaining to our TRS Properties.Corporate OfficeIn October 2015, the Company moved into its new corporate headquarters building located in Wyomissing, Pennsylvania, which is owned by the Company.ITEM 3.    LEGAL PROCEEDINGSOn December 15, 2015, the Company entered into a settlement agreement by and among GLPI, GLP Capital, L.P., PA Meadows, LLC, PA Mezzco, LLC("PA Mezz") and CCR (together with PA Mezz, the "Sellers") (the "Settlement Agreement"). The Settlement Agreement provides for the release all claims by andbetween the parties with respect to the outstanding litigation and further provides for a mutual waiver, release and covenant among the parties. On January 11,2016, the parties filed a stipulation with the court discontinuing the litigation. 34Table of ContentsIn connection with the Settlement Agreement, and as a necessary component of the settlement terms, the parties also entered into an amended and restatedmembership interest purchase agreement (the "Amended and Restated Membership Interest Purchase Agreement") providing for the amendment and restatementof the membership interest purchase agreement entered into among the same parties on May 13, 2014. Upon the terms and subject to the conditions set forth in theAmended and Restated Membership Interest Purchase Agreement, the Company will purchase from the Sellers all of the equity interests of PA Meadows, LLC fora base purchase price of $440 million, inclusive of $10 million previously paid to the Sellers, subject to certain closing adjustments, including adjustments basedon the amount of working capital and other operational cash balances. The transaction is subject to customary closing conditions, including the receipt ofregulatory approvals and expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions and othermatters arising in the normal course of business. The Company does not believe that the final outcome of these matters will have a material adverse effect on theCompany's consolidated financial position or results of operations. In addition, the Company maintains what it believes is adequate insurance coverage to furthermitigate the risks of such proceedings. However, such proceedings can be costly, time consuming and unpredictable and, therefore, no assurance can be given thatthe final outcome of such proceedings may not materially impact the Company's consolidated financial condition or results of operations. Further, no assurance canbe given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.ITEM 4.    MINE SAFETY DISCLOSURESNot applicable.35Table of ContentsPART IIITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESMarket InformationOur common stock is quoted on the NASDAQ Global Select Market under the symbol "GLPI." The following table sets forth for the periods indicated thehigh and low closing prices per share of our common stock as reported on the NASDAQ Global Select Market and cash dividends per share declared and paid forthe same periods. High Low Dividends per Share 2015 First Quarter $37.65 $28.54 $0.545Second Quarter 38.18 35.61 0.545 Third Quarter 36.76 28.68 0.545 Fourth Quarter 30.98 25.90 0.545 2014 First Quarter $50.43 $33.98 $12.36(1) Second Quarter $38.33 $32.41 $0.52 Third Quarter $35.88 $30.90 $0.52 Fourth Quarter $32.61 $28.16 $0.92(2) The closing sale price per share of our common stock on the NASDAQ Global Select Market on February 17, 2016 was $26.25. As of February 17, 2016,there were approximately 521 holders of record of our common stock.(1) Includes the February 18, 2014 Purging Distribution, which totaled $1.05 billion or $11.84 per common share and was comprised of cash and GLPIcommon stock, to distribute the accumulated earnings and profits related to the real property assets and attributable to any pre-REIT years, including any earningsand profits allocated to GLPI in connection with the Spin-Off.(2) Includes one-time dividends of $0.40 per common share related to distributions to ensure the Company appropriately allocated its historical earnings andprofits relative to the separation from Penn, in response to the Pre-Filing Agreement requested from the Internal Revenue Service and distributed 100% of itstaxable income for the 2014 year.Dividend PolicyThe Company's annual dividend is greater than or equal to at least 90% of its REIT taxable income on an annual basis, determined without regard to thedividends paid deduction and excluding any net capital gains. U.S. federal income tax law generally requires that a REIT annually distribute at least 90% of itsREIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay regular corporate rates to the extent that itannually distributes less than 100% of its taxable income. For purposes of determining its cash distributions, GLPI's Adjusted Funds From Operations is calculatedby starting with The National Association of Real Estate Investment Trusts' ("NAREIT") definition of "funds from operations," which is net income (computed inaccordance with generally accepted accounting principles ("GAAP")), excluding (gains) or losses from sales of property and real estate depreciation. The NAREITdefinition is adjusted to exclude the effect of stock based compensation expense, debt issuance costs amortization, other depreciation expense and straight-line rentadjustments and reduced by maintenance capital expenditures.On January 29, 2016 , the Company declared a regular quarterly cash dividend of $0.56 per share, which is payable on March 25, 2016 to shareholders ofrecord as of February 22, 2016 . Cash available for distribution to GLPI shareholders is derived from the rental payments under its real estate leases and the incomeof the TRS Properties. All distributions will be made by GLPI at the discretion of its Board of Directors and will depend on the financial position, results ofoperations, cash flows, capital requirements, debt covenants, applicable laws and other factors as the Board of Directors of GLPI deems relevant. See Note 11 tothe consolidated financial statements for further details on dividends.36Table of ContentsITEM 6.    SELECTED FINANCIAL DATAThe following selected consolidated financial and operating data for the five-year period ended December 31, 2015 is derived from our consolidated financialstatements. The selected consolidated financial and operating data should be read in conjunction with our consolidated financial statements and notes thereto,"Management's Discussion and Analysis of Financial Condition and Results of Operations" and the other financial information included herein. Year Ended December 31, 2015 (1) 2014 (1) 2013 (1) (2) 2012 (2) 2011 (in thousands, except per share data)Income statement data: Net revenues$575,053 $591,068 $235,452 $210,643 $231,884Total operating expenses317,638 332,562 181,547 166,975 179,371Income from operations257,415 258,506 53,905 43,668 52,513Total other expenses121,851 114,586 23,456 6,318 6,954Income from operations before income taxes135,564 143,920 30,449 37,350 45,559Taxes on income7,442 5,113 15,596 14,431 18,875Net income$128,122 $138,807 $14,853 $22,919 $26,684Per share data: Basic earnings per common share$1.12 $1.23 $0.13 $0.21 $0.24Diluted earnings per common share$1.08 $1.18 $0.13 $0.20 $0.23Weighted shares outstanding—Basic (3)114,432 112,037 110,617 110,582 110,582Weighted shares outstanding—Diluted (3)118,439 117,586 115,865 115,603 115,603 Other data: Net cash provided by operating activities$319,688 $273,259 $80,632 $26,744 $56,840Net cash used in investing activities(14,142) (317,319) (16,275) (4,810) (8,171)Net cash (used in) provided by financing activities(299,644) (205,188) 206,302 (24,518) (50,436)Depreciation109,783 106,843 28,923 14,090 14,568Straight-line rent adjustments55,825 44,877 6,677 — —Interest expense124,183 117,030 19,254 — —Capital expenditures (4)19,102 142,769 16,428 5,190 8,288Balance sheet data: Cash and cash equivalents$41,875 $35,973 $285,221 $14,562 $17,146Real estate investments, net2,090,059 2,180,124 2,010,303 — —Total assets2,448,155 2,525,454 2,562,362 267,075 261,342Total debt2,510,341 2,570,361 2,303,123 — —Shareholders' equity(253,514) (176,290) 137,452 236,330 219,911Property Data: Number of rental properties owned at year end19 19 17 — —Rentable square feet at year end6,970 6,970 6,344 — — (1) Financial results for the Company's 2015 and 2014 fiscal years reflect full years of operations for both operating segments. GLPI was spun-off from Pennon November 1, 2013. See Note 1 to the consolidated financial statements for additional details. For 2012 and 2011, the selected historical financial datasets forth the historical operations of Louisiana Casino Cruises, Inc. and Penn Cecil Maryland, Inc., which were acquired by a subsidiary of GLPI as partof the Spin-Off.37Table of Contents(2) Hollywood Casino Perryville faced increased competition and its results have been negatively impacted by the opening of a casino complex at theArundel Mills mall in Anne Arundel, Maryland. The Anne Arundel casino opened on June 6, 2012 with approximately 3,200 slot machines andsignificantly increased its slot machine offerings by mid-September 2012 to approximately 4,750 slot machines. In addition, a new riverboat casino andhotel in Baton Rouge, Louisiana opened on September 1, 2012. The opening of this riverboat casino has had an adverse effect on the financial results ofHollywood Casino Baton Rouge.(3) Basic and diluted earnings per common share and the average number of common shares outstanding as of December 31, 2012 and 2011 wereretrospectively restated to equal the number of GLPI basic and diluted shares outstanding at the Spin-Off. The share counts were also adjusted to reflectthe impact of the shares issued as part of the Purging Distribution. See Note 1 to the consolidated financial statements for further details.(4) The higher level of capital expenditures in 2014 was primarily due to the construction of Hollywood Gaming at Dayton Raceway and Hollywood Gamingat Mahoning Valley Race Course which opened to the public on August 28, 2014 and September 17, 2014, respectively.ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our OperationsGLPI is a self-administered and self-managed Pennsylvania REIT. GLPI was incorporated in Pennsylvania on February 13, 2013, as a wholly-ownedsubsidiary of Penn. On November 1, 2013, Penn contributed to GLPI, through a series of internal corporate restructurings, substantially all of the assets andliabilities associated with Penn's real property interests and real estate development business, as well as the assets and liabilities of Louisiana Casino Cruises, Inc.(d/b/a Hollywood Casino Baton Rouge) and Penn Cecil Maryland, Inc. (d/b/a Hollywood Casino Perryville), which are referred to as the "TRS Properties," andthen spun-off GLPI to holders of Penn's common and preferred stock in a tax-free distribution. The Company elected on its U.S. federal income tax return for itstaxable year beginning on January 1, 2014 to be treated as a REIT and the Company, together with an indirect wholly-owned subsidiary of the Company, GLPHoldings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. and Penn Cecil Maryland, Inc. as a "taxable REIT subsidiary"effective on the first day of the first taxable year of GLPI as a REIT. As a result of the Spin-Off, GLPI owns substantially all of Penn's former real property assetsand leases back most of those assets to Penn for use by its subsidiaries, under the Penn Master Lease, and GLPI also owns and operates the TRS Properties throughits TRS. The assets and liabilities of GLPI were recorded at their respective historical carrying values at the time of the Spin-Off.Prior to the Spin-Off, GLPI and Penn entered into a Separation and Distribution Agreement setting forth the mechanics of the Spin-Off, certainorganizational matters and other ongoing obligations of Penn and GLPI. Penn and GLPI or their respective subsidiaries, as applicable, also entered into a numberof other agreements prior to the Spin-Off to provide a framework for the restructuring and for the relationships between GLPI and Penn after the Spin-Off.GLPI's primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net leasearrangements. Triple-net leases are leases in which the lessee pays rent to the lessor, as well as all taxes, insurance, and maintenance expenses that arise from theuse of the property. As of December 31, 2015 , GLPI's portfolio consisted of 21 gaming and related facilities, including the TRS Properties and the real propertyassociated with 18 gaming and related facilities operated by Penn and the real property associated with the Casino Queen in East St. Louis, Illinois. These facilitiesare geographically diversified across 12 states and contain approximately 7.0 million of rentable square feet. As of December 31, 2015 , our properties were 100%occupied.We expect to grow our portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms,including our July 2015 announcement of our proposed acquisition of substantially all of the real estate assets of Pinnacle and our December 2015 announcementof the resolution of the previously disclosed litigation with the Meadows and our entry into an amended purchase agreement with CCR, the owner of the Meadows.The Pinnacle transaction is expected to close during April 2016, while the Meadows transaction is expected to close during the second half of 2016. However, wecannot predict the actual dates on which the transactions will be completed because each transaction is subject to conditions beyond our control.Additionally, we believe we have the ability to leverage the expertise our management team has developed over the years to secure additional avenues forgrowth beyond the gaming industry. Accordingly, we anticipate we will be able to effect strategic acquisitions unrelated to the gaming industry as well as otheracquisitions that may prove complementary to GLPI's gaming facilities.38Table of ContentsIn connection with the Spin-Off, Penn allocated its accumulated earnings and profits (as determined for U.S. federal income tax purposes) for periodsprior to the consummation of the Spin-Off between Penn and GLPI. In connection with its election to be taxed as a REIT for U.S. federal income tax purposes,GLPI declared a special dividend to its shareholders to distribute any accumulated earnings and profits relating to the real property assets and attributable to anypre-REIT years, including any earnings and profits allocated to GLPI in connection with the Spin-Off, to comply with certain REIT qualification requirements (the"Purging Distribution"). The Purging Distribution, which was paid on February 18, 2014, totaled $1.05 billion and was comprised of cash and GLPI commonstock. Additionally, pursuant to the terms of a Pre-Filing Agreement with the IRS, on December 19, 2014, we made a one-time distribution of $37.0 million toshareholders in order to confirm we appropriately allocated our historical earnings and profits relative to the separation from Penn. See Note 11 to the consolidatedfinancial statements for further details on the Purging Distribution and the distribution related to the Pre-Filing Agreement. As of December 31, 2015 , the majority of our earnings are the result of the rental revenue from the lease of our properties to a subsidiary of Pennpursuant to the Penn Master Lease. The Penn Master Lease is a triple-net operating lease with an initial term of 15 years, with no purchase option, followed byfour 5 year renewal options (exercisable by Penn) on the same terms and conditions. The rent structure under the Penn Master Lease includes a fixed component, aportion of which is subject to an annual 2% escalator if certain rent coverage ratio thresholds are met, and a component that is based on the performance of thefacilities, which is adjusted, subject to certain floors (i) every five years by an amount equal to 4% of the average change to net revenues of all facilities under thePenn Master Lease (other than Hollywood Casino Columbus and Hollywood Casino Toledo) during the preceding five years , and (ii) monthly by an amount equalto 20% of the change in net revenues of Hollywood Casino Columbus and Hollywood Casino Toledo during the preceding month. In addition to rent, the tenant isrequired to pay the following: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on theleased properties, (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and (4) all utilities and other servicesnecessary or appropriate for the leased properties and the business conducted on the leased properties. The Casino Queen property is leased back to a third partyoperator on a triple-net basis, with an initial term of 15 years, followed by four 5 year renewal options. The terms and conditions of the Casino Queen lease aresimilar to the Penn Master Lease.Additionally, in accordance with ASC 605, "Revenue Recognition" ("ASC 605"), the Company records revenue for the real estate taxes paid by its tenantson the leased properties with an offsetting expense in general and administrative expense within the consolidated statement of income, as the Company hasconcluded it is the primary obligor. Gaming revenue generated by our TRS Properties is derived primarily from video lottery gaming revenue and to a lesser extent, table game and pokerrevenue, which is highly dependent upon the volume and spending levels of customers at our TRS Properties. Other revenues at our TRS Properties are derivedfrom dining, retail, and certain other ancillary activities.Our Competitive StrengthsWe believe the following competitive strengths will contribute significantly to our success:Geographically Diverse Property PortfolioAs of December 31, 2015 , our portfolio consisted of 21 gaming and related facilities. Our portfolio comprises approximately 7.2 million of propertysquare footage and approximately 3,240 acres of owned and leased land and is broadly diversified by location across 12 states. Our geographic diversification willlimit the effect of a decline in any one regional market on our overall performance.Financially Secure TenantsAs of December 31, 2015 , substantially all of the Company's real estate properties were leased to a wholly-owned subsidiary of Penn, and the majority ofthe Company's rental revenues were derived from the Penn Master Lease. Penn is a leading, diversified, multi-jurisdictional owner and manager of gaming andpari-mutuel properties, and an established gaming provider with strong financial performance. Penn is a publicly traded company that is subject to theinformational filing requirements of the Securities Exchange Act of 1934, as amended, and is required to file periodic reports on Form 10-K, Form 10-Q and Form8-K with the Securities and Exchange Commission. According to Penn's filings with the Securities and Exchange Commission, Penn's net revenues were $2.8billion , $2.6 billion and $2.9 billion for the years ended December 31, 2015 , 2014 and 2013 , respectively.Long-Term, Triple-Net Lease StructureOur real estate properties are leased under triple-net leases guaranteed by our tenants with initial terms of 15 years (in addition to four 5 year renewals atthe tenants' option), pursuant to which the tenant is responsible for all facility maintenance,39Table of Contentsinsurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leasedproperties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.Flexible UPREIT StructureWe have the flexibility to operate through an umbrella partnership, commonly referred to as an UPREIT structure, in which substantially all of ourproperties and assets are held by GLP Capital or by subsidiaries of GLP Capital. Conducting business through GLP Capital allows us flexibility in the manner inwhich we structure and acquire properties. In particular, an UPREIT structure enables us to acquire additional properties from sellers in exchange for limitedpartnership units, which provides property owners the opportunity to defer the tax consequences that would otherwise arise from a sale of their real properties andother assets to us. As a result, this structure potentially may facilitate our acquisition of assets in a more efficient manner and may allow us to acquire assets thatthe owner would otherwise be unwilling to sell because of tax considerations. We believe that this flexibility will provide us an advantage in seeking futureacquisitions.Experienced and Committed Management TeamAlthough our management team has limited experience in operating a REIT, it has extensive gaming and real estate experience. Peter M. Carlino, chiefexecutive officer of GLPI, has more than 30 years of experience in the acquisition and development of gaming facilities and other real estate projects. William J.Clifford, chief financial officer of GLPI, is a finance professional with more than 30 years of experience in the gaming industry, including four years of gamingregulatory experience, sixteen years of casino property operations, and fourteen years of corporate experience. Through years of public company experience, ourmanagement team also has extensive experience accessing both debt and equity capital markets to fund growth and maintain a flexible capital structure.Segment Information Consistent with how our Chief Operating Decision Maker reviews and assesses our financial performance, we have two reportable segments, GLP Capitaland the TRS Properties. The GLP Capital reportable segment consists of the leased real property and represents the majority of our business. The TRS Propertiesreportable segment consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge. Executive SummaryWhen reviewing the Company's financial results it should be noted that financial results for the Company's 2015 and 2014 fiscal years reflect a full yearof operations for both operating segments, whereas financial results for the Company's 2013 fiscal year reflect a full year of operations for the businesses in thetaxable REIT subsidiaries and a partial year from November 1, 2013 to December 31, 2013 for the real estate entity. Financial Highlights We reported net revenues and income from operations of $575.1 million and $257.4 million , respectively, for the year ended December 31, 2015 ,compared to $591.1 million and $258.5 million , respectively, for the year ended December 31, 2014 . The major factors affecting our results for the year endedDecember 31, 2015 , as compared to the year ended December 31, 2014 , were: •Rent recognized from tenant lease payments increased by $5.7 million for the year ended December 31, 2015, compared to December 31, 2014, primarilydue to the addition of Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course to the Penn Master Lease in thethird quarter of 2014, as well as the impact of the Penn rent escalator, pursuant to the Penn Master Lease (effective November 1st of each year) andimproved results at our two properties with monthly variable rent in 2015, partially offset by the closure of the Argosy Casino Sioux City in July 2014.•Net revenues from our TRS Properties declined $6.2 million for the year ended December 31, 2015, compared to December 31, 2014, primarily due todecreased gaming revenues at Hollywood Casino Perryville, resulting from additional competition in the Perryville market.•Real estate taxes paid by tenants decreased by $15.5 million, primarily due to a property tax appeal settlement at one of our properties leased to Penn.Although tenants are responsible for the payment of real estate taxes under the triple-net lease structure, we are required to record revenue for the realestate taxes paid by our tenants on the leased40Table of Contentsproperties with an offsetting expense in real estate taxes within the consolidated statement of income as we have concluded we are the primary obligorunder ASC 605, "Revenue Recognition." Accordingly, the real estate taxes component of operating expenses also declined by the same amount. Thisproperty tax appeal resulted in lower net revenues and operating expenses in the year ended December 31, 2015, as compared to the year ended December31, 2014, but had no impact on income from operations or net income.•Decreased gaming expenses of $5.8 million for the year ended December 31, 2015, compared to the year ended December 31, 2014, due to a decrease ingaming taxes at Hollywood Casino Perryville, resulting from lower gaming revenues and a decrease in the gaming tax rate on revenue generated from slotmachines.•Decreased food, beverage and other expenses of $1.1 million for the year ended December 31, 2015, compared to the year ended December 31, 2014,primarily driven by decreased food and beverage sales at our TRS Properties.•General and administrative expenses increased $4.8 million for the year ended December 31, 2015 , compared to the prior year, primarily due to legal andconsulting fees incurred by our GLP Capital segment related to the recently settled Meadows litigation and in connection with the Pinnacle transaction, aswell as an increase in short-term incentive compensation and stock based compensation expense, led by additional expense for restricted stock awards andperformance-based restricted stock awards.•Increased depreciation expense of $2.9 million for the year ended December 31, 2015 , compared to the prior year, primarily due to a full year ofdepreciation expense on the assets placed into service at Hollywood Gaming at Mahoning Valley Race Course and Hollywood Gaming at DaytonRaceway during the third quarter of 2014. •Increased interest expense of $7.2 million for the year ended December 31, 2015 , compared to the prior year,primarily due to the amortization of bridge financing fees related to the Pinnacle transaction through interest expense.•Increased income tax expense of $2.3 million for the year ended December 31, 2015 , compared to the prior year. •Net income decreased by $10.7 million for the year ended December 31, 2015 , compared to the prior year, primarily due to the variances explainedabove.Segment Developments The following are recent developments that have had or are likely to have an impact on us by segment: GLP Capital•On December 15, 2015, the Company entered into the Amended and Restated Membership Interest Purchase Agreement with CCR to acquire theMeadows which is located in Washington, Pennsylvania for a base purchase price of $440 million, inclusive of the $10 million previously paid to CCR,subject to certain closing adjustments, including adjustments based on the amount of working capital and other operational cash balances. The amendedpurchase agreement amends and restates the original purchase agreement entered into among the same parties on May 13, 2014. GLPI expects to sell thegaming operations to a third party operator, while retaining ownership of the land and buildings. The transaction is expected to close in the second half of2016. However, we cannot predict the actual date on which the transaction will be completed because such transaction is subject to conditions beyond ourcontrol.As previously reported, on October 27, 2014, the Company filed a lawsuit in the Southern District of New York against CCR alleging, among otherthings, fraud, breach of the agreement and breach of the related consulting agreement entered into at the same time. The lawsuit was subsequently re-filedin New York state court on January 7, 2015 for procedural reasons. In connection with entering into the Amended and Restated Membership InterestPurchase Agreement described above, the parties also entered into the Settlement Agreement, dated December 15, 2015, pursuant to which the partiesreleased all claims against each other with respect to the outstanding litigation, and which further provides for a mutual waiver, release and covenantamong the parties.•On July 20, 2015, the Company entered into a definitive agreement with Pinnacle to acquire, subject to the terms and conditions thereof, substantially allof Pinnacle's real estate assets in a series of transactions including a spin-off by Pinnacle of its gaming and other operating assets into a new publicly-traded company followed by a merger of Pinnacle with a wholly owned subsidiary of GLPI. The transaction consideration includes 0.85 shares of GLPIcommon stock to be issued in respect of each issued and outstanding share of Pinnacle common stock and certain41Table of ContentsPinnacle equity awards. In addition, GLPI would assume $2.7 billion of Pinnacle's debt, which will be refinanced at closing. The Company also expects toissue additional equity, the proceeds of which will be used to fund transaction costs. The transaction is expected to close in April 2016. However, wecannot predict the actual date on which the transaction will be completed because such transaction is subject to conditions beyond our control. See Item 1.Business - Overview in Part I of this Annual Report on Form 10-K for further details surrounding the Pinnacle merger.•Operations at both Hollywood Gaming at Mahoning Valley Race Course and Hollywood Gaming at Dayton Raceway, our two joint developmentproperties with Penn, commenced during the third quarter of 2014. Both properties were added to the Penn Master Lease upon commencement ofoperations.•Operations at the Argosy Casino Sioux City, which was operated by Penn, ceased at the end of July 2014, as the result of a ruling of the Iowa Racing andGaming Commission ("IRGC"). Penn challenged the denial of its gaming license renewal by the IRGC but was ultimately ordered to cease operations bythe Iowa Supreme Court. TRS Properties•Hollywood Casino Perryville continued to face increased competition, led by the August 26, 2014 opening of the Horseshoe Casino Baltimore, located indowntown Baltimore. Horseshoe Casino Baltimore has and will continue to negatively impact Hollywood Casino Perryville's results of operations.•Furthermore, in November 2012, voters approved legislation authorizing a sixth casino in Prince George’s County, Maryland. The 2012 law also changesthe tax rate casino operators pay the state, varying from casino to casino, allows all casinos in Maryland to be open 24 hours per day for the entire year,and permits casinos to directly purchase slot machines in exchange for gaming tax reductions. During the first half of 2015, Hollywood Casino Perryvilledirectly purchased slot machines, and as a result its tax rate on gaming revenues derived from slot machines decreased from 67 percent to 61 percenteffective April 1, 2015, resulting in a 2015 effective tax rate of 62.5 percent. Prior to Hollywood Casino Perryville's direct slot machine purchases, all slotmachines were owned by the state. The option for an additional 5 percent tax reduction is possible in 2019 if an independent commission agrees. InDecember 2013, the license for the sixth casino in Prince George’s County was granted. The $1.3 billion casino resort, which is currently underconstruction and nteexpected to open in the fourth quarter of 2016, will adversely impact Hollywood Casino Perryville’s financial results.Critical Accounting EstimatesWe make certain judgments and use certain estimates and assumptions when applying accounting principles in the preparation of our consolidatedfinancial statements. The nature of the estimates and assumptions are material due to the levels of subjectivity and judgment necessary to account for highlyuncertain factors or the susceptibility of such factors to change. We have identified the accounting for income taxes, real estate investments, and goodwill and otherintangible assets as critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective andcomplex judgments.We believe the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate.However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements,the resulting changes could have a material adverse effect on our consolidated results of operations and, in certain situations, could have a material adverse effecton our consolidated financial condition.The development and selection of the critical accounting estimates, and the related disclosures, have been reviewed with the Audit Committee of ourBoard of Directors.Income TaxesWe elected on our U.S. federal income tax return for our taxable year beginning on January 1, 2014 to be treated as a REIT and we, together with anindirect wholly-owned subsidiary of the Company, GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana Casino Cruises, Inc. andPenn Cecil Maryland, Inc. as a "taxable REIT subsidiary" effective on the first day of the first taxable year of GLPI as a REIT. We intend to continue to beorganized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operationalrequirements, including a requirement to distribute at least 90% of our annual REIT taxable income to shareholders determined without regard to the dividendspaid deduction and excluding any net capital gain, meet the various other requirements imposed by the Code relating to matters such as operating results, assetholdings, distribution levels, and diversity of stock ownership. As a REIT, we generally will not be subject to federal income tax on income that we distribute asdividends to our shareholders.42Table of ContentsIf we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxableincome at regular corporate income tax rates, and dividends paid to our shareholders would not be deductible by us in computing taxable income. Any resultingcorporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to shareholders. Unless wewere entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following theyear in which we failed to qualify to be taxed as a REIT. It is not possible to state whether in all circumstances we would be entitled to this statutory relief.Our TRS Properties are able to engage in activities resulting in income that would be not qualifying income for a REIT. As a result, certain activities ofthe Company which occur within our TRS Properties are subject to federal and state income taxes.Real Estate InvestmentsReal estate investments primarily represent land and buildings leased to the Company's tenants. Real estate investments that we received in connectionwith the Spin-Off were contributed to us at Penn's historical carrying amount. We record the acquisition of real estate at cost, including acquisition and closingcosts. The cost of properties developed by GLPI include costs of construction, property taxes, interest and other miscellaneous costs incurred during thedevelopment period until the project is substantially complete and available for occupancy. We consider the period of future benefit of the asset to determine theappropriate useful lives. Depreciation is computed using a straight-line method over the estimated useful lives of the buildings and building improvements.Additionally, the amortization of real estate assets subject to capital leases (for which GLPI is the lessee) is included within the depreciation line item of theCompany's consolidated statements of income.We continually monitor events and circumstances that could indicate that the carrying amount of our real estate investments may not be recoverable orrealized. When indicators of potential impairment suggest that the carrying value of a real estate investment may not be recoverable, we estimate the fair value ofthe investment by calculating the undiscounted future cash flows from the use and eventual disposition of the investment. This amount is compared to the asset'scarrying value. If we determine the carrying amount is not recoverable, we would recognize an impairment charge equivalent to the amount required to reduce thecarrying value of the asset to its estimated fair value, calculated in accordance with GAAP fair value provisions. We group our real estate investments by tenant inevaluating impairment. In assessing the recoverability of the carrying value, we must make assumptions regarding future cash flows and other factors. Factorsconsidered in performing this assessment include current operating results, market and other applicable trends and residual values, as well as the effect ofobsolescence, demand, competition and other factors. If these estimates or the related assumptions change in the future, we may be required to record animpairment loss.Goodwill and Other Intangible AssetsAt December 31, 2015 , we had $75.5 million in goodwill and $9.6 million in other intangible assets within our consolidated balance sheet, resultingfrom the contribution of Hollywood Casino Baton Rouge and Hollywood Casino Perryville in connection with the Spin-Off. Our goodwill resides on the books ofour Hollywood Casino Baton Rouge subsidiary, while the other intangible asset represents a gaming license on the books of our Hollywood Casino Perryvillesubsidiary. Both subsidiaries are members of the TRS Properties segment and are considered separate reporting units under ASC 350, "Intangibles - Goodwill andOther" ("ASC 350"). Goodwill is tested at the reporting unit level, which is an operating segment or one level below an operating segment for which discretefinancial information is available.Under ASC 350, we are required to test goodwill for impairment at least annually and whenever events or circumstances indicate that it is more likely thannot that goodwill may be impaired. We have elected to perform our annual goodwill impairment test as of October 1 of each year. ASC 350 prescribes a two-stepgoodwill impairment test, the first step which involves the determination of the fair value of each reporting unit and its comparison to the carrying amount. In orderto determine the fair value of the Baton Rouge reporting unit, the Company utilized a discounted cash flow model, which relied on projected EBITDA to determinethe reporting unit's future cash flows. If the carrying amount exceeds the fair value in step 1, then step 2 of the impairment test is performed to determine theimplied value of goodwill. If the implied value of goodwill is less than the goodwill allocated to the reporting unit, an impairment loss is recognized.In accordance with ASC 350, we consider the Hollywood Casino Perryville gaming license an indefinite-lived intangible asset that does not requireamortization based on our future expectations to operate this casino indefinitely as well as the gaming industry's historical experience in renewing these intangibleassets at minimal cost with various state gaming commissions. Rather, the gaming license is tested annually, or more frequently if indicators of impairment exist,for impairment by comparing the fair value of the recorded asset to its carrying amount. If the carrying amount of the indefinite-life intangible asset exceeds its fairvalue, an impairment loss is recognized. Hollywood Casino Perryville's gaming license will expire in43Table of ContentsSeptember 2025, fifteen years from the casino's opening date. We expect to expense any costs related to the gaming license renewal as incurred.We assessed the fair value of our gaming license using the Greenfield Method under the income approach. The Greenfield Method estimates the fair valueof the gaming license assuming we built a casino with similar utility to that of the existing facility. The method assumes a theoretical start-up company going intobusiness without any assets other than the intangible asset being valued. As such the value of the license is a function of the following items:•Projected revenues and operating cash flows;•Theoretical construction costs and duration;•Pre-opening expenses;•Discounting that reflects the level of risk associated with receiving future cash flows attributable to the license; and•Remaining useful life of the license.The evaluation of goodwill and indefinite-lived intangible assets requires the use of estimates about future operating results to determine the estimatedfair value of the reporting unit and the indefinite-lived intangible assets. We must make various assumptions and estimates in performing our impairment testing.The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions which represent our best estimates of thecash flows expected to result from the use of the assets. Changes in estimates, increases in our cost of capital, reductions in transaction multiples, changes inoperating and capital expenditure assumptions or application of alternative assumptions and definitions could produce significantly different results. Future cashflow estimates are, by their nature, subjective and actual results may differ materially from our estimates. If our ongoing estimates of future cash flows are not met,we may have to record additional impairment charges in future accounting periods. Our estimates of cash flows are based on the current regulatory and economicclimates, as well as recent operating information and budgets. These estimates could be negatively impacted by changes in federal, state or local regulations,economic downturns, or other events.Forecasted cash flows can be significantly impacted by the local economy in which our subsidiaries operate. For example, increases in unemploymentrates can result in decreased customer visitations and/or lower customer spend per visit. In addition, new legislation which approves gaming in nearby jurisdictionsor further expands gaming in jurisdictions in which we operate can result in increased competition for the property. This generally has a negative effect onprofitability once competitors become established, as a certain level of cannibalization occurs absent an overall increase in customer visitations. Lastly, increases ingaming taxes approved by state regulatory bodies can negatively impact forecasted cash flows.Assumptions and estimates about future cash flow levels are complex and subjective. They are sensitive to changes in underlying assumptions and can beaffected by a variety of factors, including external factors, such as industry, geopolitical and economic trends, and internal factors, such as changes in our businessstrategy, which may reallocate capital and resources to different or new opportunities which management believes will enhance our overall value but may be to thedetriment of our existing operations.We determined the fair value of our goodwill and gaming license as of October 1, 2015 utilizing the forecasted cash flow methods described above andcompared these values to the carrying value of the assets on our balance sheet. In determining the fair value of each asset, we incorporated recent operating trendsof both TRS properties, as well as the continued impact of the opening of the Horseshoe Casino Baltimore in August 2014 and the expected impact of theanticipated opening of new casino in Prince George's County during the fourth quarter of 2016 on Hollywood Casino Perryville into our current year projections.After consideration of these facts, the fair value of both assets exceeded their carrying amounts, and as of October 1, 2015 , our goodwill and gaming license werenot impaired.Results of Operations The following are the most important factors and trends that contribute or will contribute to our operating performance: •The fact that a wholly-owned subsidiary of Penn is the lessee of substantially all of our properties pursuant to the Penn Master Lease and accounts for asignificant portion of our revenues. We expect to grow our portfolio by pursuing opportunities to acquire additional gaming facilities, such as thoseowned by Pinnacle and CCR, to lease to gaming operators under prudent terms, which may or may not include Penn. 44Table of Contents•The fact that the rules and regulations of U.S. federal income taxation are constantly under review by legislators, the IRS and the U.S. Department of theTreasury. Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect GLPI investorsor GLPI. •The risks related to economic conditions and the effect of such conditions on consumer spending for leisure and gaming activities, which may negativelyimpact our gaming tenants and operators. The consolidated results of operations for the years ended December 31, 2015 , 2014 and 2013 are summarized below: Year Ended December 31,2015 2014 2013 (in thousands)Revenues  Rental$392,075 $386,403 $62,278Real estate taxes paid by tenants35,050 50,534 7,602Total rental revenue427,125 436,937 69,880Gaming142,310 148,283 159,352Food, beverage and other11,213 11,621 12,357Total revenues580,648 596,841 241,589Less promotional allowances(5,595) (5,773) (6,137)Net revenues575,053 591,068 235,452Operating expenses  Gaming77,188 82,995 89,367Food, beverage and other8,586 9,734 10,775Real estate taxes36,412 52,154 9,220General and administrative85,669 80,836 43,262Depreciation109,783 106,843 28,923Total operating expenses317,638 332,562 181,547Income from operations$257,415 $258,506 $53,905 Certain information regarding our results of operations by segment for the years ended December 31, 2015 , 2014 and 2013 is summarized below:  Net Revenues Income from OperationsYear Ended December 31,2015 2014 2013 2015 2014 2013 (in thousands)GLP Capital$427,125 $436,944 69,880 $232,701 $234,971 27,656TRS Properties147,928 154,124 165,572 24,714 23,535 26,249Total$575,053 $591,068 $235,452 $257,415 $258,506 $53,905 FFO, AFFO and Adjusted EBITDA Funds From Operations ("FFO"), Adjusted Funds From Operations ("AFFO") and Adjusted EBITDA are non-GAAP financial measures used by theCompany as performance measures for benchmarking against the Company’s peers and as internal measures of business operating performance. The Companybelieves FFO, AFFO and Adjusted EBITDA provide a meaningful perspective of the underlying operating performance of the Company’s current business. This isespecially true since these measures exclude real estate depreciation and we believe that real estate values fluctuate based on market conditions rather thandepreciating in value ratably on a straight-line basis over time. FFO is a non-GAAP financial measure that is considered a supplemental measure for the real estate industry and a supplement to GAAP measures. TheNational Association of Real Estate Investment Trusts defines FFO as net income (computed in accordance with GAAP), excluding (gains) or losses from sales ofproperty and real estate depreciation. We have defined AFFO as FFO excluding stock based compensation expense, debt issuance costs amortization, otherdepreciation and straight-line rent adjustments, reduced by maintenance capital expenditures. Finally, we have defined Adjusted EBITDA as net income excludinginterest, taxes on income, depreciation, (gains) or losses from sales of property, management fees stock based compensation expense and straight-line rentadjustments.45Table of Contents FFO, AFFO and Adjusted EBITDA are not recognized terms under GAAP. Because certain companies do not calculate FFO, AFFO and AdjustedEBITDA in the same way and certain other companies may not perform such calculation, those measures as used by other companies may not be consistent withthe way the Company calculates such measures and should not be considered as alternative measures of operating profit or net income. The Company’spresentation of these measures does not replace the presentation of the Company’s financial results in accordance with GAAP. The reconciliation of the Company’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the years ended December 31, 2015 , 2014 and2013 is as follows: Year Ended December 31,2015 2014 2013 (in thousands)Net income$128,122 $138,807 $14,853Losses (gains) from dispositions of property185 10 (39)Real estate depreciation95,511 92,750 14,896Funds from operations$223,818 $231,567 $29,710Straight-line rent adjustments55,825 44,877 6,677Other depreciation14,272 14,093 14,027Amortization of debt issuance costs (1)14,016 8,057 700Stock based compensation16,811 12,258 1,566Maintenance CAPEX(2,953) (3,538) (4,230)Adjusted funds from operations$321,789 $307,314 $48,450Interest, net121,851 114,586 19,253Management fees— — 4,203Income tax expense7,442 5,113 15,596Maintenance CAPEX2,953 3,538 4,230Amortization of debt issuance costs (1)(14,016) (8,057) (700)Adjusted EBITDA$440,019 $422,494 $91,032(1) Such amortization is a non-cash component included in interest, net.46Table of ContentsThe reconciliation of each segment’s net income per GAAP to FFO, AFFO, and Adjusted EBITDA for the years ended December 31, 2015 , 2014 and2013 is as follows:   GLP Capital  (1) TRS PropertiesYear Ended December 31, 2015 2014 2013 2015 2014 2013  (in thousands)Net income $119,914 $130,580 $1,635 $8,208 $8,227 13,218(Gains) losses from dispositions of property 152 (149) — 33 159 (39)Real estate depreciation 95,511 92,750 14,896 — — —Funds from operations $215,577 $223,181 $16,531 $8,241 $8,386 13,179Straight-line rent adjustments 55,825 44,877 6,677 — — —Other depreciation 1,913 1,832 — 12,359 12,261 14,027Debt issuance costs amortization (3) 14,016 8,057 700 — — —Stock based compensation 16,811 12,258 1,566 — — —Maintenance CAPEX — — — (2,953) (3,538) (4,230)Adjusted funds from operations $304,142 $290,205 $25,474 $17,647 $17,109 22,976Interest, net (2) 111,449 104,180 19,254 10,402 10,406 (1)Management fees — — — — — 4,203Income tax expense 1,338 211 6,767 6,104 4,902 8,829Maintenance CAPEX — — — 2,953 3,538 4,230Debt issuance costs amortization (3) (14,016) (8,057) (700) — — —Adjusted EBITDA $402,913 $386,539 $50,795 $37,106 $35,955 40,237 (1) GLP Capital operations commenced November 1, 2013 in connection with the Spin-Off.(2) Interest expense, net for the GLP Capital segment is net of an intercompany interest elimination of $10.4 million for the years ended December 31,2015 and 2014 .(3) Such amortization is a non-cash component included in interest, net. 2015 Compared with 2014Net income, FFO, AFFO, and Adjusted EBITDA for our GLP Capital segment were $119.9 million , $215.6 million , $304.1 million and $402.9 million ,respectively, for the year ended December 31, 2015 . This compared to net income, FFO, AFFO, and Adjusted EBITDA, for our GLP Capital segment of $130.6million , $223.2 million , $290.2 million and $386.5 million , respectively, for the year ended December 31, 2014. The $10.7 million decline in net income in ourGLP Capital segment was primarily driven by a $5.7 million increase in rent recognized from tenant lease payments, offset by a $5.1 million increase in generaland administrative expenses, a $2.8 million increase in depreciation expense, a $7.3 million increase in interest, net and a $1.1 million increase in income taxexpense for the year ended December 31, 2015 compared to the prior year. The decrease in net income also drove the $7.6 million decline in FFO, offset by higherreal estate depreciation of $2.7 million which is added back to net income. The additional $2.7 million of real estate depreciation related to a full year ofdepreciation at our Hollywood Gaming at Mahoning Valley Race Course and Hollywood Gaming at Dayton Raceway facilities. The $13.9 million increase inAFFO for our GLP Capital segment was primarily driven by the items noted above as well as, higher add-backs of non-cash straight-line rent adjustments, drivenby the opening of the Dayton Raceway and Mahoning Valley Race Course facilities during the third quarter of 2014, higher stock-based compensation expense andincreased amortized debt issuance costs, associated with the bridge financing related to the Pinnacle transaction. As interest and taxes are added back for purposesof calculating Adjusted EBITDA, the $16.4 million increase in Adjusted EBITDA for our GLP Capital segment was primarily driven by the increases in theseitems described above, less the increase in amortized debt issuance costs, which are non-cash and excluded from AFFO.Net income and FFO for our TRS Properties segment were relatively flat year over year, primarily due to additional competition in the Perryville marketand increased operating pressure at both of our TRS Properties, offset by lower gaming taxes at Perryville related to the purchase of slot machines in exchange forgaming tax reductions and food and beverage expense reduction at Baton Rouge. AFFO for our TRS Properties segment increased by $0.5 million for the yearended47Table of ContentsDecember 31, 2015 , as compared to the year ended December 31, 2014 , primarily due to the reasons described above, as well as a decrease of $0.6 million inmaintenance capital expenditures at the TRS Properties for the year ended December 31, 2015 . Adjusted EBITDA for our TRS Properties segment increased $1.2million for the year ended December 31, 2015 , as compared to the year ended December 31, 2014 , primarily due to the explanations described above, as well ashigher taxes in the year ended December 31, 2015 .2014 Compared with 2013FFO, AFFO, and Adjusted EBITDA for our GLP Capital segment were $223.2 million, $290.2 million and $386.5 million, respectively, for the yearended December 31, 2014. The increases in FFO, AFFO and Adjusted EBITDA from the year ended December 31, 2013 were primarily due to a full year of realestate operations in 2014 compared to only two months of real estate operations in 2013.Net income for our TRS Properties segment decreased by $5.0 million for the year ended December 31, 2014, as compared to the year endedDecember 31, 2013, primarily due to additional competition in the Perryville market and increased operating pressure at both of our TRS properties, as well asinterest expense in the year ended December 31, 2014. FFO for our TRS Properties segment decreased by $4.8 million for the year ended December 31, 2014, ascompared to the year ended December 31, 2013, primarily due to the decrease in net income described above. AFFO for our TRS Properties segment decreased by$5.9 million for the year ended December 31, 2014, as compared to the year ended December 31, 2013, primarily due to the decrease described above, as well as adecrease of $1.7 million in depreciation expense at Hollywood Casino Perryville for the year ended December 31, 2014, due to certain equipment purchased atopening now being fully depreciated. Adjusted EBITDA for our TRS Properties segment decreased $4.3 million for the year ended December 31, 2014, ascompared to the year ended December 31, 2013, primarily due to the decrease described above, as well as lower taxes and the elimination of management fees inthe year ended December 31, 2014.Revenues Revenues for the years ended December 31, 2015 , 2014 and 2013 were as follows (in thousands):         PercentageYear Ended December 31, 2015 2014 Variance VarianceTotal rental revenue $427,125 $436,937 $(9,812) (2.2)%Gaming 142,310 148,283 (5,973) (4.0)%Food, beverage and other 11,213 11,621 (408) (3.5)%Total Revenues 580,648 596,841 (16,193) (2.7)%Less promotional allowances (5,595) (5,773) 178 3.1 %Net revenues $575,053 $591,068 $(16,015) (2.7)%         PercentageYear Ended December 31, 2014 2013 Variance VarianceTotal rental revenue $436,937 $69,880 $367,057 525.3 %Gaming 148,283 159,352 (11,069) (6.9)%Food, beverage and other 11,621 12,357 (736) (6.0)%Total Revenues 596,841 241,589 355,252 147.0 %Less promotional allowances (5,773) (6,137) 364 5.9 %Net revenues $591,068 $235,452 $355,616 151.0 % Total rental revenue2015 Compared to 2014For the year ended December 31, 2015 , rental income was $427.1 million for our GLP Capital segment, which included rent recognized from tenantlease payments of $392.1 million and $35.0 million of revenue for the real estate taxes paid by our tenants on the leased properties. For the year endedDecember 31, 2014 , rental income was $436.9 million for our GLP Capital segment, which included rent recognized from tenant lease payments of $386.4million and $50.5 million of48Table of Contentsrevenue for the real estate taxes paid by our tenants on the leased properties. Rent recognized from tenant lease payments increased by $5.7 million for the yearended December 31, 2015, compared to December 31, 2014, primarily due to the addition of Hollywood Gaming at Dayton Raceway and Hollywood Gaming atMahoning Valley Race Course to the Penn Master Lease in the third quarter of 2014, as well as the impact of the Penn rent escalator, pursuant to the Penn MasterLease (effective November 1st of each year) and improved results at our two properties with monthly variable rent in 2015, partially offset by the closure of theArgosy Casino Sioux City in July 2014.During the fourth quarter of 2015, Penn received a significant real estate tax refund related to the settlement of property tax appeal at a GLPI ownedproperty, which directly offset its real estate taxes paid during the quarter. Although tenants are responsible for the payment of real estate taxes under the triple-netlease structure, we are required to record revenue for the real estate taxes paid by our tenants on the leased properties with an offsetting expense in real estate taxeswithin our consolidated statement of income as we have concluded we are the primary obligor under ASC 605. This tax refund resulted in lower net revenues forthe year ended December 31, 2015, as compared to the year ended December 31, 2014, despite an increase in rent recognized from tenant lease payments but hadno impact on our income from operations or net income.2014 Compared to 2013For the year ended December 31, 2014, rental income was $436.9 million for our GLP Capital segment, which included $50.5 million of revenue for thereal estate taxes paid by our tenants on the leased properties. For the year ended December 31, 2013, rental income was $69.9 million for our GLP Capitalsegment, which included $7.6 million of revenue for the real estate taxes paid by our tenants on the leased properties. Rental revenue increased from 2013 to 2014due to a full year of real estate operations in 2014, compared to only two months of real estate operations in 2013. Gaming revenue2015 Compared to 2014 Gaming revenue for our TRS Properties segment decreased by $6.0 million , or 4.0% , for the year ended December 31, 2015 , as compared to the yearended December 31, 2014 , primarily due to decreased gaming revenues of $5.5 million at Hollywood Casino Perryville, resulting from additional competition inthe Perryville market.2014 Compared to 2013Gaming revenue for our TRS Properties segment decreased by $11.1 million, or 6.9%, for the year ended December 31, 2014, as compared to the yearended December 31, 2013, due to decreased gaming revenues of $6.1 million at Hollywood Casino Baton Rouge and $5.0 million at Hollywood Casino Perryville,resulting from additional competition in the Perryville market and increased operating pressure at both of our TRS properties.Operating Expenses Operating expenses for the years ended December 31, 2015 , 2014 and 2013 were as follows (in thousands):        PercentageYear Ended December 31, 2015 2014 Variance VarianceGaming $77,188 $82,995 $(5,807) (7.0)%Food, beverage and other 8,586 9,734 (1,148) (11.8)%Real estate taxes 36,412 52,154 (15,742) (30.2)%General and administrative 85,669 80,836 4,833 6.0 %Depreciation 109,783 106,843 2,940 2.8 %Total operating expenses $317,638 $332,562 $(14,924) (4.5)%49Table of Contents        PercentageYear Ended December 31, 2014 2013 Variance VarianceGaming $82,995 $89,367 $(6,372) (7.1)%Food, beverage and other 9,734 10,775 (1,041) (9.7)%Real estate taxes 52,154 9,220 42,934 465.7 %General and administrative 80,836 43,262 37,574 86.9 %Depreciation 106,843 28,923 77,920 269.4 %Total operating expenses $332,562 $181,547 $151,015 83.2 % Gaming expense 2015 Compared with 2014Gaming expense for our TRS Properties segment decreased by $5.8 million , or 7.0% , for the year ended December 31, 2015 , as compared to the yearended December 31, 2014 , due to a $5.8 million decrease in gaming and admission taxes at Hollywood Casino Perryville, resulting from lower gaming revenuesand a decrease in the gaming tax rate on revenue generated from slot machines. During the year ended December 31, 2015, Hollywood Casino Perryville directlypurchased slot machines in exchange for gaming tax reductions from the state.2014 Compared with 2013Gaming expense for our TRS Properties segment decreased by $6.4 million, or 7.1%, for the year ended December 31, 2014, as compared to the yearended December 31, 2013, primarily due to decreases of $1.6 million and $3.2 million, respectively in gaming and admission taxes at Hollywood Casino BatonRouge and Hollywood Casino Perryville, resulting from a reduction in taxable gaming revenue.Real estate taxes2015 Compared with 2014 Real estate taxes decreased by $15.7 million , or 30.2% , for the year ended December 31, 2015 , as compared to the year ended December 31, 2014 ,primarily due to the receipt of a significant property tax refund at one of our properties which is leased to Penn related to the settlement of a property tax appeal. Although this amount is paid by our tenants, we are required to present this amount in both revenues and expense for financial reporting purposes under ASC 605.2014 Compared with 2013 Real estate taxes increased by $42.9 million, or 465.7%, for the year ended December 31, 2014, as compared to the year ended December 31, 2013,primarily due to a full year of real estate taxes paid by our tenants on the leased properties in our GLP Capital segment. General and administrative expense General and administrative expenses include items such as compensation costs (including stock based compensation awards), professional services, rentexpense, and costs associated with development activities. In addition, Penn provided GLPI with certain administrative and support services on a transitional basispursuant to a transition services agreement executed in connection with the Spin-Off during the years ended December 31, 2015, 2014 and 2013. The fees chargedto GLPI for transition services furnished pursuant to this agreement were determined based on fixed percentages of Penn’s internal costs which were intended toapproximate the actual cost incurred by Penn in providing the transition services to GLPI for the relevant period. These services were terminated as of September30, 2015.2015 Compared with 2014 General and administrative expenses increased by $4.8 million , or 6.0% , for the year ended December 31, 2015 , as compared to the year endedDecember 31, 2014 , primarily due to legal and consulting fees incurred by our GLP Capital segment related to the recently settled Meadows litigation and thePinnacle transaction, as well as an increase in short-term incentive compensation and stock based compensation expense.50Table of Contents2014 Compared with 2013 General and administrative expenses increased by $37.6 million, or 86.9%, for the year ended December 31, 2014, as compared to the year endedDecember 31, 2013, primarily resulting from general and administrative expenses for our GLP Capital segment of $56.9 million for the year ended December 31,2014 as a result of a full year of operations in 2014. General and administrative expenses for our GLP Capital segment included compensation expense of $10.6million, stock based compensation charges of $30.9 million, rent expense for those leases assigned to GLPI as part of the Spin-Off of $2.8 million (see Note 9 tothe consolidated financial statements for further information on assigned leases), and fees for outside services, including transition services and legal of $9.3million. Stock-based compensation charges for our GLP Capital segment for the year ended December 31, 2014 include approximately $2.4 million of expenserelated to the $0.40 one-time dividend.Depreciation expense2015 Compared with 2014 Depreciation expense increased by $2.9 million , or 2.8% , to $109.8 million for the year ended December 31, 2015 , as compared to the year endedDecember 31, 2014 , primarily due to a full year of depreciation expense on the assets placed into service at Hollywood Gaming at Mahoning Valley Race Courseand Hollywood Gaming at Dayton Raceway during the third quarter of 2014.2014 Compared with 2013 Depreciation expense increased by $77.9 million, or 269.4%, to $106.8 million for the year ended December 31, 2014, as compared to the year endedDecember 31, 2013, primarily due to a full year of depreciation related to the real property assets transferred to GLPI as part of the Spin-Off. We also recordeddepreciation expense of approximately $2.9 million related to the assets acquired in the January 2014 Casino Queen transaction.Other income (expenses) Other income (expenses) for the years ended December 31, 2015 , 2014 and 2013 were as follows (in thousands):         PercentageYear Ended December 31, 2015 2014 Variance VarianceInterest expense $(124,183) $(117,030) $(7,153) (6.1)%Interest income 2,332 2,444 (112) (4.6)%Total other expenses $(121,851) $(114,586) $(7,265) (6.3)%         PercentageYear Ended December 31, 2014 2013 Variance VarianceInterest expense $(117,030) $(19,254) $(97,776) (507.8)%Interest income 2,444 1 2,443 244,300.0 %Management fee — (4,203) 4,203 100.0 %Total other expenses $(114,586) $(23,456) $(91,130) (388.5)% Interest expense2015 Compared with 2014For the year ended December 31, 2015 , interest expense related to our fixed and variable rate borrowings was $124.2 million , as compared to $117.0million in the year ended December 31, 2014 . Interest expense primarily increased due to the amortization of bridge financing fees related to the Pinnacletransaction through interest expense.2014 Compared with 2013 For the year ended December 31, 2014, interest expense related to our fixed and variable rate borrowings was $117.0 million, as compared to $19.3million in the year ended December 31, 2013. Interest expense increased due a full year of interest expense on both our fixed and variable rate borrowings enteredinto in connection with the Spin-Off and additional variable rate borrowings during the year ended December 31, 2014.51Table of ContentsManagement fees2014 Compared with 2013 Management fees decreased by $4.2 million, for the year ended December 31, 2014, as compared to the year ended December 31, 2013, due to themanagement agreement with Penn terminating on November 1, 2013 in connection with the Spin-Off.Taxes2015 Compared to 2014During the year ended December 31, 2015 , we had income tax expense of approximately $7.4 million , compared to income tax expense of $5.1 millionduring the year ended December 31, 2014 . Income tax expense increased by $2.3 million for the year ended December 31, 2015 , compared to the prior year. Oureffective tax rate (income taxes as a percentage of income from operations before income taxes) was 5.5% for the year ended December 31, 2015 , as compared to3.6% for the year ended December 31, 2014 .2014 Compared to 2013During the year ended December 31, 2014, we had income tax expense of approximately $5.1 million, compared to income tax expense of $15.6 millionduring the year ended December 31, 2013. Our intended election to be taxed as REIT for our taxable year beginning on January 1, 2014 contributed to oursignificant decrease in income tax expense in 2014 as compared to the corresponding period in the prior year. Our effective tax rate (income taxes as a percentageof income from operations before income taxes) was 3.6% for the year ended December 31, 2014, as compared to 51.2% for the year ended December 31, 2013,driven by our REIT election. As a REIT, we will no longer be required to pay federal corporate income tax on earnings from operations of the REIT that aredistributed to our shareholders. We will continue to be required to pay federal and state corporate income taxes on the earnings of our TRS Properties.Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash flow from operations, borrowings from banks, and proceeds from the issuance of debt andequity securities. Net cash provided by operating activities was $319.7 million , $273.3 million and $80.6 million during the years ended December 31, 2015 , 2014 and2013 , respectively. The increase in net cash provided by operating activities of $46.4 million for the year ended December 31, 2015 compared to the year endedDecember 31, 2014 was primarily comprised of a decrease in cash paid to suppliers and vendors of $21.4 million, a $15.4 million decrease related to cash paid fortaxes (including tax transfers to Penn by our TRS Properties prior to the Spin-Off) and an increase in cash receipts from customers/tenants of $10.3 million. Thedecrease in cash paid to suppliers and vendors was driven by a decrease in gaming and food beverage and other expenses due to declining revenues at our TRSProperties and a decrease in working capital requirements, partially offset by an increase in general and administrative expenses. The increase in cash receiptscollected from our customers/tenants for the year ended December 31, 2015 compared to the year ended December 31, 2014 was primarily due to the addition ofHollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course to the Penn Master Lease in the third quarter of 2014, as well asthe impact of the Penn rent escalator, pursuant to the Penn Master Lease (effective November 1st of each year) and improved results at our two properties withmonthly variable rent in 2015, partially offset by a decrease of $6.2 million in our TRS Properties’ net revenues due to operating pressure and competition in theirrespective markets. The increase in net cash provided by operating activities for the year ended December 31, 2014 as compared to the year ended December 31,2013 was primarily the result of a full year of REIT operations in 2014. Net cash used in investing activities totaled $14.1 million , $317.3 million and $16.3 million , respectively, for the years ended December 31, 2015 , 2014and 2013 . Net cash used in investing activities for the year ended December 31, 2015 included capital expenditures of $19.1 million, primarily related to $6.5million of construction spend related to the Company's new corporate headquarters building located in Wyomissing, Pennsylvania, and Hollywood CasinoPerryville's $5.9 million purchase of slot machines, associated with its initiative to directly purchase slot machines in exchange for gaming tax reductions, partiallyoffset by principal payments received of $4.7 million made by Casino Queen on their five year term loan. Net cash used in investing activities for the year endedDecember 31, 2014 included a $140.7 million payment associated with the Casino Queen asset acquisition, along with the $43.0 million five year term loan toCasino Queen, less $9.0 million of principal payments, as well as capital expenditures of $142.8 million primarily related to construction spend at the two recently52Table of Contentsopened Ohio facilities. Net cash used in investing activities for the year ended December 31, 2013 primarily consisted of capital project spend of $12.2 million andcapital maintenance expenditures of $4.2 million. Financing activities used net cash of $299.6 million and $205.2 million , respectively, during the years ended December 31, 2015 and 2014 and providednet cash of $206.3 million during the year ended December 31, 2013. Net cash used in financing activities for the year ended December 31, 2015 included dividendpayments of $251.7 million and repayments of long-term debt and financing costs of $77.6 million , partially offset by proceeds from stock option exercises of$29.7 million . Net cash used in financing activities for the year ended December 31, 2014 included dividend payments of $494.1 million (including the PurgingDistribution), partially offset by proceeds from the issuance of long-term debt, net of repayments and financing costs of $259.6 million and proceeds from stockoption exercises of $29.9 million. Net cash provided by financing activities for the year ended December 31, 2013 included proceeds from the issuance of long-term debt, net of issuance costs of $2,301.9 million, partially offset by the cash distribution to Penn in connection with the Spin-Off of $2,090.0 million. Capital Expenditures Capital expenditures are accounted for as either capital project or capital maintenance (replacement) expenditures. Capital project expenditures are forfixed asset additions that expand an existing facility or create a new facility. The cost of properties developed by the Company include costs of construction,property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available foroccupancy. Capital maintenance expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out orno longer cost effective to repair. During the year ended December 31, 2015, Hollywood Casino Perryville directly purchased slot machines in exchange forgaming tax reductions from the state. Previously, all of the property's slot machines were owned by the state. As this one-time project cost was dictated by newstate legislation that allowed Maryland casinos to purchase their slot machines in exchange for gaming tax reductions this expense was treated as a capital projectexpenditure. During the fourth quarter of 2015 and going forward Hollywood Casino Perryville incurred and will continue to incur incremental expenses related toslot purchases which will be treated as capital maintenance. The purchase of incremental slot machines at Hollywood Casino Baton Rouge was treated as capitalmaintenance during the three years ended December 31, 2015. Capital project expenditures totaled $16.1 million for the year ended December 31, 2015 and primarily consisted of construction spend totaling $6.5million related to the Company's new corporate headquarters building located in Wyomissing, Pennsylvania and Hollywood Casino Perryville's direct purchase ofslot machines. During the year ended December 31, 2015, Hollywood Casino Perryville made direct purchases of slot machines totaling $5.9 million, whichresulted in a decrease of gaming taxes derived from slot machine revenues. During the years ended December 31, 2014 and 2013 , capital project expenditurestotaled $139.2 million and $12.2 million , respectively. Capital expenditures in the year ended December 31, 2014 primarily consisted of $71.3 million and $63.0million for the real estate related construction costs of the Mahoning Valley Race Course and the Dayton Raceway, respectively. Operations at both facilitiescommenced during the year ended December 31, 2014 and were added to the Penn Master Lease upon commencement of operations. During the years ended December 31, 2015 , 2014 and 2013 we spent approximately $3.0 million , $3.5 million and $4.2 million , respectively, for capitalmaintenance expenditures. The majority of the capital maintenance expenditures were for slot machines and slot machine equipment at our TRS Properties. Ourtenants are responsible for capital maintenance expenditures at our leased properties. DebtSenior Unsecured Credit Facility The Company has a one billion dollar Credit Facility, consisting of a $700 million revolving credit facility and a $300 million Term Loan A facility. TheCredit Facility matures on October 28, 2018. At December 31, 2015 , the Credit Facility had a gross outstanding balance of $490 million , consisting of the $300million Term Loan A facility and $190 million of borrowings under the revolving credit facility. Additionally, at December 31, 2015 , the Company wascontingently obligated under letters of credit issued pursuant to the senior unsecured credit facility with face amounts aggregating approximately $0.9 million ,resulting in $509.1 million of available borrowing capacity under the revolving credit facility as of December 31, 2015 . The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of GLPI and its subsidiariesto grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations or pay certain dividends and otherrestricted payments. The Credit Facility contains the following financial covenants, which are measured quarterly on a trailing four-quarter basis: a maximum totaldebt to total asset53Table of Contentsvalue ratio, a maximum senior secured debt to total asset value ratio, a maximum ratio of certain recourse debt to unencumbered asset value and a minimum fixedcharge coverage ratio. In addition, GLPI is required to maintain a minimum tangible net worth and its status as a REIT on and after the effective date of its electionto be treated as a REIT, which the Company elected on its 2014 U.S. federal income tax return. GLPI is permitted to pay dividends to its shareholders as may berequired in order to maintain REIT status, subject to the absence of payment or bankruptcy defaults. GLPI is also permitted to make other dividends anddistributions subject to pro forma compliance with the financial covenants and the absence of defaults. The Credit Facility also contains certain customaryaffirmative covenants and events of default, including the occurrence of a change of control and termination of the Penn Master Lease (subject to certainreplacement rights). The occurrence and continuance of an event of default under the Credit Facility will enable the lenders under the Credit Facility to acceleratethe loans and terminate the commitments thereunder. At December 31, 2015 , the Company was in compliance with all required covenants under the CreditFacility.Senior Unsecured NotesAt December 31, 2015 , the Company had $550 million outstanding of 4.375% senior unsecured notes maturing on November 1, 2018 (the "2018 Notes"),$1,000 million outstanding of 4.875% senior unsecured notes maturing on November 1, 2020 (the "2020 Notes") and $500 million outstanding of 5.375% seniorunsecured notes maturing on November 1, 2023 (the "2023 Notes"). Interest on each of the 2018 Notes, 2020 Notes and 2023 Notes, (collectively the "Notes") ispayable semi-annually on May 1 and November 1 of each year.The Company may redeem the Notes of any series at any time, and from time to time, at a redemption price of 100% of the principal amount of the Notesredeemed, plus a "make-whole" redemption premium described in the indenture governing the Notes, together with accrued and unpaid interest to, but notincluding, the redemption date, except that if Notes of a series are redeemed 90 or fewer days prior to their maturity, the redemption price will be 100% of theprincipal amount of the Notes redeemed, together with accrued and unpaid interest to, but not including, the redemption date. If GLPI experiences a change ofcontrol accompanied by a decline in the credit rating of the Notes of a particular series, the Company will be required to give holders of the Notes of such series theopportunity to sell their Notes of such series at a price equal to 101% of the principal amount of the Notes of such series, together with accrued and unpaid interestto, but not including, the repurchase date. The Notes also are subject to mandatory redemption requirements imposed by gaming laws and regulations. The Notes were issued by GLP Capital, L.P. and GLP Financing II, Inc., (the "Issuers") two wholly-owned subsidiaries of GLPI and are guaranteed on asenior unsecured basis by GLPI. The guarantees of GLPI are full and unconditional. The Notes are the Issuers' senior unsecured obligations and rank pari passu inright of payment with all of the Issuers' senior indebtedness, including the Credit Facility, and senior in right of payment to all of the Issuers' subordinatedindebtedness, without giving effect to collateral arrangements. See Note 18 for additional financial information on the parent guarantor and subsidiary issuers ofthe Notes.The Notes contain covenants limiting the Company’s ability to: incur additional debt and use its assets to secure debt; merge or consolidate with anothercompany; and make certain amendments to the Penn Master Lease. The Notes also require the Company to maintain a specified ratio of unencumbered assets tounsecured debt. These covenants are subject to a number of important and significant limitations, qualifications and exceptions. At December 31, 2015 , the Company was in compliance with all required covenants under the Notes.Capital LeaseThe Company assumed the capital lease obligation related to certain assets at its Aurora, Illinois property. GLPI recorded the asset and liability associatedwith the capital lease on its balance sheet. The original term of the capital lease was 30 years and it will terminate in 2026.Bridge Facility and Financing CommitmentsIn connection with the proposed Pinnacle transaction, the Company entered into an amended and restated commitment letter dated July 31, 2015 (the "GLPICommitment Letter") with JPMorgan Chase Bank, N.A., Bank of America, N.A., Fifth Third Bank, Manufacturers and Traders Trust Company, Wells Fargo Bank,National Association, UBS AG, Stamford Branch, Credit Agricole Corporate and Investment Bank, Suntrust Bank, Nomura Securities International, Inc., CitizensBank, National Association, Barclays and certain of their affiliates (collectively, the "GLPI Commitment Parties") to provide debt financing in connection with thetransaction. Pursuant to the GLPI Commitment Letter, the GLPI Commitment Parties have committed to provide a $1.875 billion senior unsecured 364 -day termloan bridge facility (the "GLPI Bridge Facility"). The Company expects54Table of Contentsto raise the proceeds necessary to finance the Pinnacle transaction through a combination of debt and equity offerings and does not expect to utilize the GLPIBridge Facility (the "Bridge Facility").Also in connection with the Pinnacle transaction, the Company entered into Amendment No. 1 (the "Credit Agreement Amendment"), dated July 31, 2015, tothe Credit Facility. The Credit Agreement Amendment provides incremental term loan commitments in an aggregate committed amount of $825 million subject tolimited conditionality (the "Limited Conditionality Incremental Term Facility"). The Credit Agreement Amendment also provides for revolving loans in a principalamount not to exceed $411 million borrowed in connection with the transactions to be subject to the same limited conditionality as the incremental term loans (the"Limited Conditionality Revolver").The commitment of the Commitment Parties under the Commitment Letter expires upon the earliest to occur of (i) 11:59 p.m. (New York City time) on March31, 2016, unless we elect the "end date extension" (as defined in the Merger Agreement) in which case such date shall be extended to 11:59 p.m. (New York Citytime) on June 30, 2016, (ii) the closing of the Merger either (a) without the use of the Bridge Facility or (b) if the Bridge Facility is intended to be used, theexecution of the definitive credit documentation and the funding of the loans thereunder, (iii) the termination of the Merger Agreement we entered into withPinnacle in accordance with its terms and (iv) as to the portion of the commitments to be reduced on certain automatic reduction events in accordance with theterms of the Commitment Letter, upon such events.To the extent the Bridge Facility funds, the interest rate per annum applicable to loans under the Bridge Facility would be equal to three-month LIBOR rateplus 1.75% and, unless the loans under the Bridge Facility are repaid in full within three months following the closing date, the applicable margin would increaseby 0.25% at the end of such three-month period and would increase by an additional 0.25% at the end of each of the two succeeding three-month periods thereafterto the extent such loans remain outstanding at such dates. To the extent the Limited Conditionality Incremental Term Facility funds, the interest rate per annumapplicable to loans under the Limited Conditionality Incremental Term Facility would be, at our option, equal to either a base rate or a LIBOR rate plus anapplicable margin ranging from LIBOR plus 1.00% to 2.00% or base rate plus 0.00% to 1.00% based on a ratings-based pricing grid.If the Bridge Facility and the Limited Conditionality Incremental Term Facility fund, they will not be subject to amortization. The Bridge Facility would besubject to mandatory prepayment to the extent of net proceeds of certain debt for borrowed money and equity issuances. The borrower may prepay all or anyportion of the loans, if any, under the Bridge Facility, the Limited Conditionality Incremental Term Facility and the Limited Conditionality Revolver prior tomaturity without premium or penalty, subject to reimbursement of any LIBOR breakage costs of the lenders.The Bridge Facility would contain customary affirmative and negative covenants and events of default consistent with those in the credit agreementgoverning our existing Credit Facility. The Limited Conditionality Incremental Term Facility and the Limited Conditionality Revolver would contain theaffirmative and negative covenants and events of default that are in the credit agreement governing our existing Credit Facility.The availability of the Bridge Facility, the Limited Conditionality Incremental Term Facility and the Limited Conditionality Revolver is subject to customaryconditions, including conditions that do not relate directly to the conditions to closing in the Merger Agreement we entered into with Pinnacle. We may elect toenter into long-term debt financing instead of funding loans in connection with the Bridge Facility. Such long-term debt financing could consist of seniorunsecured notes of certain of our subsidiaries. Any determination to enter into alternative debt financing will be based on, among other items, market conditions atthe time such debt financing would be syndicated, placed or incurred. There can be no assurances as to the terms of such debt financing. Currently, we expect toraise the proceeds necessary to finance the Pinnacle transaction through a combination of debt and equity offerings and do not expect to utilize the Bridge Facility.However, there can be no assurance that we will be able to raise sufficient funds through an equity and/or debt offering.OutlookBased on our current level of operations and anticipated earnings, we believe that cash generated from operations and cash on hand, together with amountsavailable under our senior unsecured credit facility, will be adequate to meet our anticipated debt service requirements, capital expenditures, working capital needsand dividend requirements. In addition, we expect the majority of our future growth to come from acquisitions of gaming and other properties at reasonablevaluations to lease to third parties. If we consummate significant acquisitions in the future, our cash requirements may increase significantly and we would likelyneed to raise additional proceeds through a combination of either common equity and/or debt offerings.For example, we expect to raise funds through both debt and equity offerings during early 2016 to finance our proposed acquisition of substantially all of thePinnacle real estate assets and to pay transaction fees and expenses. This amount is expected to be funded through one or more of the following sources: availablecash on hand, the issuance and sale by GLP Capital and GLP Financing II, Inc. of senior unsecured notes, the issuance and sale by GLPI of common equityinterests and borrowings under the GLPI Bridge Facility, the GLPI Limited Conditionality Incremental Term Facility and the GLPI Limited55Table of ContentsConditionality Revolver (each as described herein). Our future operating performance and our ability to service or refinance our debt will be subject to futureeconomic conditions and to financial, business and other factors, many of which are beyond our control. See "Risk Factors-Risks Related to Our Capital Structure"of this Annual Report on Form 10-K for a discussion of the risk related to our capital structure.56Table of ContentsCommitments and ContingenciesContractual Cash ObligationsThe following table presents our contractual obligations at December 31, 2015 : Payments Due By Period Total 2016 2017 - 2018 2019 - 2020 2021 and After (in thousands)Senior unsecured credit facility Principal$490,000 $— $490,000 $— $—Interest (1)44,533 14,590 29,943 — —4.375% senior subordinated notes Principal550,000 — 550,000 — —Interest72,188 24,063 48,125 — —4.875% senior subordinated notes Principal1,000,000 — — 1,000,000 —Interest243,750 48,750 97,500 97,500 —5.375% senior subordinated notes Principal500,000 — — — 500,000Interest215,000 26,875 53,750 53,750 80,625Capital lease obligations1,389 102 220 242 825Purchase obligations702 513 174 15 —Operating leases50,091 1,565 3,078 1,557 43,891Other liabilities reflected in the Company's consolidatedbalance sheets (2)379 379 — — —Total$3,168,032 $116,837 $1,272,790 $1,153,064 $625,341 (1) The interest rates associated with the variable rate components of our senior unsecured credit facility are estimated, reflected of forward LIBOR curvesplus the spread over LIBOR of 150 basis points. The contractual amounts to be paid on our variable rate obligations are affected by changes in marketinterest rates and changes in our spreads which are based on our leverage ratios. Future changes in such ratios will impact the contractual amounts to bepaid.(2) Primarily represents liabilities associated with reward programs at our TRS Properties that can be redeemed for free play, merchandise or services.Other Commercial CommitmentsThe following table presents our material commercial commitments as of December 31, 2015 for the following future periods: Total AmountsCommitted 2016 2017 - 2018 2019 - 2020 2021 and After (in thousands)Letters of Credit (1)$855 $855 — — —Total$855 $855 — — — 57Table of Contents(1) The available balance under the revolving credit portion of our senior unsecured credit facility is reduced by outstanding letters of credit.Off-Balance Sheet ArrangementsWe had no off-balance sheet arrangements as of December 31, 2015 and 2014 .ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We face market risk exposure in the form of interest rate risk. These market risks arise from our debt obligations. We have no international operations.Our exposure to foreign currency fluctuations is not significant to our financial condition or results of operations. GLPI’s primary market risk exposure is interest rate risk with respect to its indebtedness of $2,541.4 million at December 31, 2015 . Furthermore,$2,050.0 million of our obligations are the senior unsecured notes that have fixed interest rates with maturity dates ranging from three to eight years. An increase ininterest rates could make the financing of any acquisition by GLPI more costly, as well as increase the costs of its variable rate debt obligations. Rising interestrates could also limit GLPI’s ability to refinance its debt when it matures or cause GLPI to pay higher interest rates upon refinancing and increase interest expenseon refinanced indebtedness. GLPI may manage, or hedge, interest rate risks related to its borrowings by means of interest rate swap agreements. GLPI also expectsto manage its exposure to interest rate risk by maintaining a mix of fixed and variable rates for its indebtedness. However, the provisions of the Code applicable toREITs substantially limit GLPI’s ability to hedge its assets and liabilities. The table below provides information at December 31, 2015 about our financial instruments that are sensitive to changes in interest rates. For debtobligations, the table presents notional amounts maturing in each fiscal year and the related weighted-average interest rates by maturity dates. Notional amountsare used to calculate the contractual payments to be exchanged by maturity date and the weighted-average interest rates are based on implied forward LIBOR ratesat December 31, 2015 .  01/01/16-12/31/16 01/01/17-12/31/17 01/01/18-12/31/18 01/01/19-12/31/19 01/01/20-12/31/20 Thereafter Total Fair Value at12/31/2015 (in thousands)Long-term debt:              Fixed rate$— $— $550,000 $— $1,000,000 $500,000 $2,050,000 $2,014,750Average interest rate 4.38% 4.88% 5.38% Variable rate$— $— $490,000 $— $— $— $490,000 $479,612Average interest rate (1) 3.56% (1) Estimated rate, reflective of forward LIBOR plus the spread over LIBOR applicable to variable-rate borrowing. 58Table of ContentsITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAReport of Independent Registered Public Accounting FirmBoard of Directors and ShareholdersGaming and Leisure Properties, Inc. and SubsidiariesWe have audited the accompanying consolidated balance sheets of Gaming and Leisure Properties, Inc. and Subsidiaries as of December 31, 2015 and2014, and the related consolidated statements of income, changes in shareholders' equity (deficit), and cash flows for each of the three years in the period endedDecember 31, 2015. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are theresponsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Gaming and LeisureProperties, Inc. and Subsidiaries at December 31, 2015 and 2014, and the consolidated results of their operations and their cash flows for each of the three years inthe period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statementschedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Gaming and LeisureProperties, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2016expressed an unqualified opinion thereon./s/ ERNST & YOUNG LLP Philadelphia, PennsylvaniaFebruary 22, 201659Table of ContentsGaming and Leisure Properties, Inc. and SubsidiariesConsolidated Balance Sheets(amounts in thousands, except share and per share data)  December 31, 2015 December 31, 2014 Assets Real estate investments, net$2,090,059 $2,180,124Property and equipment, used in operations, net129,747 134,028Cash and cash equivalents41,875 35,973Prepaid expenses7,908 7,900Other current assets57,721 45,254Goodwill75,521 75,521Other intangible assets9,577 9,577Debt issuance costs, net of accumulated amortization of $5,937 at December 31, 20153,563 —Loan receivable29,350 34,000Deferred tax assets, non-current2,447 2,694Other assets387 383Total assets$2,448,155 $2,525,454 Liabilities Accounts payable$406 $4,409Accrued expenses9,580 5,339Accrued interest17,623 17,528Accrued salaries and wages13,719 12,581Gaming, property, and other taxes24,702 22,741Current maturities of long-term debt102 81Other current liabilities17,687 15,788Long-term debt, net of current maturities and unamortized debt issuance costs2,510,239 2,570,280Deferred rental revenue107,379 51,554Deferred tax liabilities, non-current232 1,443Total liabilities2,701,669 2,701,744 Commitments and Contingencies (Note 9) Shareholders’ deficit Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued or outstanding at December 31, 2015and December 31, 2014)— —Common stock ($.01 par value, 500,000,000 shares authorized, 115,594,321 and 112,981,088 shares issued atDecember 31, 2015 and December 31, 2014, respectively)1,156 1,130Additional paid-in capital935,220 888,860Retained deficit(1,189,890) (1,066,280)Total shareholders’ deficit(253,514) (176,290)Total liabilities and shareholders’ deficit$2,448,155 $2,525,454 See accompanying notes to the consolidated financial statements.60Table of ContentsGaming and Leisure Properties, Inc. and SubsidiariesConsolidated Statements of Income(in thousands, except per share data) Year ended December 31, 2015 2014 2013 Revenues Rental $392,075 $386,403 $62,278Real estate taxes paid by tenants 35,050 50,534 7,602Total rental revenue 427,125 436,937 69,880Gaming 142,310 148,283 159,352Food, beverage and other 11,213 11,621 12,357Total revenues 580,648 596,841 241,589Less promotional allowances (5,595) (5,773) (6,137)Net revenues 575,053 591,068 235,452 Operating expenses Gaming 77,188 82,995 89,367Food, beverage and other 8,586 9,734 10,775Real estate taxes 36,412 52,154 9,220General and administrative 85,669 80,836 43,262Depreciation 109,783 106,843 28,923Total operating expenses 317,638 332,562 181,547Income from operations 257,415 258,506 53,905 Other income (expenses) Interest expense (124,183) (117,030) (19,254)Interest income 2,332 2,444 1Management fees — — (4,203)Total other expenses (121,851) (114,586) (23,456) Income before income taxes 135,564 143,920 30,449Income tax expense 7,442 5,113 15,596Net income $128,122 $138,807 $14,853 Earnings per common share: Basic earnings per common share $1.12 $1.23 $0.13Diluted earnings per common share $1.08 $1.18 $0.13 See accompanying notes to the consolidated financial statements.61Table of ContentsGaming and Leisure Properties, Inc. and SubsidiariesConsolidated Statements of Changes in Shareholders’ Equity (Deficit)(in thousands, except share data) Common Stock AdditionalPaid-InCapital RetainedEarnings(Deficit) TotalShareholders’Equity (Deficit) Shares Amount Balance, December 31, 2012— $— $71,356 $164,974 $236,330Contributions to Penn National Gaming, Inc., prior toSpin-Off— — (3,387) (46,913) (50,300)Real estate assets and liabilities contributed to GLPI fromPenn National Gaming, Inc. (See Note 1)88,601,637 886 2,022,687 — 2,023,573Cash contribution to Penn National Gaming, Inc. inconnection with Spin-Off (2,090,000) — (2,090,000)Stock option activity57,811 1 2,621 — 2,622Restricted stock activity— — 374 — 374Net income— — — 14,853 14,853Balance, December 31, 201388,659,448 887 3,651 132,914 137,452Stock option activity2,184,980 21 38,648 — 38,669Restricted stock activity156,839 2 3,519 — 3,521Dividends paid, including the Purging Distribution($14.32 per common share)21,979,821 220 843,677 (1,338,001) (494,104)Distribution in connection with tax matter agreement— — (635) — (635)Net income— — — 138,807 138,807Balance, December 31, 2014112,981,088 1,130 888,860 (1,066,280) (176,290)Stock option activity2,511,639 25 34,621 — 34,646Restricted stock activity101,594 1 11,739 — 11,740Dividends paid ($2.18 per common share)— — — (251,732) (251,732)Net income— — — 128,122 128,122Balance, December 31, 2015115,594,321 $1,156 $935,220 $(1,189,890) $(253,514) See accompanying notes to the consolidated financial statements.62Table of ContentsGaming and Leisure Properties, Inc. and Subsidiaries Consolidated Statements of Cash Flows(in thousands) Year ended December 31, 2015 2014 2013Operating activities   Net income $128,122 $138,807 $14,853Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 109,783 106,843 28,923Amortization of debt issuance costs 14,016 8,057 1,270Losses (gains) on dispositions of property 185 10 (39)Deferred income taxes (813) (3,305) (5,646)Stock-based compensation 16,811 12,258 1,566Straight-line rent adjustments 55,825 44,877 6,677 (Increase) decrease, Prepaid expenses and other current assets (9,708) (10,601) (885)Other assets (4) (1,660) (662)(Decrease), increase Accounts payable (946) (1,650) 2,638Accrued expenses 4,241 (8,444) 7,996Accrued interest 95 (527) 17,216Accrued salaries and wages 1,138 2,244 2,131Gaming, property and other taxes (956) 527 (7)Income taxes — (17,054) 4,018Other current and noncurrent liabilities 1,899 2,877 583Net cash provided by operating activities 319,688 273,259 80,632Investing activities   Capital project expenditures, net of reimbursements (16,149) (139,231) (12,198)Capital maintenance expenditures (2,953) (3,538) (4,230)Proceeds from sale of property and equipment 310 180 153Funding of loan receivable — (43,000) —Principal payments on loan receivable 4,650 9,000 —Acquisition of real estate — (140,730) —Net cash used in investing activities (14,142) (317,319) (16,275)Financing activities   Net advances to Penn National Gaming, Inc. — — (6,982)Cash contributions to Penn National Gaming, Inc. in connection with Spin-Off — — (2,090,000)Dividends paid (including the Purging Distribution in 2014) (251,732) (494,104) —Proceeds from exercise of options 29,686 29,931 1,431Proceeds from issuance of long-term debt — 291,950 2,350,000Financing costs (9,500) (306) (48,147)Payments of long-term debt (68,098) (32,024) —Distribution in connection with 2013 Pre-Spin tax matter agreement — (635) —Net cash (used in) provided by financing activities (299,644) (205,188) 206,302Net increase (decrease) in cash and cash equivalents 5,902 (249,248) 270,659Cash and cash equivalents at beginning of period 35,973 285,221 14,562Cash and cash equivalents at end of period $41,875 $35,973 $285,221See accompanying notes to the consolidated financial statements.63Table of ContentsGaming and Leisure Properties, Inc.Notes to the Consolidated Financial Statements 1.      Business and Basis of Presentation Gaming and Leisure Properties, Inc. ("GLPI") is a self-administered and self-managed Pennsylvania real estate investment trust ("REIT"). GLPI (togetherwith its subsidiaries, the "Company") was incorporated on February 13, 2013, as a wholly-owned subsidiary of Penn National Gaming, Inc. ("Penn"). OnNovember 1, 2013, Penn contributed to GLPI, through a series of internal corporate restructurings, substantially all of the assets and liabilities associated withPenn’s real property interests and real estate development business, as well as the assets and liabilities of Hollywood Casino Baton Rouge and Hollywood CasinoPerryville, which are referred to as the "TRS Properties," and then spun-off GLPI to holders of Penn's common and preferred stock in a tax-free distribution (the"Spin-Off"). The Company elected on its United States ("U.S.") federal income tax return for its taxable year beginning on January 1, 2014 to be treated as a REITand the Company, together with an indirect wholly-owned subsidiary of the Company, GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc.,Louisiana Casino Cruises, Inc. (d/b/a Hollywood Casino Baton Rouge) and Penn Cecil Maryland, Inc. (d/b/a Hollywood Casino Perryville) as a "taxable REITsubsidiary" ("TRS") effective on the first day of the first taxable year of GLPI as a REIT. As a result of the Spin-Off, GLPI owns substantially all of Penn’s formerreal property assets and leases back most of those assets to Penn for use by its subsidiaries, under a master lease, a triple-net operating lease with an initial term of15 years with no purchase option, followed by four 5 year renewal options (exercisable by Penn) on the same terms and conditions (the "Penn Master Lease"), andGLPI also owns and operates the TRS Properties through an indirect wholly-owned subsidiary, GLP Holdings, Inc. Prior to the Spin-Off, GLPI and Penn entered into a Separation and Distribution Agreement setting forth the mechanics of the Spin-Off, certainorganizational matters and other ongoing obligations of Penn and GLPI. Penn and GLPI or their respective subsidiaries, as applicable, also entered into a numberof other agreements prior to the Spin-Off to provide a framework for the restructuring and for the relationships between GLPI and Penn after the Spin-Off.GLPI’s primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net leasearrangements. As of December 31, 2015 , GLPI’s portfolio consisted of 21 gaming and related facilities, including the TRS Properties, the real property associatedwith 18 gaming and related facilities operated by Penn and the real property associated with the Casino Queen in East St. Louis, Illinois. These facilities aregeographically diversified across 12 states and contain approximately 7.0 million of rentable square feet. As of December 31, 2015 , the Company's propertieswere 100% occupied.In connection with the Spin-Off, Penn allocated its accumulated earnings and profits (as determined for U.S. federal income tax purposes) for periodsprior to the consummation of the Spin-Off between Penn and GLPI. In connection with its election to be taxed as a REIT for U.S. federal income tax purposes,GLPI declared a special dividend to its shareholders to distribute any accumulated earnings and profits relating to the real property assets and attributable to anypre-REIT years, including any earnings and profits allocated to GLPI in connection with the Spin-Off, to comply with certain REIT qualification requirements (the"Purging Distribution"). The Purging Distribution, which was paid on February 18, 2014, totaled approximately $1.05 billion and was comprised of cash and GLPIcommon stock. Additionally, pursuant to the terms of a Pre-Filing Agreement with the IRS, on December 19, 2014, the Company made a one-time distribution of$37.0 million to shareholders in order to confirm the Company appropriately allocated its historical earnings and profits relative to the separation from Penn. SeeNote 11 for further details on the Purging Distribution and the distribution related to the Pre-Filing Agreement.64Table of ContentsThe assets and liabilities of GLPI were recorded at their respective historical carrying values at the time of the Spin-Off in accordance with the provisionsof Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 505-60, "Spinoffs and Reverse Spinoffs." The assets andliabilities contributed to GLPI from Penn were as follows (in thousands):Prepaid expenses$2,766Current deferred income tax assets4,358Property and equipment, net2,024,572Other assets16,245Accrued expenses(5,656)Other current liabilities(12,219)Deferred income tax liabilities(6,493)Net contribution$2,023,573GLPI expects to grow its portfolio by pursuing opportunities to acquire additional gaming facilities to lease to gaming operators under prudent terms,including its July 2015 announcement of the proposed acquisition of substantially all of the real estate assets of Pinnacle Entertainment, Inc. ("Pinnacle") and itsDecember 2015 announcement of the resolution of the previously disclosed litigation with The Meadows Racetrack and Casino (the "Meadows") and entry into anamended purchase agreement with Cannery Casino Resorts LLC, the owner of the Meadows. The Pinnacle transaction is expected to close during April 2016,while the Meadows transaction is expected to close during the second half of 2016. However, we cannot predict the actual dates on which the transactions will becompleted because each transaction is subject to conditions beyond such parties' control.On July 20, 2015, GLPI, Gold Merger Sub, LLC, a direct, wholly owned subsidiary of GLPI ("Merger Sub"), and Pinnacle entered into a mergeragreement (as it may be amended from time to time, the "Merger Agreement") providing for the merger of Pinnacle with and into Merger Sub, with Merger Subsurviving the merger as a wholly owned subsidiary of GLPI (the "Merger"). Following the consummation of the Merger, GLPI will own all of Pinnacle’s realproperty assets, other than Pinnacle’s Belterra Park property and excess land at certain locations. In order to effect the acquisition of Pinnacle’s real property assets(other than the Belterra Park property and excess land at certain locations), prior to the Merger, Pinnacle will cause certain assets relating to its operating businessto be transferred to, and liabilities relating thereto to be assumed by a newly formed wholly owned subsidiary of Pinnacle ("OpCo"). Immediately following theseparation, Pinnacle will distribute to Pinnacle’s stockholders all of the issued and outstanding shares of common stock of OpCo owning Pinnacle’s operatingassets and certain other specified assets. Then, upon satisfaction or waiver of the conditions to closing in the Merger Agreement on the closing date, Pinnacle willmerge with and into Merger Sub, as described in more detail in the joint proxy statement/prospectus filed with a Registration Statement on Form S-4 (No. 333-206649) initially filed by GLPI with the Securities and Exchange Commission on December 23, 2015, as most recently amended on February 16, 2016 (and as thesame may be thereafter amended, the "Joint Proxy Statement/Prospectus"). Merger Sub, as the surviving company in the Merger, will then own substantially all ofPinnacle’s real estate assets that were retained or transferred to Pinnacle in the separation and will lease those assets back to OpCo pursuant to a triple-net 35 year(including extension renewals) master lease agreement (the "Pinnacle Master Lease Agreement) substantially in the form attached as Exhibit B to the MergerAgreement. A wholly-owned subsidiary of OpCo would operate the leased gaming facilities as a tenant under the Pinnacle Master Lease Agreement.At the effective time of the Merger, each share of Pinnacle common stock issued and outstanding immediately prior to the effective time of the Mergerwill be converted into 0.85 shares of a share of GLPI common stock, with cash paid in lieu of the issuance of fractional shares of GLPI common stock. Theexchange ratio will not be adjusted to reflect changes in the price of GLPI common stock or the price of Pinnacle common stock occurring prior to the completionof the Merger. The obligations of GLPI and Pinnacle to effect the Merger are subject to the satisfaction or waiver of certain conditions set forth in the MergerAgreement (including the applicable approvals of each company’s stockholders and gaming regulatory approvals). Upon completion of the Merger, the currentdirectors and officers of GLPI are expected to continue in their current positions, other than as may be publicly announced by GLPI in the normal course ofbusiness.In connection with the proposed Merger, GLPI and Pinnacle will each hold a special meeting of their respective stockholders. At the GLPI specialmeeting, GLPI stockholders will be asked to vote on (i) a proposal to approve the issuance of GLPI common stock to Pinnacle stockholders in the Merger and (ii) aproposal to approve one or more adjournments of the meeting to another date, time or place, if necessary or appropriate, to solicit additional proxies in favor of theproposal to approve the issuance of shares of GLPI common stock to Pinnacle stockholders in the Merger. At the Pinnacle special meeting, Pinnacle stockholderswill be asked to vote on (i) a proposal to adopt the Merger Agreement, (ii) an advisory (non-binding)65Table of Contentsproposal to approve certain compensation that may be paid or become payable to the named executive officers of Pinnacle in connection with the Merger, and (iii)a proposal to approve one or more adjournments of the meeting to another date, time or place, if necessary or appropriate, to solicit additional proxies in favor ofthe proposal to approve the Merger and the other transactions contemplated by the Merger Agreement. The Joint Proxy Statement/Prospectus describes theforegoing proposals in more detail, as well as other matters contemplated in connection with the proposed Merger.The Merger Agreement may be terminated, subject to certain exceptions, prior to the effective time of the Merger by either GLPI or Pinnacle undercertain conditions, including if the Merger has not been consummated on or before March 31, 2016, subject to one three-month extension by GLPI, at the electionof GLPI, if the only conditions not satisfied at such time related to regulatory and other government approvals. The Company expects to exercise the extension.As a result of adopting two new accounting pronouncements, at December 31, 2015, the Company made two related reclassifications on its December 31,2014 consolidated balance sheet. Under Accounting Standards Update ("ASU") No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of DeferredTaxes ("ASU 2015-17") both deferred tax assets and liabilities are now classified as non-current on a classified balance sheet. As such, the Company reclassified$2.0 million of previously classified current deferred tax assets to non-current deferred tax assets. In addition, as a result of adopting the new guidance for debtissuance costs under ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"),the Company reclassified $39.1 million of debt issuance costs from the consolidated balance sheet line item debt issuance costs, net of accumulated amortization toa contra liability account which nets these unamortized financing fees against the Company's long-term debt line item on its consolidated balance sheet. See Note 3for further details on the Company's adoption and implementation of these new accounting pronouncements. These reclassifications had no impact on theCompany's financial position, results of operations or cash flows for the year ended December 31, 2014.The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue andexpenses for the reporting periods. Actual results may differ from those estimates. 2.    Principles of ConsolidationThe consolidated financial statements include the accounts of GLPI and its subsidiaries. All significant intercompany accounts and transactions have beeneliminated in consolidation.When reviewing the Company's financial results it should be noted that financial results for the Company's 2015 and 2014 fiscal years reflect a full yearof operations for both operating segments, whereas financial results for the Company's 2013 fiscal year reflect a full year of operations for the businesses in theTRS and a partial year from November 1, 2013 to December 31, 2013 for the real estate entity.3.    New Accounting PronouncementsRecently Adopted Accounting PronouncementsIn November 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classificationof Deferred Taxes . This ASU simplifies the presentation of deferred income taxes by requiring that both deferred tax assets and liabilities be classified as non-current on a classified balance sheet. Previously, the Company classified its current and non-current deferred tax assets and liabilities as individual line items on itsbalance sheet. The Company early adopted ASU 2015-17 on a retrospective basis and its balance sheet presentation at December 31, 2015 and 2014 reflects theadoption of the new standard.In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt IssuanceCosts . This ASU requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct reduction from the carryingamount of that debt liability, consistent with the presentation of debt discounts. In August 2015, the FASB issued explanatory guidance on ASU 2015-03 in theform of ASU No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated withLine-of-Credit Arrangements ("ASU 2015-15"). ASU 2015-15 clarifies that debt issuance costs not associated with outstanding borrowings may continue to beaccounted for as assets within the balance sheet. The Company early adopted ASU 2015-03 on a retrospective basis and its balance sheet presentation at December31, 2015 and 2014 reflects the adoption of the new standard.66Table of ContentsAccounting Pronouncements Not Yet AdoptedIn February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis ("ASU 2015-02"). ASU2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify theevaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities, (ii) eliminate the presumptionthat a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs, and (iv)provide a scope exception for certain entities. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. TheCompany is currently evaluating the impact of the adoption of ASU 2015-02 on its consolidated financial statements and believes should it elect to implement theUPREIT structure in a future period additional disclosures may be required.In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). This new standard will replace allcurrent U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. ASU 2014-09 provides a unified model to determine when and howrevenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in anamount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. At the April 1, 2015 FASB meeting, theboard voted to defer the effective date for the new revenue recognition standard to annual reporting periods beginning after December 15, 2017. Thepronouncement was originally effective for annual reporting periods beginning after December 15, 2016, and companies are permitted to elect the adoption of thestandard as of the original effective date. When adopted, the new guidance can be applied either retrospectively to each period presented or as a cumulative-effectadjustment as of the date of adoption. The Company is evaluating the impact of adopting this new accounting standard on its financial statements and internalrevenue recognition policies.4.      Summary of Significant Accounting PoliciesCash and Cash EquivalentsThe Company considers all cash balances and highly-liquid investments with original maturities of three months or less to be cash and cash equivalents.Concentration of Credit RiskConcentrations of credit risk arise when a number of operators, tenants, or obligors related to the Company's investments are engaged in similar businessactivities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, includingthose to the Company, to be similarly affected by changes in economic conditions. As of December 31, 2015 , substantially all of the Company's real estateproperties were leased to Penn and approximately 96% of the Company's rental revenues were derived from the Penn Master Lease. Revenues from Penn, asreported in Penn's filings with the Securities and Exchange Commission, are reported in the Company's GLP Capital, L.P. reportable segment. Penn is a publiclytraded company that is subject to the informational filing requirements of the Securities Exchange Act of 1934, as amended, and is required to file periodic reportson Form 10-K, Form 10-Q and Form 8-K with the Securities and Exchange Commission. According to Penn's filings with Securities and Exchange Commission,Penn's net revenues were $2.8 billion , $2.6 billion and $2.9 billion for the years ended December 31, 2015 , 2014 and 2013 , respectively. Other than theCompany's tenant concentration, management believes the Company's portfolio was reasonably diversified by geographical location and did not contain any othersignificant concentrations of credit risk. As of December 31, 2015 , the Company's portfolio of 19 leased properties and the TRS properties are diversified bylocation across 12 states.Financial instruments that subject the Company to credit risk consist of cash and cash equivalents, accounts receivable and loans receivable.The Company's policy is to limit the amount of credit exposure to any one financial institution and place investments with financial institutions evaluatedas being creditworthy, or in short-term money market and tax-free bond funds which are exposed to minimal interest rate and credit risk. At times, the Companyhas bank deposits and overnight repurchase agreements that exceed federally-insured limits.Prepaid Expenses and Other AssetsPrepaid expenses consist of expenditures for goods (other than inventories) or services before the goods are used or the services are received. Theseamounts are deferred and charged to operations as the benefits are realized and primarily consist of prepayments for insurance and other contracts that will beexpensed during the subsequent year. It also includes property taxes that were paid in advance, as well as transaction costs that will be allocated to purchase priceupon the closing of67Table of Contentsan asset acquisition. Other current assets are items expected to be realized within twelve months of the balance sheet date and primarily consists of accountsreceivable, deposits, food and beverage inventory and deferred compensation plan assets (See Note 9 for further details). Other assets are all items that are long-term in nature.Fair Value of Financial Instruments The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate: Cash and Cash Equivalents The fair value of the Company’s cash and cash equivalents approximates the carrying value of the Company’s cash and cash equivalents, due to the shortmaturity of the cash equivalents.Deferred Compensation Plan Assets and Corresponding LiabilitiesThe Company's deferred compensation plan assets consist of open-ended mutual funds and as such the fair value measurement of the assets is considereda Level 1 measurement as defined under ASC 820 "Fair Value Measurements and Disclosures" ("ASC 820"). Deferred compensation plan assets are includedwithin other current assets on the consolidated balance sheets. Deferred compensation liabilities approximate the plan's assets and are included with other currentliabilities on the consolidated balance sheets. The difference between the Company's deferred compensation plan assets and liabilities at both December 31, 2015and 2014 is related to timing differences between the funding of assets held at the plan trustee and the actual contributions from eligible employees' compensation.Loan ReceivableThe fair value of the loan receivable approximates the carrying value of the Company's loan receivable, as collection on the outstanding loan balance isreasonably assured and the interest rate approximates market rates for a similar instrument. The fair value measurement of the loan receivable is considered a Level3 measurement as defined under ASC 820. Long-term Debt The fair value of the senior unsecured notes and senior unsecured credit facility is estimated based on quoted prices in active markets and as such is aLevel 1 measurement as defined under ASC 820. The estimated fair values of the Company’s financial instruments are as follows (in thousands): December 31, 2015 December 31, 2014 CarryingAmount FairValue CarryingAmount FairValueFinancial assets:       Cash and cash equivalents$41,875 $41,875 $35,973 $35,973Deferred compensation plan assets14,833 14,833 14,280 14,280Loan receivable29,350 29,350 34,000 34,000Financial liabilities: Deferred compensation plan liabilities14,866 14,866 14,369 14,369Long-term debt: Senior unsecured credit facility490,000 479,612 558,000 535,010Senior unsecured notes2,050,000 2,014,750 2,050,000 2,091,000Real Estate InvestmentsReal estate investments primarily represent land and buildings leased to the Company's tenants. The Company records the acquisition of real estate assetsat cost, including acquisition and closing costs. The cost of properties developed by the Company include costs of construction, property taxes, interest and othermiscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. The Company considers theperiod of future benefit of the asset to determine the appropriate useful lives. Depreciation is computed using a straight-line method over the estimated useful livesof the buildings and building improvements which are generally between 10 to 31 years . Additionally,68Table of Contentsthe amortization of real estate assets subject to capital leases (for which GLPI is the lessee) is included within the depreciation line item of the Company'sconsolidated statements of income.The Company continually monitors events and circumstances that could indicate that the carrying amount of its real estate investments may not berecoverable or realized. When indicators of potential impairment suggest that the carrying value of a real estate investment may not be recoverable, the Companyestimates the fair value of the investment by calculating the undiscounted future cash flows from the use and eventual disposition of the investment. This amount iscompared to the asset's carrying value. If the Company determines the carrying amount is not recoverable, it would recognize an impairment charge equivalent tothe amount required to reduce the carrying value of the asset to its estimated fair value, calculated in accordance with GAAP fair value provisions. The Companygroups its real estate investments by tenant in evaluating impairment. In assessing the recoverability of the carrying value, the Company must make assumptionsregarding future cash flows and other factors. The factors considered by the Company in performing this assessment include current operating results, market andother applicable trends and residual values, as well as the effect of obsolescence, demand, competition and other factors. If these estimates or the relatedassumptions change in the future, the Company may be required to record an impairment loss.Property and Equipment Used in OperationsProperty and equipment are stated at cost, less accumulated depreciation and represent assets used by the Company's TRS operations and certaincorporate assets. Maintenance and repairs that neither add materially to the value of the asset nor appreciably prolong its useful life are charged to expense asincurred. Gains or losses on the disposal of property and equipment are included in the determination of income.Depreciation of property and equipment is recorded using the straight-line method over the following estimated useful lives: Land improvements 15 yearsBuilding and improvements 5 to 31 yearsFurniture, fixtures, and equipment 3 to 31 yearsLeasehold improvements are depreciated over the shorter of the estimated useful life of the improvement or the related lease term. The estimated usefullives are determined based on the nature of the assets as well as the Company's current operating strategy.The Company reviews the carrying value of its property and equipment for possible impairment whenever events or changes in circumstances indicatethat the carrying value of an asset may not be recoverable based upon the estimated undiscounted future cash flows expected to result from its use and eventualdisposition. If the Company determines the carrying amount is not recoverable, it would recognize an impairment charge equivalent to the amount required toreduce the carrying value of the asset to its estimated fair value, calculated in accordance with GAAP fair value provisions. In estimating expected future cashflows for determining whether an asset is impaired, assets are grouped at the individual property level. In assessing the recoverability of the carrying value ofproperty and equipment, the Company must make assumptions regarding future cash flows and other factors. The factors considered by the Company inperforming this assessment include current operating results, market and other applicable trends and residual values, as well as the effect of obsolescence, demand,competition and other factors. If these estimates or the related assumptions change in the future, the Company may be required to record an impairment loss forthese assets.Goodwill and Other Intangible AssetsAt both December 31, 2015 and 2014 , the Company had $75.5 million of goodwill and $9.6 million of other intangible assets within its consolidatedbalance sheets, resulting from the contribution of Hollywood Casino Baton Rouge and Hollywood Casino Perryville in connection with the Spin-Off. TheCompany's goodwill resides on the books of its Hollywood Casino Baton Rouge subsidiary, while the other intangible asset represents a gaming license on thebooks of its Hollywood Casino Perryville subsidiary. Both subsidiaries are members of the TRS Properties segment and are considered separate reporting unitsunder ASC 350, "Intangibles - Goodwill and Other" ("ASC 350"). Goodwill is tested at the reporting unit level, which is an operating segment or one level belowan operating segment for which discrete financial information is available.Under ASC 350, the Company is required to test goodwill for impairment at least annually and whenever events or circumstances indicate that it is morelikely than not that goodwill may be impaired. The Company has elected to perform its annual goodwill impairment test as of October 1 of each year. ASC 350prescribes a two-step goodwill impairment test, the first step which involves the determination of the fair value of each reporting unit and its comparison to thecarrying amount. In order to determine the fair value of the Baton Rouge reporting unit, the Company utilized a discounted cash flow model, which69Table of Contentsrelied on projected EBITDA to determine the reporting unit's future cash flows. If the carrying amount exceeds the fair value in step 1, then step 2 of theimpairment test is performed to determine the implied value of goodwill. If the implied value of goodwill is less than the goodwill allocated to the reporting unit,an impairment loss is recognized.In accordance with ASC 350, the Company considers its Hollywood Casino Perryville gaming license an indefinite-lived intangible asset that does notrequire amortization based on the Company's future expectations to operate this casino indefinitely, as well as the gaming industry's historical experience inrenewing these intangible assets at minimal cost with various state gaming commissions. Rather, the Company's gaming license is tested annually, or morefrequently if indicators of impairment exist, for impairment by comparing the fair value of the recorded asset to its carrying amount. If the carrying amount of theindefinite-life intangible asset exceeds its fair value, an impairment loss is recognized. Hollywood Casino Perryville's gaming license will expire in September2025, fifteen years from the casino's opening date. The Company expects to expense any costs related to the gaming license renewal as incurred.We assessed the fair value of our gaming license using the Greenfield Method under the income approach. The Greenfield Method estimates the fair valueof the gaming license assuming the Company built a casino with similar utility to that of the existing facility. The method assumes a theoretical start-up companygoing into business without any assets other than the intangible asset being valued. As such the value of the license is a function of the following items:•Projected revenues and operating cash flows;•Theoretical construction costs and duration;•Pre-opening expenses;•Discounting that reflects the level of risk associated with receiving future cash flows attributable to the license; and•Remaining useful life of the licenseThe evaluation of goodwill and indefinite-lived intangible assets requires the use of estimates about future operating results to determine the estimatedfair value of the reporting unit and the indefinite-lived intangible assets. The Company must make various assumptions and estimates in performing its impairmenttesting. The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions, which represent the Company'sbest estimates of the cash flows expected to result from the use of the assets. Changes in estimates, increases in the Company's cost of capital, reductions intransaction multiples, changes in operating and capital expenditure assumptions or application of alternative assumptions and definitions could producesignificantly different results. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company's estimates. Ifthe Company's ongoing estimates of future cash flows are not met, the Company may have to record additional impairment charges in future accounting periods.The Company's estimates of cash flows are based on the current regulatory and economic climates, as well as recent operating information and budgets. Theseestimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events.Forecasted cash flows can be significantly impacted by the local economy in which the Company's subsidiaries operate. For example, increases inunemployment rates can result in decreased customer visitations and/or lower customer spend per visit. In addition, new legislation which approves gaming innearby jurisdictions or further expands gaming in jurisdictions in which the Company operates can result in increased competition for the property. This generallyhas a negative effect on profitability once competitors become established, as a certain level of cannibalization occurs absent an overall increase in customervisitations. Lastly, increases in gaming taxes approved by state regulatory bodies can negatively impact forecasted cash flows.Assumptions and estimates about future cash flow levels are complex and subjective. They are sensitive to changes in underlying assumptions and can beaffected by a variety of factors, including external factors, such as industry, geopolitical and economic trends, and internal factors, such as changes in theCompany's business strategy, which may reallocate capital and resources to different or new opportunities which management believes will enhance the Company'soverall value but may be to the detriment of its existing operations.The Company determined the fair value of its goodwill and gaming license as of October 1, 2015 utilizing the forecasted cash flow methods describedabove and compared these values to the carrying value of the assets on its balance sheet. In determining the fair value of each asset, the Company incorporatedrecent operating trends of both TRS properties, as well as the continued impact of the opening of the Horseshoe Casino Baltimore in August 2014 and the expectedimpact of the anticipated opening of new casino in Prince George's County during the fourth quarter of 2016 on Hollywood Casino Perryville into its current yearprojections. After consideration of these facts, the fair value of both assets exceeded their carrying amount, and as of October 1, 2015 , the Company's goodwilland gaming license were not impaired.70Table of ContentsDebt Issuance CostsDebt issuance costs that are incurred by the Company in connection with the issuance of debt are deferred and amortized to interest expense over thecontractual term of the underlying indebtedness. During 2015, the Company early adopted ASU 2015-03 on a retrospective basis, which requires long-term debt tobe reported net of unamortized debt issuance costs on the consolidated balance sheet. See Note 3 for further information on the adoption of ASU 2015-03.Comprehensive Income Comprehensive income includes net income and all other non-owner changes in shareholders’ equity during a period. The Company did not have anynon-owner changes in shareholders’ equity for the three years ended December 31, 2015 and comprehensive income for the three years ended December 31, 2015was equivalent to net income for those time periods.Income TaxesThe TRS Properties are able to engage in activities resulting in income that would not be qualifying income for a REIT. As a result, certain activities ofthe Company which occur within its TRS Properties are subject to federal and state income taxes. The Company accounts for income taxes in accordance with ASC 740, "Income Taxes" ("ASC 740"). Under ASC 740, deferred tax assets and liabilitiesare determined based on the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and are measured at theprevailing enacted tax rates that will be in effect when these differences are settled or realized. ASC 740 also requires that deferred tax assets be reduced by avaluation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realizability of the deferred tax assets isevaluated by assessing the valuation allowance and by adjusting the amount of the allowance, if any, as necessary. The factors used to assess the likelihood ofrealization are the forecast of future taxable income.ASC 740 also creates a single model to address uncertainty in tax positions, and clarifies the accounting for uncertainty in income taxes recognized in anenterprise's financial statements by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in an enterprise'sfinancial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure andtransition. The Company did not have any uncertain tax positions for the three years ended December 31, 2015 .The Company is required under ASC 740 to disclose its accounting policy for classifying interest and penalties, the amount of interest and penaltiescharged to expense each period, as well as the cumulative amounts recorded in the consolidated balance sheets. If and when they occur, the Company will classifyany income tax-related penalties and interest accrued related to unrecognized tax benefits in taxes on income within the consolidated statements of income. Duringthe years ended December 31, 2015 and 2014 , the Company recognized $59 thousand and $18 thousand of penalties and interest, net of deferred income taxes,respectively. During the year ended December 31, 2013 , the Company did not recognize any interest and penalties, net of deferred income taxes.The Company elected on its U.S. federal income tax return for its taxable year beginning on January 1, 2014 to be treated as a REIT and the Company,together with an indirect wholly-owned subsidiary of the Company, GLP Holdings, Inc., jointly elected to treat each of GLP Holdings, Inc., Louisiana CasinoCruises, Inc. and Penn Cecil Maryland, Inc. as a "taxable REIT subsidiary" effective on the first day of the first taxable year of GLPI as a REIT. The Companycontinues to be organized and to operate in a manner that will permit the Company to qualify as a REIT. To qualify as a REIT, the Company must meet certainorganizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to shareholders. As a REIT, theCompany generally will not be subject to federal income tax on income that it distributes as dividends to its shareholders. If the Company fails to qualify as a REITin any taxable year, it will be subject to U.S. federal income tax, including any applicable alternative minimum tax, on its taxable income at regular corporateincome tax rates, and dividends paid to its shareholders would not be deductible by the Company in computing taxable income. Any resulting corporate liabilitycould be substantial and could materially and adversely affect the Company's net income and net cash available for distribution to shareholders. Unless theCompany was entitled to relief under certain Internal Revenue Code provisions, the Company also would be disqualified from re-electing to be taxed as a REIT forthe 4 taxable years following the year in which it failed to qualify to be taxed as a REIT.Revenue Recognition and Promotional Allowances The Company recognizes rental revenue from tenants, including rental abatements, lease incentives and contractually fixed increases attributable tooperating leases, on a straight-line basis over the term of the related leases when collectability is reasonably assured. Additionally, percentage rent that is fixed anddeterminable at the lease inception date is recorded on a straight-line basis over the lease term, resulting in the recognition of deferred rental revenue on theCompany’s consolidated71Table of Contentsbalance sheets. Deferred rental revenue is amortized to rental revenue on a straight-line basis over the remainder of the lease term. The lease term includes theinitial non-cancelable lease term and any reasonably assured renewable periods. Contingent rental income that is not fixed and determinable at lease inception isrecognized only when the lessee achieves the specified target. Recognition of rental income commences when control of the facility has been transferred to thetenant.The Company determined, based on facts and circumstances prevailing at the time of each lease's inception, that neither Penn nor Casino Queen couldeffectively operate and run their respective business without the properties that are leased to it under the respective lease agreements with GLPI. Furthermore, atlease inception, all of Casino Queen's revenues and substantially all of Penn's revenues were generated from operations in connection with the leased properties.There are also various legal restrictions in the jurisdictions in which Penn and Casino Queen operate that limit the availability and location of gaming facilities,which makes relocation or replacement of the leased gaming facilities restrictive and potentially impracticable or unavailable. Moreover, under the terms of thePenn Master Lease, Penn must make its renewal election with respect to all of the leased property together; the tenant is not entitled to selectively renew certain ofthe leased property while not renewing other property. Accordingly, the Company concluded that failure by Penn or Casino Queen to renew the lease wouldimpose a significant penalty on such tenant such that renewal of all lease renewal options appears at lease inception to be reasonably assured. Therefore, theCompany concluded that the term of the leases with both Penn and Casino Queen is 35 years , equal to the initial 15 year term plus all four of the 5 year renewaloptions.As of December 31, 2015 , all but one of the Company’s real estate investment properties were leased to a subsidiary of Penn under the Penn MasterLease. The obligations under the Penn Master Lease are guaranteed by Penn and by most Penn subsidiaries that occupy and operate the facilities leased under thePenn Master Lease. A default by Penn or its subsidiaries with regard to any facility will cause a default with regard to the Penn Master Lease. In January 2014,GLPI completed the asset acquisition of Casino Queen in East St. Louis, Illinois. GLPI subsequently leased the property back to Casino Queen on a triple-net basison terms similar to those in the Penn Master Lease. The rent structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual 2% escalator if certain rentcoverage ratio thresholds are met, and a component that is based on the performance of the facilities, which is adjusted, subject to certain floors (i) every five years by an amount equal to 4% of the average change to net revenues of all facilities under the Penn Master Lease (other than Hollywood Casino Columbus andHollywood Casino Toledo) during the preceding five years , and (ii) monthly by an amount equal to 20% of the change in net revenues of Hollywood CasinoColumbus and Hollywood Casino Toledo during the preceding month. In addition to rent, all properties under the Penn Master Lease are required to pay thefollowing: (1) all facility maintenance, (2) all insurance required in connection with the leased properties and the business conducted on the leased properties, (3)taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor) and (4) all utilities and other services necessary or appropriatefor the leased properties and the business conducted on the leased properties.The rent structure under the Casino Queen lease also includes a fixed component, a portion of which is subject to an annual 2% escalator if certain rentcoverage ratio thresholds are met, and a component that is based on the performance of the facility, which is reset every five years to a fixed amount equal to thegreater of (i) the annual amount of non-fixed rent applicable for the lease year immediately preceding such rent reset year and (ii) an amount equal to 4% of theaverage annual net revenues of the facility for the trailing five year period. Similar to Penn Master Lease, the tenant is responsible for all executory chargesdescribed in the above paragraph.As of December 31, 2015 , the future minimum rental income from the Company's properties under non-cancelable operating leases, including anyreasonably assured rental periods, was as follows (in thousands):Year ending December 31, 2016$354,9282017355,4282018357,9492019370,5532020370,553Thereafter10,326,873Total$12,136,284For the years ended December 31, 2015 , 2014 and 2013 , GLPI recognized $43.5 million , $40.5 million and $6.7 million , respectively, in contingentrental income from Hollywood Casino Columbus and Hollywood Casino Toledo related to72Table of Contentsclause (ii) in the paragraph above. The expected future minimum rental income from these properties, as well as the portion of the rent based on the performance ofthe other facilities under the Penn Master Lease that is reset in Year 5 (November 1, 2018) of the lease are excluded from the table above as they are consideredcontingent rental income under ASC 840 "Leases." Furthermore, during the years ended December 31, 2015 and 2014 , the Company recognized $4.0 million and$0.5 million , respectively of rental income related to the annual 2% rent escalator noted above. The rent escalator was fully activated in November 2015 andpartially activated in November 2014. Any anticipated future rent escalations are also excluded from the table above.Additionally, in accordance with ASC 605, "Revenue Recognition," the Company records revenue for the real estate taxes paid by its tenants on theleased properties with an offsetting expense in real estate taxes within the consolidated statement of income as the Company has concluded it is the primaryobligor. Gaming revenue generated by the TRS Properties mainly consists of video lottery gaming revenue and to a lesser extent, table game and poker revenue.Video lottery gaming revenue is the aggregate net difference between gaming wins and losses with liabilities recognized for funds deposited by customers beforegaming play occurs, for "ticket-in, ticket-out" coupons in the customers’ possession, and for accruals related to the anticipated payout of progressive jackpots.Progressive slot machines, which contain base jackpots that increase at a progressive rate based on the number of coins played, are charged to revenue as theamount of the jackpots increase. Table game gaming revenue is the aggregate of table drop adjusted for the change in aggregate table chip inventory. Table drop isthe total dollar amount of the currency, coins, chips, tokens, outstanding counter checks (markers), and front money that are removed from the live gaming tables.Additionally, food and beverage revenue is recognized as services are performed. The following table discloses the components of gaming revenue within the consolidated statements of income for the years ended December 31, 2015 ,2014 and 2013 :  Year Ended December 31, 2015 2014 2013 (in thousands)Video lottery$122,292 $127,572 $138,803Table game18,799 19,120 18,096Poker1,219 1,591 2,453Total gaming revenue, net of cash incentives$142,310 $148,283 $159,352 Gaming revenue is recognized net of certain sales incentives in accordance with ASC 605-50, "Revenue Recognition— Customer Payments andIncentives." The Company records certain sales incentives and points earned in point-loyalty programs as a reduction of revenue. The retail value of food and beverage and other services furnished to guests without charge is included in gross revenues and then deducted aspromotional allowances. The amounts included in promotional allowances for the years ended December 31, 2015 , 2014 and 2013 are as follows:  Year Ended December 31, 2015 2014 2013 (in thousands)Food and beverage$5,512 $5,732 $5,970Other83 41 167Total promotional allowances$5,595 $5,773 $6,137 The estimated cost of providing such complimentary services, which is primarily included in food, beverage, and other expense, for the years endedDecember 31, 2015 , 2014 and 2013 are as follows:  Year Ended December 31, 2015 2014 2013 (in thousands) Food and beverage$2,343 $2,766 $2,907Other38 15 86Total cost of complimentary services$2,381 $2,781 $2,99373Table of Contents Gaming and Admission Taxes For the TRS Properties, the Company is subject to gaming and admission taxes based on gross gaming revenues in the jurisdictions in which it operates.The Company primarily recognizes gaming tax expense based on the statutorily required percentage of revenue that is required to be paid to state and localjurisdictions in the states where wagering occurs. At Hollywood Casino Baton Rouge, the gaming and admission tax is based on graduated tax rates. At HollywoodCasino Perryville the gaming tax rate is flat. The Company records gaming and admission taxes at the Company’s estimated effective gaming tax rate for the year,considering estimated taxable gaming revenue and the applicable rates. Such estimates are adjusted each interim period. If gaming and admission tax rates changeduring the year, such changes are applied prospectively in the determination of gaming tax expense in future interim periods. For the three years endedDecember 31, 2015 , these expenses, which are primarily recorded within gaming expense in the consolidated statements of income, totaled $60.1 million , $66.8million and $71.6 million , respectively. Earnings Per Share The Company calculates earnings per share ("EPS") in accordance with ASC 260, "Earnings Per Share." Basic EPS is computed by dividing net incomeapplicable to common stock by the weighted-average number of common shares outstanding during the period, excluding net income attributable to participatingsecurities (unvested restricted stock awards). Diluted EPS reflects the additional dilution for all potentially-dilutive securities such as stock options, unvestedrestricted shares and unvested performance-based restricted shares.The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average commonshares outstanding used in the calculation of diluted EPS for the years ended December 31, 2015 , 2014 and 2013 (in thousands):  Year Ended December 31, 2015 2014 2013  Determination of shares:    Weighted-average common shares outstanding114,432 112,037 110,617Assumed conversion of dilutive employee stock-based awards3,755 5,340 4,924Assumed conversion of restricted stock170 209 324Assumed conversion of performance-based restricted stock awards82 — —Diluted weighted-average common shares outstanding118,439 117,586 115,865 The following table presents the calculation of basic and diluted EPS for the Company’s common stock for the years ended December 31, 2015 , 2014and 2013 :  Year Ended December 31, 2015 2014 2013  Calculation of basic EPS: Net income$128,122 $138,807 $14,853Less: Net income allocated to participating securities(517) (578) (56)Net income attributable to common shareholders$127,605 $138,229 $14,797Weighted-average common shares outstanding114,432 112,037 110,617Basic EPS$1.12 $1.23 $0.13 Calculation of diluted EPS: Net income$128,122 $138,807 $14,853Diluted weighted-average common shares outstanding118,439 117,586 115,865Diluted EPS$1.08 $1.18 $0.13 Options to purchase 24,233 and 17,917 shares were outstanding during the years ended December 31, 2015 and 2014 but were not included in thecomputation of diluted EPS because of being antidilutive. There were no outstanding options to74Table of Contentspurchase shares of common stock during the year ended December 31, 2013 that were not included in the computation of diluted EPS because of beingantidilutive. Stock-Based CompensationThe Company's 2013 Long Term Incentive Compensation Plan (the "2013 Plan") provides for the Company to issue stock options (incentive and/or non-qualified), restricted stock awards, including performance-based restricted stock awards, phantom stock units ("PSUs") and other equity or cash based awards toemployees. Any director, employee or consultant shall be eligible to receive such awards.The Company accounts for stock compensation under ASC 718, "Compensation - Stock Compensation," which requires the Company to expense the costof employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This expense is recognized ratablyover the requisite service period following the date of grant. The fair value for stock options is estimated at the date of grant using the Black-Scholes option-pricingmodel. The fair value of the Company's time-based restricted stock awards is equivalent to the closing stock price on the day of grant. The Company utilizes a thirdparty valuation firm to measure the fair value of performance-based restricted stock awards at grant date using the Monte Carlo model. Additionally, the cash-settled PSUs entitle employees to receive cash based on the fair value of the Company’s common stock on the vesting date. ThesePSUs are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with compensation expense beingrecognized over the requisite service period in accordance with ASC 718-30, "Compensation-Stock Compensation, Awards Classified as Liabilities."In connection with the Spin-Off, each outstanding option with respect to Penn common stock outstanding on the distribution date was converted into twoawards, an adjusted Penn option and a GLPI option. The adjustment preserved the aggregate intrinsic value of the options. Additionally, in connection with theSpin-Off, holders of outstanding restricted stock and PSUs with respect to Penn common stock became entitled to an additional share of restricted stock or PSUwith respect to GLPI common stock for each share of Penn restricted stock or PSU held.The adjusted options, as well as the restricted stock awards and PSUs, otherwise remain subject to their original terms, except that for purposes of theadjusted Penn awards (including in determining exercisability and the post-termination exercise period), continued service with GLPI following the distributiondate shall be deemed continued service with Penn; and for purposes of the GLPI awards (including in determining exercisability and the post-termination exerciseperiod), continued service with Penn following the distribution date shall be deemed continued service with GLPI.The unrecognized compensation relating to both Penn and GLPI’s stock options, restricted stock awards, performance-based restricted stock awards andPSUs held by GLPI employees will be amortized to expense over the awards’ remaining vesting periods.See Note 12 for further information related to the stock-based compensation. Segment Information Consistent with how the Company’s Chief Operating Decision Maker reviews and assesses the Company’s financial performance, the Company has tworeportable segments, GLP Capital, L.P. (a wholly-owned subsidiary of GLPI through which GLPI owns substantially all of its real estate assets) ("GLP Capital")and the TRS Properties. The GLP Capital reportable segment consists of the leased real property and represents the majority of the Company’s business. The TRSProperties reportable segment consists of Hollywood Casino Perryville and Hollywood Casino Baton Rouge. See Note 13 for further information with respect tothe Company’s segments.Statements of Cash FlowsThe Company has presented the consolidated statements of cash flows using the indirect method, which involves the reconciliation of net income to netcash flow from operating activities.Certain Risks and UncertaintiesThe Company is dependent on Penn (including its subsidiaries), who is the lessee of substantially all of the Company's properties pursuant to the PennMaster Lease and accounts for a significant portion of its revenues. The inability or unwillingness of Penn to meet its subsidiary's rent obligations and otherobligations under the Penn Master Lease could materially adversely affect the Company's business, financial position or results of operations, including theCompany's ability75Table of Contentsto pay dividends to its shareholders as required to maintain its status as a REIT. For these reasons, if Penn were to experience a material adverse effect on itsgaming business, financial position or results of operations, the Company's business, financial position or results of operations could also be materially adverselyaffected.The Company's operations are also dependent on its continued licensing by state gaming commissions of its gaming tenants and operators. The loss of alicense could have an adverse effect on future results of operations. Additionally, the Company is dependent on the local market in which its gaming tenants andoperators operate for a significant number of its patrons and revenues. If economic conditions in these areas deteriorate or additional gaming licenses are awardedin these markets, the Company's results of operations could be adversely affected. Furthermore, the Company is dependent upon a stable gaming tax structure inthe locations that its gaming tenants and operators operate in. Any change in the tax structure could have an adverse effect on future results of operations.5.      Acquisitions In January 2014, the Company completed the asset acquisition of the real property associated with the Casino Queen in East St. Louis, Illinois for $140.7million , including transaction fees of $0.7 million . Simultaneously with the acquisition, GLPI also provided Casino Queen with a $43.0 million , five year termloan at 7% interest, pre-payable at any time, which, together with the sale proceeds, completely refinanced and retired all of Casino Queen’s outstanding long-termdebt obligations. Since March 31, 2015, Casino Queen has been obligated to make mandatory principal payments on the loan on the last day of each calendar yearquarter equal to 1.25% of the original loan balance. As of December 31, 2015 , these mandatory principal payments, as well as additional principal payments havereduced the balance of this loan to $29.4 million . The collectability of the remaining loan balance is reasonably assured and as of December 31, 2015 the obligorhas made all mandatory principal and interest payments in full and on time and paid down additional principal toward the loan. The loan balance is recorded atcarrying value which approximates fair value. Interest income related to the loan is recorded in interest income within the Company's consolidated statement ofincome in the period earned. GLPI leased the property back to Casino Queen on a triple-net basis on terms similar to those in the Penn Master Lease and receivesapproximately $14.0 million in annual rent. The lease has an initial term of 15 years , and the tenant has an option to renew it at the same terms and conditions forfour successive five year periods.6.      Real Estate Investments Real estate investments, net, represents investments in 19 rental properties and the corporate headquarters building and is summarized as follows: December 31, 2015 December 31, 2014 (in thousands)Land and improvements$453,739 $454,181Building and improvements2,297,128 2,288,664Construction in progress— 2,576Total real estate investments2,750,867 2,745,421Less accumulated depreciation(660,808) (565,297)Real estate investments, net$2,090,059 $2,180,124The increase in building and improvements and corresponding decrease in construction in progress represents the placement of the Company's investmentin its corporate headquarters building located in Wyomissing, Pennsylvania into service during the year ended December 31, 2015. The company relocated to thenew corporate headquarters at the beginning of the fourth quarter of 2015.76Table of Contents7.      Property and Equipment Used in Operations Property and equipment used in operations, net, consists of the following and primarily represents the assets utilized in the TRS Properties December 31, 2015 December 31, 2014 (in thousands)Land and improvements$31,187 $31,595Building and improvements117,314 116,867Furniture, fixtures, and equipment112,227 103,612Construction in progress354 724Total property and equipment261,082 252,798Less accumulated depreciation(131,335) (118,770)Property and equipment, net$129,747 $134,028 The increase in furniture, fixtures, and equipment is primarily due to the purchase of slot machines at Hollywood Casino Perryville, totalingapproximately $6.2 million for year ended December 31, 2015.8.      Long-term Debt Long-term debt, net of current maturities and unamortized debt issuance costs is as follows: December 31, 2015 December 31, 2014 (in thousands)Senior unsecured credit facility$490,000 $558,000$550 million 4.375% senior unsecured notes due November 2018550,000 550,000$1,000 million 4.875% senior unsecured notes due November 20201,000,000 1,000,000$500 million 5.375% senior unsecured notes due November 2023500,000 500,000Capital lease1,389 1,487Total long-term debt2,541,389 2,609,487Less: unamortized debt issuance costs(31,048) (39,126)Total long-term debt, net of unamortized debt issuance costs2,510,341 2,570,361Less current maturities of long-term debt(102) (81)Long-term debt, net of current maturities and unamortized debt issuance costs$2,510,239 $2,570,280 The following is a schedule of future minimum repayments of long-term debt as of December 31, 2015 (in thousands): 2016$102201710720181,040,11320191,000,1182020124Over 5 years500,825Total minimum payments$2,541,389Senior Unsecured Credit Facility The Company has a one billion dollar senior unsecured credit facility (the "Credit Facility"), consisting of a $700 million revolving credit facility and a$300 million Term Loan A facility. On July 31, 2015, in connection with the announced Pinnacle acquisition, the Company entered into the first amendment to theCredit Facility, which permits the Company to borrow an additional $825 million under a Term Loan A-1 facility. At December 31, 2015, the Company had noborrowings outstanding under the Term Loan A-1 facility.77Table of ContentsThe interest rates payable on the loans are, at the Company's option, equal to either a LIBOR rate or a base rate plus an applicable margin, which rangesfrom 1.0% to 2.0% per annum for LIBOR loans and 0.0% to 1.0% per annum for base rate loans, in each case, depending on the credit ratings assigned to theCredit Facility. At December 31, 2015 , the applicable margin was 1.50% for LIBOR loans and 0.50% for base rate loans. In addition, the Company is required topay a commitment fee on the unused portion of the commitments under the revolving facility at a rate that ranges from 0.15% to 0.35% per annum, depending onthe credit ratings assigned to the Credit Facility. At December 31, 2015 , the commitment fee rate was 0.25% . The Company is not required to repay any loansunder the Credit Facility prior to maturity on October 28, 2018 and may prepay all or any portion of the loans under the Credit Facility prior to maturity withoutpremium or penalty, subject to reimbursement of any LIBOR breakage costs of the lenders. The Company's wholly owned subsidiary, GLP Capital is the primaryobligor under the Credit Facility, which is guaranteed by GLPI.At December 31, 2015 , the Credit Facility had a gross outstanding balance of $490 million , consisting of the $300 million Term Loan A facility and$190 million of borrowings under the revolving credit facility. Additionally, at December 31, 2015 , the Company was contingently obligated under letters ofcredit issued pursuant to the senior unsecured credit facility with face amounts aggregating approximately $0.9 million , resulting in $509.1 million of availableborrowing capacity under the revolving credit facility as of December 31, 2015 .The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of GLPI and its subsidiariesto grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations or pay certain dividends and otherrestricted payments. The Credit Facility contains the following financial covenants, which are measured quarterly on a trailing four-quarter basis: a maximum totaldebt to total asset value ratio, a maximum senior secured debt to total asset value ratio, a maximum ratio of certain recourse debt to unencumbered asset value anda minimum fixed charge coverage ratio. In addition, GLPI is required to maintain a minimum tangible net worth and its status as a REIT on and after the effectivedate of its election to be treated as a REIT, which the Company elected on its 2014 U.S. federal income tax return. GLPI is permitted to pay dividends to itsshareholders as may be required in order to maintain REIT status, subject to the absence of payment or bankruptcy defaults. GLPI is also permitted to make otherdividends and distributions subject to pro forma compliance with the financial covenants and the absence of defaults. The Credit Facility also contains certaincustomary affirmative covenants and events of default, including the occurrence of a change of control and termination of the Penn Master Lease (subject to certainreplacement rights). The occurrence and continuance of an event of default under the Credit Facility will enable the lenders under the Credit Facility to acceleratethe loans and terminate the commitments thereunder. At December 31, 2015 , the Company was in compliance with all required covenants under the CreditFacility.Senior Unsecured NotesAt December 31, 2015 , the Company had $550 million outstanding of 4.375% senior unsecured notes maturing on November 1, 2018 (the "2018 Notes"),$1,000 million outstanding of 4.875% senior unsecured notes maturing on November 1, 2020 (the "2020 Notes") and $500 million outstanding of 5.375% seniorunsecured notes maturing on November 1, 2023 (the "2023 Notes"). Interest on each of the 2018 Notes, 2020 Notes and 2023 Notes, (collectively the "Notes") ispayable semi-annually on May 1 and November 1 of each year.The Company may redeem the Notes of any series at any time, and from time to time, at a redemption price of 100% of the principal amount of the Notesredeemed, plus a "make-whole" redemption premium described in the indenture governing the Notes, together with accrued and unpaid interest to, but notincluding, the redemption date, except that if Notes of a series are redeemed 90 or fewer days prior to their maturity, the redemption price will be 100% of theprincipal amount of the Notes redeemed, together with accrued and unpaid interest to, but not including, the redemption date. If GLPI experiences a change ofcontrol accompanied by a decline in the credit rating of the Notes of a particular series, the Company will be required to give holders of the Notes of such series theopportunity to sell their Notes of such series at a price equal to 101% of the principal amount of the Notes of such series, together with accrued and unpaid interestto, but not including, the repurchase date. The Notes also are subject to mandatory redemption requirements imposed by gaming laws and regulations. The Notes were issued by GLP Capital, L.P. and GLP Financing II, Inc., (the "Issuers") two wholly-owned subsidiaries of GLPI and are guaranteed on asenior unsecured basis by GLPI. The guarantees of GLPI are full and unconditional. The Notes are the Issuers' senior unsecured obligations and rank pari passu inright of payment with all of the Issuers' senior indebtedness, including the Credit Facility, and senior in right of payment to all of the Issuers' subordinatedindebtedness, without giving effect to collateral arrangements. See Note 18 for additional financial information on the parent guarantor and subsidiary issuers ofthe Notes.The Notes contain covenants limiting the Company’s ability to: incur additional debt and use its assets to secure debt; merge or consolidate with anothercompany; and make certain amendments to the Penn Master Lease. The Notes also require78Table of Contentsthe Company to maintain a specified ratio of unencumbered assets to unsecured debt. These covenants are subject to a number of important and significantlimitations, qualifications and exceptions. At December 31, 2015 , the Company was in compliance with all required covenants under the Notes.Capital LeaseThe Company assumed the capital lease obligation related to certain assets at its Aurora, Illinois property. GLPI recorded the asset and liability associatedwith the capital lease on its balance sheet. The original term of the capital lease was 30 years and it will terminate in 2026.Bridge FacilityAlso in connection with the announced Pinnacle transaction, the Company entered into an amended and restated commitment letter dated July 31, 2015(the "GLPI Commitment Letter") with JPMorgan Chase Bank, N.A., Bank of America, N.A., Fifth Third Bank, Manufacturers and Traders Trust Company, WellsFargo Bank, National Association, UBS AG, Stamford Branch, Credit Agricole Corporate and Investment Bank, Suntrust Bank, Nomura Securities International,Inc., Citizens Bank, National Association, Barclays and certain of their affiliates (collectively, the "GLPI Commitment Parties") to provide debt financing inconnection with the transaction. Pursuant to the GLPI Commitment Letter, the GLPI Commitment Parties have committed to provide a $1.875 billion seniorunsecured 364 -day term loan bridge facility (the "GLPI Bridge Facility"). Currently, the Company expects to raise the proceeds necessary to finance the Pinnacletransaction through a combination of debt and equity offerings and does not expect to utilize the GLPI Bridge Facility. However, there can be no assurance that theCompany will be able to raise sufficient funds through an equity and/or debt offering.9.      Commitments and Contingencies LitigationPursuant to a Separation and Distribution Agreement between Penn and GLPI, any liability arising from or relating to legal proceedings involving thebusinesses and operations of Penn’s real property holdings prior to the Spin-Off (other than any liability arising from or relating to legal proceedings where thedispute arises from the operation or ownership of the TRS Properties) will be retained by Penn, and Penn will indemnify GLPI (and its subsidiaries, directors,officers, employees and agents and certain other related parties) against any losses it may incur arising from or relating to such legal proceedings. There can be noassurance that Penn will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Penn any amounts forwhich we are liable, we may be temporarily required to bear those losses.The Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions, andother matters arising in the normal course of business. The Company does not believe that the final outcome of these matters will have a material adverse effect onthe Company’s consolidated financial position or results of operations. In addition, the Company maintains what it believes is adequate insurance coverage tofurther mitigate the risks of such proceedings. However, such proceedings can be costly, time consuming, and unpredictable and, therefore, no assurance can begiven that the final outcome of such proceedings may not materially impact the Company’s financial condition or results of operations. Further, no assurance canbe given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters. Operating Lease CommitmentsAs part of the Spin-Off, Penn assigned to GLPI various leases on the land and buildings acquired in connection with the Spin-Off. The following is adescription of some of the more significant lease contracts that Penn assigned to GLPI. Total rental expense under these agreements was $2.8 million , $2.8 millionand $0.4 million for the years ended December 31, 2015 , 2014 and 2013 (which covers the period subsequent to the Spin-Off date). The leases consist of annualbase lease payments and, in some instances, a percentage rent based on a percent of adjusted gaming wins, as described in the respective leases.The Company has an operating lease for the land utilized in connection with the operations of the casino in Biloxi, Mississippi. The lease commencedMarch 3, 1994 and is for a term of 99 years . The annual rental payments are increased every 5 years by fifteen percent. The next reset period is in March 2019.The Company has an operating lease for the land utilized in connection with the operations of the casino in Tunica, Mississippi. The lease commenced onOctober 11, 1993 with a five year initial term and nine five year renewals at the tenant's79Table of Contentsoption. The lease agreement has an annual fixed rent provision, as well as an annual revenue-sharing provision, which is equal to the result obtained by subtractingthe fixed rent provision from 4% of gross revenues.The Company has an operating lease with the City of Bangor which covers the permanent casino facility that opened on July 1, 2008. Under the leaseagreement, there is a fixed rent provision, for which GLPI is responsible, which totals $0.1 million per year. The term of the lease, which commenced with theopening of the permanent facility, is for an initial term of fifteen years , with three ten -year renewal options.In addition, the Company is liable under numerous operating leases for equipment and other miscellaneous assets, which expire at various dates through2019.The future minimum lease commitments relating to noncancelable operating leases at December 31, 2015 are as follows (in thousands):Year ending December 31,   (1)2016$1,56520171,54020181,53820191,0962020461Thereafter43,891Total$50,091 (1) The above table excludes contingent rent in accordance with ASC 840.Total rental expense for equipment and other miscellaneous assets under these agreements was $2.6 million , $1.2 million and $1.4 million for the yearsended December 31, 2015 , 2014 and 2013 , respectively.Capital Expenditure CommitmentsThe Company's current construction program for 2016 calls for no material capital expenditures for which the Company was contractually committed tospend at December 31, 2015 .Purchase ObligationsThe Company has obligations to purchase various goods and services totaling $0.7 million at December 31, 2015 , of which $0.5 million will be incurredin 2016 .Employee Benefit PlansThe Company maintains a defined contribution plan under the provisions of Section 401(k) of the Internal Revenue Code of 1986, as amended, whichcovers all eligible employees. The plan enables participating employees to defer a portion of their salary and/or their annual bonus in a retirement fund to beadministered by the Company. The Company makes a discretionary match contribution of 50% of employees' elective salary deferrals, up to a maximum of 6% ofeligible employee compensation. The matching contributions for the defined contribution plan for the years ended December 31, 2015 , 2014 and 2013 were $0.3million , $0.3 million , and $0.2 million , respectively.The Company maintains a non-qualified deferred compensation plan that covers most management and other highly-compensated employees. The planallows the participants to defer, on a pre-tax basis, a portion of their base annual salary and/or their annual bonus, and earn tax-deferred earnings on these deferrals.The plan also provides for matching Company contributions that vest over a five -year period. The Company has established a Trust, and transfers to the Trust, ona periodic basis, an amount necessary to provide for its respective future liabilities with respect to participant deferral and Company contribution amounts. TheCompany's matching contributions for the non-qualified deferred compensation plan for the years ended December 31, 2015 , 2014 and 2013 were $0.5 million ,$0.4 million and $0.3 million , respectively. The Company's deferred compensation liability, which was included in other current liabilities within the consolidatedbalance sheet, was $14.9 million and $14.4 million at December 31, 2015 and 2014 , respectively and primarily relates to balances contributed as part of the Spin-Off as related to the Company's executive officers that were previously employed by Penn. Assets held in the Trust were $14.8 million and $14.3 million atDecember 31, 2015 and 2014 , respectively, and are included in other current assets within the consolidated balance sheet.80Table of ContentsLabor AgreementsSome of Hollywood Casino Perryville's employees are currently represented by labor unions. The Seafarers Entertainment and Allied Trade Unionrepresents 208 of Hollywood Casino Perryville's employees under an agreement that expires in February 2020. Additionally, Local No. 27 United Food andCommercial Workers and United Industrial Service Transportation Professional and Government Workers of North America represent certain employees undercollective bargaining agreements that expire in 2020, neither of which represents more than 50 of Hollywood Casino Perryville's employees. If the Company failsto renew or modify existing agreements on satisfactory terms, this failure could have a material adverse effect on Hollywood Casino Perryville's business, financialcondition and results of operations. There can be no assurance that Hollywood Casino Perryville will be able to maintain these agreements.10.    Income TaxesThe Company elected on its U.S. federal income tax return for its taxable year beginning on January 1, 2014 to be treated as a REIT. The benefits of theintended REIT conversion on the Company's tax provision and effective income tax rate are reflected in the tables below. Deferred tax assets and liabilities areprovided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. Thesetemporary differences result in taxable or deductible amounts in future years. The components of the Company's deferred tax assets and liabilities, related to itsTRS, are as follows:Year ended December 31,2015 2014 (in thousands)Deferred tax assets: Accrued expenses$2,125 $2,015Property and equipment4,414 679Net deferred tax assets6,539 2,694Deferred tax liabilities: Property and equipment(2,959) (336)Intangibles(1,365) (1,107)Net deferred tax liabilities(4,324) (1,443)Net:$2,215 $1,251The provision for income taxes charged to operations for years ended December 31, 2015 , 2014 and 2013 was as follows:Year ended December 31,201520142013 (in thousands)Current tax expense Federal$4,945 $6,115 $17,729State3,310 2,303 3,513Total current8,255 8,418 21,242Deferred tax (benefit) expense Federal(533) (2,680) (7,624)State(280) (625) 1,978Total deferred(813) (3,305) (5,646)Total provision$7,442 $5,113 $15,59681Table of ContentsThe following tables reconcile the statutory federal income tax rate to the actual effective income tax rate for the years ended December 31, 2015 , 2014and 2013 :Year ended December 31,201520142013Percent of pretax income U.S. federal statutory income tax rate35.0 % 35.0 % 35.0 %State and local income taxes1.3 % 0.7 % 12.6 %Nondeductible transaction costs— % — % 9.2 %REIT conversion benefit(31.3)% (31.8)% (4.3)%Permanent differences— % — % (0.9)%Other miscellaneous items0.5 % (0.3)% (0.4)%5.5 % 3.6 % 51.2 % Year ended December 31,2015 2014 2013 (in thousands)Amount based upon pretax income U.S. federal statutory income tax$47,447 $50,372 $10,657State and local income taxes1,702 964 3,840Nondeductible transaction costs— — 2,793REIT conversion benefit(42,438) (45,777) (1,322)Permanent differences61 52 (268)Other miscellaneous items670 (498) (104) $7,442 $5,113 $15,596The Company is still subject to federal income tax examinations for its years ended December 31, 2015, 2014 and 2013.11.       DividendsThe following table lists the regular dividends declared and paid by the Company during the years ended December 31, 2015 and 2014 :Declaration Date Shareholder Record Date SecuritiesClass Dividend PerShare Period Covered Distribution Date Dividend Amount (in thousands)2015 February 3, 2015 March 10, 2015 CommonStock $0.545 First Quarter 2015 March 27, 2015 $62,072May 1, 2015 June 11, 2015 CommonStock $0.545 Second Quarter 2015 June 26, 2015 $62,348July 30, 2015 September 14, 2015 CommonStock $0.545 Third Quarter 2015 September 25, 2015 $62,456October 28, 2015 December 1, 2015 CommonStock $0.545 Fourth Quarter 2015 December 18, 2015 $62,8142014 February 18, 2014 March 7, 2014 CommonStock $0.52 First Quarter 2014 March 28, 2014 $58,008May 30, 2014 June 12, 2014 CommonStock $0.52 Second Quarter 2014 June 27, 2014 $58,207September 3, 2014 September 15, 2014 CommonStock $0.52 Third Quarter 2014 September 26, 2014 $58,464November 18, 2014 December 2, 2014 CommonStock $0.92 Fourth Quarter 2014 December 19, 2014 $103,71282Table of ContentsIn addition for the years ended December 31, 2015 and 2014 , dividend payments were made to or accrued for GLPI restricted stock award holders andfor both GLPI and Penn unvested employee stock options in the amount of $2.0 million and $4.0 million , respectively. Additionally, on February 18, 2014, GLPI made the Purging Distribution, which totaled $1.05 billion and was comprised of cash and GLPI commonstock, to distribute the accumulated earnings and profits related to the real property assets and attributable to any pre-REIT years, including any earnings andprofits allocated to GLPI in connection with the Spin-Off. Shareholders were given the option to elect either an all-cash or all-stock dividend, subject to a total cashlimitation of $210.0 million . Of the 88,691,827 shares of common stock outstanding on the record date, approximately 54.3% elected the cash distribution andapproximately 45.7% elected a stock distribution or made no election. Shareholders electing cash received $4.358049 plus 0.195747 additional GLPI shares percommon share held on the record date. Shareholders electing stock or not making an election received 0.309784 additional GLPI shares per common share held onthe record date. Stock dividends were paid based on the volume weighted average price for the three trading days ended February 13, 2014 of $38.2162 per share.Approximately 22.0 million shares were issued in connection with this dividend payment. In addition, cash distributions were made to GLPI and Penn employeerestricted stock award holders in the amount of $1.0 million for the Purging Distribution. Additionally, pursuant to the terms of a Pre-Filing Agreement with the IRS, on December 19, 2014, the Company made a one-time distribution of $37.0million to shareholders in order to confirm the Company appropriately allocated its historical earnings and profits relative to the separation from Penn in responseto the Pre-Filing Agreement requested from the Internal Revenue Service and to ensure that the Company had distributed 100% of its taxable income for the 2014year. The total distribution of $0.92 per share was made to shareholders during the fourth quarter of 2014 and included a regular quarterly dividend of $0.52 pershare and a one-time dividend of $0.40 per share. In addition, cash distributions were made to or accrued for both GLPI restricted stock award holders and GLPIand Penn unvested employee stock options in the amount of $0.7 million for the one-time distribution. A summary of the Company's common stock distributions for the year ended December 31, 2015 and 2014 is as follows (unaudited): Year Ended December 31, 2015 2014 (in dollars per share)Qualified dividends$0.0698 $12.24Non-qualified dividends1.9462 1.90Capital gains0.0012 0.16Non-taxable return of capital0.1628 0.02Total distributions per common share$2.18 $14.32 Percentage classified as qualified dividends3.21% 85.47%Percentage classified as non-qualified dividends89.45% 13.27%Percentage classified as capital gains— 1.12%Percentage classified as non-taxable return of capital7.34% 0.14% 100.00% 100.00%12.    Stock-Based CompensationAs of December 31, 2015 , the Company had 3,669,842 shares available for future issuance under the 2013 Long Term Incentive Compensation Plan (the"2013 Plan") that was approved by shareholders on October 23, 2013. The 2013 Plan provides for the Company to issue stock options (incentive and/or non-qualified), restricted stock awards, including performance-based restricted stock awards, phantom stock units and other equity or cash based awards to employees.Any director, employee or consultant shall be eligible to receive such awards.In connection with the Spin-Off, each outstanding option with respect to Penn common stock outstanding on the distribution date was converted into twoawards, an adjusted Penn option and a GLPI option. The adjustment preserved the aggregate intrinsic value of the options. Additionally, in connection with theSpin-Off, holders of outstanding restricted stock and PSUs with respect to Penn common stock became entitled to an additional share of restricted stock or PSUwith respect to GLPI common stock for each share of Penn restricted stock or PSU held. These awards are not counted against the 2013 Plan limit mentionedabove.83Table of ContentsThe adjusted options, as well as the restricted stock awards and PSUs, otherwise remain subject to their original terms, except that for purposes of theadjusted Penn awards (including in determining exercisability and the post-termination exercise period), continued service with GLPI following the distributiondate shall be deemed continued service with Penn; and for purposes of the GLPI awards (including in determining exercisability and the post-termination exerciseperiod), continued service with Penn following the distribution date shall be deemed continued service with GLPI.The unrecognized compensation relating to both Penn and GLPI’s stock options, restricted stock awards, performance-based restricted stock awards andPSUs held by GLPI employees will be amortized to expense over the awards’ remaining vesting periods.As of December 31, 2015 , there was $21 thousand of total unrecognized compensation cost for stock options that will be recognized over the grantsremaining weighted average vesting period of 0.01 years . For the years ended December 31, 2015 , 2014 and 2013 , the Company recognized $2.8 million , $5.8million and $1.2 million , respectively of compensation expense associated with these awards. In addition, for the years ended December 31, 2015 and 2014 , theCompany also recognized $11.3 million and $15.3 million , respectively, of compensation expense relating to the $2.18 and $2.48 , respectively, per sharedividends paid on vested employee stock options.The following tables contain information on stock options issued and outstanding for the year ended December 31, 2015 :  Number ofOption Shares Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm (in years) AggregateIntrinsic Value(in thousands)Outstanding at December 31, 2014 11,161,842 $18.83 Exercised (3,206,692) 16.35 Canceled (28,084) 22.09 Outstanding at December 31, 2015 7,927,066 $19.82 1.83 $63,210  Exercise Price Range Total $14.87 to $22.92 $23.02 to $34.81 $35.74 to $35.87 $14.87 to $35.87Outstanding options Number outstanding6,839,896 1,079,901 7,269 7,927,066Weighted-average remaining contractual life (years)1.95 1.06 1.67 1.83Weighted-average exercise price$19.07 $24.43 $35.81 $19.82Exercisable options Number outstanding6,421,414 1,076,597 7,269 7,505,280Weighted-average exercise price$18.88 $24.43 $35.81 $19.69The Company had 7,505,280 stock options that were exercisable at December 31, 2015 with a weighted average exercise price of $19.69 which had anintrinsic value of $60.8 million and a weighted-average remaining contractual term of 1.76 years . The aggregate intrinsic value of stock options exercised for theyears ended December 31, 2015 , 2014 and 2013 was $47.8 million , $43.1 million and $1.3 million , respectively. The Company issues new authorized commonshares to satisfy stock option exercises and restricted stock award releases.As of December 31, 2015 , there was $8.6 million of total unrecognized compensation cost for restricted stock awards that will be recognized over thegrants remaining weighted average vesting period of 1.54 years . For the years ended December 31, 2015 , 2014 and 2013 , the Company recognized $5.9 million ,$3.6 million and $0.4 million , respectively, of compensation expense associated with these awards. The total fair value of awards released for years endedDecember 31, 2015 and 2014 , was $4.5 million and $4.9 million , respectively. During the year ended December 31, 2013 , there were no awards released.84Table of ContentsThe following table contains information on restricted stock award activity for the years ended December 31, 2015 and 2014 :  Number ofAwardShares Weighted AverageGrant-Date FairValueOutstanding at December 31, 2013525,328 $28.34Granted240,149 $37.12Released(237,618) $24.55Canceled(59,018) $31.99Outstanding at December 31, 2014468,841 $34.31Granted164,612 $29.37Released(160,234) $33.85Canceled(9,455) $32.38Outstanding at December 31, 2015463,764 $32.76Performance-based restricted stock awards have a three -year cliff vesting with the amount of restricted shares vesting at the end of the three -year perioddetermined based on the Company’s performance as measured against its peers. More specifically, the percentage of shares vesting at the end of the measurementperiod will be based on the Company’s three -year total shareholder return measured against the three -year return of the MSCI US REIT index. As ofDecember 31, 2015 , there was $11.0 million of total unrecognized compensation cost, which will be recognized over the awards remaining weighted averagevesting period of 1.58 years for performance-based restricted stock awards. For the years ended December 31, 2015 and 2014 , the Company recognized $8.1million and $2.9 million , respectively, of compensation expense associated with these awards. During the year ended December 31, 2013 , there was nocompensation expense, because the Company did not grant performance-based restricted stock awards in 2013 .The following table contains information on performance-based restricted stock award activity for the years ended December 31, 2015 and 2014 : Number of  Performance-BasedAward Shares Weighted AverageGrant-Date Fair ValueOutstanding at December 31, 2013— $—Granted613,556 $22.93Released— $—Canceled(70,000) $22.93Outstanding at December 31, 2014543,556 $22.93Granted548,000 $17.29Released— $—Canceled— $—Outstanding at December 31, 20151,091,556 $20.10As of December 31, 2015 , there was $1.6 million of total unrecognized compensation cost for Penn and GLPI PSUs held by GLPI employees that will becash-settled by GLPI, which will be recognized over the awards remaining weighted average vesting period of 1 year. For the years ended December 31, 2015 ,2014 and 2013 , the Company recognized $3.7 million , $2.5 million and $1.2 million , respectively of compensation expense associated with these awards. Inaddition, the Company also recognized $0.2 million and $0.8 million , respectively, of compensation expense for the years ended December 31, 2015 and 2014relating to the $2.18 and $2.48 , respectively, per share dividends paid on unvested PSUs and the Purging Distribution dividend for the year ended December 31,2014. Amounts paid by the Company for the years ended December 31, 2015 and 2014 on these cash-settled awards totaled $3.8 million and $3.7 million ,respectively. During the year ended December 31, 2013 , there were no amounts paid by the Company related to cash-settled awards.85Table of ContentsUpon the declaration of the Purging Distribution, GLPI options were adjusted in a manner that preserved both the pre-distribution intrinsic value of theoptions and the pre-distribution ratio of the stock price to exercise price that existed immediately before the Purging Distribution. Additionally, upon declaration ofthe Purging Distribution, holders of GLPI PSUs were credited with the special dividend, which will accrue and be paid, if applicable, on the vesting date of therelated PSU. Holders of GLPI restricted stock were entitled to receive the special dividend with respect to such restricted stock on the same date or dates that thespecial dividend was payable on GLPI common stock to shareholders of GLPI generally.86Table of Contents13.      Segment Information The following tables present certain information with respect to the Company’s segments. Intersegment revenues between the Company’s segments werenot material in any of the periods presented below. GLP Capital (1) TRS Properties Eliminations  (2) Total (in thousands)For the year ended December 31, 2015 Net revenues $427,125 $147,928 $— $575,053Income from operations 232,701 24,714 — 257,415Interest, net 121,855 10,402 (10,406) 121,851Income before income taxes 121,252 14,312 — 135,564Income tax expense 1,338 6,104 — 7,442Net income 119,914 8,208 — 128,122Depreciation 97,424 12,359 — 109,783Capital project expenditures, net of reimbursements 10,252 5,897 — 16,149Capital maintenance expenditures — 2,953 — 2,953 For the year ended December 31, 2014 Net revenues $436,944 $154,124 $— $591,068Income from operations 234,971 23,535 — 258,506Interest, net 114,588 10,406 (10,408) 114,586Income before income taxes 130,791 13,129 — 143,920Income tax expense 211 4,902 — 5,113Net income 130,580 8,227 — 138,807Depreciation 94,582 12,261 — 106,843Capital project expenditures, net of reimbursements 139,231 — — 139,231Capital maintenance expenditures — 3,538 — 3,538 For the year ended December 31, 2013 Net revenues $69,880 $165,572 $— $235,452Income from operations 27,656 26,249 — 53,905Interest, net 19,254 (1) — 19,253Income before income taxes 8,402 22,047 — 30,449Income tax expense 6,767 8,829 — 15,596Net income 1,635 13,218 — 14,853Depreciation 14,896 14,027 — 28,923Capital project expenditures, net of reimbursements 13,042 (844) — 12,198Capital maintenance expenditures — 4,230 — 4,230 Balance sheet at December 31, 2015 Total assets $2,223,373 $224,782 $— $2,448,155 Balance sheet at December 31, 2014 Total assets $2,296,346 $229,108 $— $2,525,454 (1) GLP Capital operations commenced November 1, 2013 in connection with the Spin-Off. For the year ended December 31, 2013, results includedtransaction costs associated with the Spin-Off of $13.5 million .87Table of Contents(2) Amounts in the "Eliminations" column represent the elimination of intercompany interest payments from the Company’s TRS Properties businesssegment to its GLP Capital business segment.14.    Summarized Quarterly Data (Unaudited)The following table summarizes the quarterly results of operations for the years ended December 31, 2015 and 2014 : Fiscal Quarter  First Second Third Fourth  (in thousands, except per share data) 2015 Net revenues$148,705 $149,867 $147,792 $128,689(1) Income from operations64,800 62,871 65,291 64,453 Net income33,131 31,989 33,229 29,773 Earnings per common share: Basic earnings per common share$0.29 $0.28 $0.29 $0.26 Diluted earnings per common share$0.28 $0.27 $0.28 $0.25 2014 Net revenues$148,312 $150,770 $146,906 $145,080 Income from operations64,318 67,358 66,733 60,097Net income34,296 36,996 37,313 30,202 Earnings per common share: Basic earnings per common share$0.31 $0.33 $0.33 $0.27 Diluted earnings per common share$0.29 $0.31 $0.32 $0.26 (1) During the fourth quarter of 2015, Penn received a significant real estate tax refund related to a property reassessment of a GLPI owned property, which directlyoffset its real estate taxes paid during the quarter. Although tenants are responsible for the payment of real estate taxes under the triple-net lease structure, theCompany is required to record revenue for the real estate taxes paid by its tenants on the leased properties with an offsetting expense in real estate taxes within theconsolidated statement of income as the Company has concluded it is the primary obligor. This tax refund resulted in the lower net revenues in the fourth quarter of2015, as compared to the fourth quarter of 2014, despite an increase in rent recognized from tenant lease payments but had no impact on income from operations ornet income.15.      Pre-Spin Transactions with Penn Before the Spin-Off, Hollywood Casino Baton Rouge and Hollywood Casino Perryville had a corporate overhead assessment with Penn, whereby Pennprovided various management services in consideration of a management fee equal to 3% of net revenues. The Company incurred and paid management fees of$4.2 million for the year ended December 31, 2013 (before the Spin-Off). In connection with the completion of the Spin-Off, the management fee agreementsbetween Penn and Hollywood Casino Baton Rouge and Hollywood Casino Perryville were terminated.16.      Supplemental Disclosures of Cash Flow InformationSupplemental disclosures of cash flow information are as follows:Year ended December 31,2015 2014 2013 (in thousandsCash paid for income taxes, net of refunds received9,785 20,092 —Cash paid for interest109,966 109,376 75088Table of ContentsPrior to the Spin-Off, the Company’s Hollywood Casino Baton Rouge and Hollywood Casino Perryville paid no federal income taxes directly to taxauthorities and instead settled all intercompany balances with Penn. These settlements included, among other things, the share of federal income taxes allocated byPenn to Hollywood Casino Baton Rouge and Hollywood Casino Perryville. The amounts paid to Penn for Hollywood Casino Baton Rouge and Hollywood CasinoPerryville’s allocated share of federal income taxes was $9.4 million for the year ended December 31, 2013. Hollywood Casino Baton Rouge and HollywoodCasino Perryville made state income tax payments directly to the state authorities of $1.6 million for the year ended December 31, 2013. 17.    Related Party TransactionsDuring the year ended December 31, 2014, the Company entered into an Agreement of Sale (the "Sale Agreement") with Wyomissing ProfessionalCenter Inc. ("WPC") and acquired certain land in an office complex known as The Wyomissing Professional Center Campus, located in Wyomissing, Pennsylvania(on which to build its corporate headquarters), in exchange for the payment of $725,000 in cash to WPC, plus taxes and closing costs. In addition, the Companyreimbursed WPC approximately $270,000 for site work and pre-development costs previously completed per the Sale Agreement. The Company subsequently paidapproximately $433,000 and $244,000 , respectively, to WPC during the years ended December 31, 2015 and 2014 in connection with construction costs paid byWPC on the Company's behalf.In connection with construction of the building in The Wyomissing Professional Center Campus, the Company also entered into an agreement (the"Construction Management Agreement") with CB Consulting Group LLC (the "Construction Manager") during the year ended December 31, 2014. Pursuant to theConstruction Management Agreement, the Construction Manager will, among other things, provide certain construction management services to the Company inexchange for three percent ( 3% ) of the total cost of work to complete the building construction project, and certain additional costs for added services. During theyears ended December 31, 2015 and 2014 , the Company paid approximately $175,000 and $59,000 , respectively, to the Construction Manager.Construction of the Company's corporate headquarters building was completed in October 2015, and the Company does not expect to incur additionalexpenses related to the building with either WPC or the Construction Manager. Upon completion of the building in October 2015, the Company becameresponsible for the payment of monthly common area maintenance fees to the Wyomissing Professional Center Owners' Association ("WPCOA"). During the yearended December 31, 2015, the Company paid approximately $10,000 to the WPCOA.Peter M. Carlino, the Company’s Chairman of the Board of Directors and Chief Executive Officer, is also the sole owner of WPC and therefore associatedwith the WPCOA. In addition, Mr. Carlino’s son owns a material interest in the Construction Manager.18.      Supplementary Condensed Consolidating Financial Information of Parent Guarantor and Subsidiary Issuers GLPI guarantees the Notes issued by its subsidiaries, GLP Capital, L.P. and GLP Financing II, Inc. Each of the subsidiary issuers is 100% owned byGLPI. The guarantees of GLPI are full and unconditional. GLPI is not subject to any material or significant restrictions on its ability to obtain funds from itssubsidiaries by dividend or loan or to transfer assets from such subsidiaries, except as provided by applicable law. No subsidiaries of GLPI guarantee the Notes. Summarized balance sheet information as of December 31, 2015 and 2014 and summarized income statement and cash flow information for the yearsended December 31, 2015 , 2014 and 2013 for GLPI as the parent guarantor, for GLP Capital, L.P. and GLP Financing II, Inc. as the subsidiary issuers and theother subsidiary non-issuers is presented below.89Table of ContentsAt December 31, 2015 Condensed Consolidating Balance Sheet Parent Guarantor Subsidiary Issuers Other Subsidiary Non-Issuers Eliminations Consolidated  (in thousands)Assets Real estate investments, net $— $1,955,290 $134,769 $— $2,090,059Property and equipment, used in operations, net — 24,494 105,253 — 129,747Cash and cash equivalents — 8,716 33,159 — 41,875Prepaid expenses — 3,768 1,218 2,922 7,908Other current assets — 54,838 2,883 — 57,721Goodwill — — 75,521 — 75,521Other intangible assets — — 9,577 — 9,577Debt issuance costs, net of accumulated amortization of $5,937 atDecember 31, 2015 — 3,563 — — 3,563Loan receivable — — 29,350 — 29,350Intercompany loan receivable — 193,595 — (193,595) —Intercompany transactions and investment in subsidiaries (253,514) 191,112 (46,418) 108,820 —Deferred tax assets, non-current — — 2,554 (107) 2,447Other assets — 256 131 — 387Total assets $(253,514) $2,435,632 $347,997 $(81,960) $2,448,155 Liabilities Accounts payable $— $127 $279 $— $406Accrued expenses — 4,737 4,843 — 9,580Accrued interest — 17,623 — — 17,623Accrued salaries and wages — 10,728 2,991 — 13,719Gaming, property, and other taxes — 21,949 2,753 — 24,702Income taxes — (41) (2,881) 2,922 —Current maturities of long-term debt — 102 — — 102Other current liabilities — 16,303 1,384 — 17,687Long-term debt, net of current maturities and unamortized debtissuance costs — 2,510,239 — — 2,510,239Intercompany loan payable — — 193,595 (193,595) —Deferred rental revenue — 107,379 — — 107,379Deferred tax liabilities, non-current — — 339 (107) 232Total liabilities — 2,689,146 203,303 (190,780) 2,701,669 Shareholders’ (deficit) equity Preferred stock ($.01 par value, 50,000,000 shares authorized, noshares issued or outstanding at December 31, 2015 — — — — —Common stock ($.01 par value, 500,000,000 shares authorized,115,594,321 shares issued at December 31, 2015 1,156 1,156 1,156 (2,312) 1,156Additional paid-in capital 935,220 935,221 1,088,058 (2,023,279) 935,220Retained (deficit) earnings (1,189,890) (1,189,891) (944,520) 2,134,411 (1,189,890)Total shareholders’ (deficit) equity (253,514) (253,514) 144,694 108,820 (253,514)Total liabilities and shareholders’ (deficit) equity $(253,514) $2,435,632 $347,997 $(81,960) $2,448,15590Table of ContentsYear ended December 31, 2015 Condensed Consolidating Statement of Operations Parent Guarantor Subsidiary Issuers Other Subsidiary Non-Issuers Eliminations Consolidated  (in thousands)Revenues Rental $— $378,075 $14,000 $— $392,075Real estate taxes paid by tenants — 33,041 2,009 — 35,050Total rental revenue — 411,116 16,009 — 427,125Gaming — — 142,310 — 142,310Food, beverage and other — — 11,213 — 11,213Total revenues — 411,116 169,532 — 580,648Less promotional allowances — — (5,595) — (5,595)Net revenues — 411,116 163,937 — 575,053Operating expenses Gaming — — 77,188 — 77,188Food, beverage and other — — 8,586 — 8,586Real estate taxes — 33,041 3,371 — 36,412General and administrative — 61,950 23,719 — 85,669Depreciation — 94,380 15,403 — 109,783Total operating expenses — 189,371 128,267 — 317,638Income from operations — 221,745 35,670 — 257,415 Other income (expenses) Interest expense — (124,183) — — (124,183)Interest income — 10 2,322 — 2,332Intercompany dividends and interest — 36,292 7,094 (43,386) —Total other expenses — (87,881) 9,416 (43,386) (121,851) Income before income taxes — 133,864 45,086 (43,386) 135,564Income tax expense — 1,338 6,104 — 7,442Net income $— $132,526 $38,982 $(43,386) $128,12291Table of ContentsYear ended December 31, 2015 Condensed Consolidating Statement of Cash Flows ParentGuarantor SubsidiaryIssuers OtherSubsidiaryNon-Issuers Eliminations Consolidated  (in thousands)Operating activities   Net income $— $132,526 $38,982 $(43,386) $128,122Adjustments to reconcile net income to net cash provided by (usedin) operating activities: Depreciation — 94,380 15,403 — 109,783Amortization of debt issuance costs — 14,016 — — 14,016Losses on dispositions of property — 152 33 — 185Deferred income taxes — — (813) — (813)Stock-based compensation — 16,811 — — 16,811Straight-line rent adjustments — 55,825 — — 55,825 (Increase) decrease, Prepaid expenses and other current assets — (9,988) 1,703 (1,423) (9,708)Other assets — — (4) — (4)Intercompany — 2,484 (2,484) — —(Decrease) increase, Accounts payable — (1,013) 67 — (946)Accrued expenses — 4,104 137 — 4,241Accrued interest — 95 — — 95Accrued salaries and wages — 715 423 — 1,138Gaming, property and other taxes — (898) (58) — (956)Income taxes — 125 (1,548) 1,423 —Other current and noncurrent liabilities — 1,934 (35) — 1,899Net cash provided by (used in) operating activities — 311,268 51,806 (43,386) 319,688Investing activities          Capital project expenditures, net of reimbursements — (10,252) (5,897) — (16,149)Capital maintenance expenditures — — (2,953) — (2,953)Proceeds from sale of property and equipment — 304 6 — 310Principal payments on loan receivable — — 4,650 — 4,650Net cash used in investing activities — (9,948) (4,194) — (14,142)Financing activities Dividends paid (251,732) — — — (251,732)Proceeds from exercise of options 29,686 — — — 29,686Financing costs — (9,500) — — (9,500)Payments of long-term debt — (68,098) — — (68,098)Intercompany financing 219,403 (219,456) (43,333) 43,386 —Net cash (used in) provided by financing activities (2,643) (297,054) (43,333) 43,386 (299,644)Net (decrease) increase in cash and cash equivalents (2,643) 4,266 4,279 — 5,902Cash and cash equivalents at beginning of period 2,643 4,450 28,880 — 35,973Cash and cash equivalents at end of period $— $8,716 $33,159 $— $41,87592Table of ContentsAt December 31, 2014 Condensed Consolidating Balance Sheet ParentGuarantor SubsidiaryIssuers OtherSubsidiaryNon-Issuers Eliminations Consolidated  (in thousands)Assets Real estate investments, net $— $2,042,311 $137,813 $— $2,180,124Property and equipment, used in operations, net 25,228 — 108,800 — 134,028Cash and cash equivalents 2,643 4,450 28,880 — 35,973Prepaid expenses 1,096 2,196 3,110 1,498 7,900Other current assets 14,947 27,417 2,890 — 45,254Goodwill — — 75,521 — 75,521Other intangible assets — — 9,577 — 9,577Loan receivable — — 34,000 — 34,000Intercompany loan receivable — 193,595 — (193,595) —Intercompany transactions and investment in subsidiaries (190,541) 195,092 13,701 (18,252) —Deferred tax assets, non-current — — 2,694 — 2,694Other assets 256 — 127 — 383Total assets $(146,371) $2,465,061 $417,113 $(210,349) $2,525,454 Liabilities Accounts payable $4,011 $188 $210 $— $4,409Accrued expenses 514 119 4,706 — 5,339Accrued interest — 17,528 — — 17,528Accrued salaries and wages 10,013 — 2,568 — 12,581Gaming, property, and other taxes 1,012 18,874 2,855 — 22,741Income taxes — (165) (1,333) 1,498 —Current maturities of long-term debt — 81 — — 81Other current liabilities 14,369 — 1,419 — 15,788Long-term debt, net of current maturities and unamortized debtissuance costs — 2,570,280 — — 2,570,280Intercompany loan payable — — 193,595 (193,595) —Deferred rental revenue — 51,554 — — 51,554Deferred tax liabilities, non-current — — 1,443 — 1,443Total liabilities 29,919 2,658,459 205,463 (192,097) 2,701,744 Shareholders’ (deficit) equity Preferred stock ($.01 par value, 50,000,000 shares authorized, noshares issued or outstanding at December 31, 2014 — — — — —Common stock ($.01 par value, 500,000,000 shares authorized,112,981,088 shares issued at December 31, 2014 1,130 — — — 1,130Additional paid-in capital 888,860 139,811 292,547 (432,358) 888,860Retained (deficit) earnings (1,066,280) (333,209) (80,897) 414,106 (1,066,280)Total shareholders’ (deficit) equity (176,290) (193,398) 211,650 (18,252) (176,290)Total liabilities and shareholders’ (deficit) equity $(146,371) $2,465,061 $417,113 $(210,349) $2,525,45493Table of ContentsYear ended December 31, 2014 Condensed Consolidating Statement of Operations ParentGuarantor SubsidiaryIssuers OtherSubsidiaryNon-Issuers Eliminations Consolidated  (in thousands)Revenues          Rental $— $373,231 $13,172 $— $386,403Real estate taxes paid by tenants — 48,570 1,964 — 50,534Total rental revenue — 421,801 15,136 — 436,937Gaming — — 148,283 — 148,283Food, beverage and other 7 — 11,614 — 11,621Total revenues 7 421,801 175,033 — 596,841Less promotional allowances — — (5,773) — (5,773)Net revenues 7 421,801 169,260 — 591,068Operating expenses Gaming — — 82,995 — 82,995Food, beverage and other — — 9,734 — 9,734Real estate taxes — 48,576 3,578 — 52,154General and administrative 54,073 2,758 24,005 — 80,836Depreciation 1,832 89,833 15,178 — 106,843Total operating expenses 55,905 141,167 135,490 — 332,562Income from operations (55,898) 280,634 33,770 — 258,506 Other income (expenses) Interest expense (11) (117,016) (3) — (117,030)Interest income — — 2,444 — 2,444Intercompany dividends and interest 612,326 39,805 618,695 (1,270,826) —Total other expenses 612,315 (77,211) 621,136 (1,270,826) (114,586) Income before income taxes 556,417 203,423 654,906 (1,270,826) 143,920Income tax expense — 210 4,903 — 5,113Net income $556,417 $203,213 $650,003 $(1,270,826) $138,80794Table of ContentsYear ended December 31, 2014 Condensed Consolidating Statement of Cash Flows ParentGuarantor SubsidiaryIssuers OtherSubsidiaryNon-Issuers Eliminations Consolidated  (in thousands)Operating activities   Net income $556,417 $203,213 $650,003 $(1,270,826) $138,807Adjustments to reconcile net income to net cash provided by (used in)operating activities: Depreciation 1,832 89,833 15,178 — 106,843Amortization of debt issuance costs — 8,057 — — 8,057Losses (gains) on dispositions of property 2 (150) 158 — 10Deferred income taxes — — (3,305) — (3,305)Stock-based compensation 12,258 — — — 12,258Straight-line rent adjustments — 44,877 — — 44,877 Decrease (increase), Prepaid expenses and other current assets 181 (10,741) (1,539) 1,498 (10,601)Other assets (1,645) — (15) — (1,660) Intercompany 800 (4,015) 3,215 — —(Decrease) increase, 0 0 0 Accounts payable (16,995) 15,526 (181) — (1,650)Accrued expenses (7,944) 119 (619) — (8,444)Accrued interest — (527) — — (527)Accrued salaries and wages 2,882 — (638) — 2,244Gaming, property and other taxes 871 — (344) — 527Income taxes (1,441) (7,625) (6,490) (1,498) (17,054)Other current and noncurrent liabilities 1,585 — 1,292 — 2,877Net cash provided by (used in) operating activities 548,803 338,567 656,715 (1,270,826) 273,259Investing activities      Capital project expenditures, net of reimbursements (1,613) (137,618) — — (139,231)Capital maintenance expenditures — — (3,538) — (3,538)Proceeds from sale of property and equipment — 150 30 — 180Funding of loan receivable — — (43,000) — (43,000)Principal payments on loan receivable — — 9,000 — 9,000Acquisition of real estate — — (140,730) — (140,730)Net cash used in investing activities (1,613) (137,468) (178,238) — (317,319)Financing activities Dividends paid, including the Purging Distribution (494,104) — — — (494,104)Proceeds from exercise of options 29,931 — — — 29,931Proceeds from issuance of long-term debt — 291,950 — — 291,950Financing costs — (306) — — (306)Payments of long-term debt — (32,024) — — (32,024)Intercompany financing (122,540) (677,364) (470,922) 1,270,826 — Distribution in connection with 2013 Pre-spin tax matter agreement (635) — — — (635)Net cash (used in) provided by financing activities (587,348) (417,744) (470,922) 1,270,826 (205,188)Net (decrease) increase in cash and cash equivalents (40,158) (216,645) 7,555 — (249,248)Cash and cash equivalents at beginning of period 42,801 221,095 21,325 — 285,221Cash and cash equivalents at end of period $2,643 $4,450 $28,880 $— $35,97395Table of ContentsYear ended December 31, 2013 Condensed Consolidating Statement of Operations ParentGuarantor SubsidiaryIssuers OtherSubsidiaryNon-Issuers Eliminations Consolidated  (in thousands)Revenues          Rental $— $62,278 $— $— $62,278Real estate taxes paid by tenants — 7,602 — — 7,602Total rental revenue — 69,880 — — 69,880Gaming — — 159,352 — 159,352Food, beverage and other — — 12,357 — 12,357Total revenues — 69,880 171,709 — 241,589Less promotional allowances — — (6,137) — (6,137)Net revenues — 69,880 165,572 — 235,452Operating expenses Gaming — — 89,367 — 89,367Food, beverage and other — — 10,775 — 10,775Real estate taxes — 7,602 1,618 — 9,220General and administrative 19,726 — 23,536 — 43,262Depreciation 74 14,822 14,027 — 28,923Total operating expenses 19,800 22,424 139,323 — 181,547Income from operations (19,800) 47,456 26,249 — 53,905 Other income (expenses) Interest expense — (19,254) — — (19,254)Interest income — — 1 — 1Management fees — — (4,203) — (4,203)Intercompany dividends and interest 68,955 — 68,955 (137,910) —Total other expenses 68,955 (19,254) 64,753 (137,910) (23,456) Income before income taxes 49,155 28,202 91,002 (137,910) 30,449Income tax expense 643 6,124 8,829 — 15,596Net income $48,512 $22,078 $82,173 $(137,910) $14,85396Table of ContentsYear ended December 31, 2013 Condensed Consolidating Statement of Cash Flows ParentGuarantor SubsidiaryIssuers OtherSubsidiaryNon-Issuers Eliminations Consolidated  (in thousands)Operating activities   Net income $48,512 $22,078 $82,173 $(137,910) $14,853Adjustments to reconcile net income to net cash provided by (used in)operating activities: Depreciation 74 14,822 14,027 — 28,923Amortization of debt issuance costs — 1,270 — — 1,270Gain on sales of property — — (39) — (39)Deferred income taxes — — (5,646) — (5,646)Stock-based compensation 1,566 — — — 1,566Straight-line rent adjustments — 6,677 — — 6,677 (Increase) decrease, Prepaid expenses and other current assets (1,944) — (775) 1,834 (885)Other assets (662) — — — (662) Intercompany 2,259 — (2,259) — —Increase (decrease), 0 0 0 Accounts payable 20,073 (18,508) 1,073 — 2,638Accrued expenses 8,458 — (462) — 7,996Accrued interest — 18,055 (839) — 17,216Accrued salaries and wages 2,432 — (301) — 2,131Gaming, property and other taxes 141 — (148) — (7)Income taxes (4,473) 10,608 (283) (1,834) 4,018Other current and noncurrent liabilities 564 — 19 — 583Net cash provided by (used in) operating activities 77,000 55,002 86,540 (137,910) 80,632Investing activities      Capital project expenditures, net of reimbursements (5,532) (7,510) 844 — (12,198)Capital maintenance expenditures — — (4,230) — (4,230)Proceeds from sale of property and equipment — — 153 — 153Net cash used in investing activities (5,532) (7,510) (3,233) — (16,275)Financing activities Net advances to Penn National Gaming, Inc. — — (6,982) — (6,982)Cash contributions to Penn National Gaming, Inc. in connection withSpin-Off (19,609) (1,992,931) (77,460) — (2,090,000)Proceeds from exercise of options 1,431 — — — 1,431Proceeds from issuance of long-term debt — 2,350,000 — — 2,350,000Financing costs — (48,147) — — (48,147)Intercompany financing (10,489) (135,319) 7,898 137,910 —Net cash (used in) provided by financing activities (28,667) 173,603 (76,544) 137,910 206,302Net increase in cash and cash equivalents 42,801 221,095 6,763 — 270,659Cash and cash equivalents at beginning of period — — 14,562 $— 14,562Cash and cash equivalents at end of period $42,801 $221,095 $21,325 $— $285,22197Table of Contents19.    Subsequent EventOn January 29, 2016 , the Company declared a regular quarterly cash dividend of $0.56 per share, which is payable on March 25, 2016 to shareholders ofrecord as of February 22, 2016 .98Table of ContentsSCHEDULE IIIREAL ESTATE ASSETS AND ACCUMULATED DEPRECIATIONDecember 31, 2015(in thousands)     Initial Cost to Company NetCapitalizedCosts(Retirements)Subsequent toAcquisition Gross Amount at which Carried at Close ofPeriod     Life onwhichDepreciationin LatestIncomeStatement isComputed     OriginalDate ofConstruction/Renovation   Description Location Encumbrances Land andImprovements Buildings andImprovements Land andImprovements Buildings andImprovements Total (1) AccumulatedDepreciation DateAcquire d RentalProperties: HollywoodCasinoLawrenceburg Lawrenceburg,IN $— $15,251 $342,393 $(29) $15,222 $342,392 $357,614 $98,091 1997/2009 11/1/2013 31HollywoodCasino Aurora Aurora, IL — 4,937 98,378 (439) 4,937 97,939 102,876 52,951 1993/2002/2012 11/1/2013 30HollywoodCasino Joliet Joliet, IL — 19,214 101,104 — 19,214 101,104 120,318 44,458 1992/2003/2010 11/1/2013 31Argosy CasinoAlton Alton, IL — — 6,462 — — 6,462 6,462 3,973 1991/1999 11/1/2013 31HollywoodCasino Toledo Toledo, OH — 12,003 144,093 — 12,003 144,093 156,096 19,003 2012 11/1/2013 31HollywoodCasinoColumbus Columbus, OH — 38,240 188,543 105 38,266 188,622 226,888 23,380 2012 11/1/2013 31HollywoodCasino atCharlesTown Races Charles Town,WV — 35,102 233,069 — 35,102 233,069 268,171 103,003 1997/2010 11/1/2013 31HollywoodCasino atPennNationalRace Course Grantville, PA — 25,500 161,810 — 25,500 161,810 187,310 54,803 2008/2010 11/1/2013 31M Resort Henderson, NV — 66,104 126,689 — 66,104 126,689 192,793 21,341 2009/2012 11/1/2013 30HollywoodCasino Bangor Bangor, ME — 12,883 84,257 — 12,883 84,257 97,140 22,759 2008/2012 11/1/2013 31Zia Park Casino Hobbs, NM — 9,313 38,947 — 9,313 38,947 48,260 14,584 2005 11/1/2013 31HollywoodCasino BaySt. Louis Bay St. Louis,MS — 59,388 87,352 (229) 59,176 87,335 146,511 40,453 1992/2006/2011 11/1/2013 40Argosy CasinoRiverside Riverside, MO — 23,468 143,301 (77) 23,391 143,301 166,692 48,717 1994/2007 11/1/2013 37HollywoodCasino Tunica Tunica, MS — 4,634 42,031 — 4,634 42,031 46,665 22,114 1994/2012 11/1/2013 31BoomtownBiloxi Biloxi, MS — 3,423 63,083 (137) 3,286 63,083 66,369 37,404 1994/2006 11/1/2013 15HollywoodCasinoSt. Louis MarylandHeights, MO — 44,198 177,063 — 44,198 177,063 221,261 40,065 1997/2013 11/1/2013 13HollywoodCasino atDaytonRaceway (2) Dayton, OH — 3,211 — 86,288 3,211 86,288 89,499 3,815 2014 11/1/2013 31HollywoodCasino atMahoningValley RaceTrack (2) Youngstown,OH — 5,683 — 94,314 5,833 94,164 99,997 3,875 2014 11/1/2013 31Casino Queen East St. Louis,IL — 70,716 70,014 — 70,716 70,014 140,730 5,961 1999 1/23/2014 31 $— $453,268 $2,108,589$179,796$452,989$2,288,663$2,741,652$660,750 HeadquartersProperty: GLPICorporateOffice (3) Wyomissing,PA $— $750 $8,465 $— $750 $8,465 $9,215 $58 2014/2015 9/19/2014 31 $— $454,018$2,117,054$179,796$453,739$2,297,128$2,750,867$660,808 99Table of Contents(1) The aggregate cost for federal income tax purposes of the properties listed above was $2.76 billion at December 31, 2015 .(2) Hollywood Casino at Dayton Raceway and Hollywood Casino at Mahoning Valley Race Course were jointly developed with Penn National Gaming, Inc. Thecosts capitalized subsequent to acquisition represent the capital expenditures incurred by the Company subsequent to the transfer of the development properties atSpin-Off. Both properties commenced operations and began paying rent during the year ended December 31, 2014.(3) The Company's corporate headquarters building was completed in October 2015. The land was purchased on September 19, 2014 and construction on thebuilding occurred through October 2015.A summary of activity for real estate and accumulated depreciation for the years ended December 31, 2015 , 2014 and 2013 is as follows: Year Ended December 31, 2015 2014 2013Real Estate:(in thousands)Balance at the beginning of the period$2,742,845 $2,433,114 $—Amounts contributed from Spin-Off— — 2,433,052Acquisitions— 140,730 —Capital expenditures and assets placed in service8,478 181,404 62Dispositions(456) (12,403) —Balance at the end of the year$2,750,867 $2,742,845 $2,433,114Accumulated Depreciation: Balance at the beginning of the period$(565,297) $(484,488) $—Amounts contributed from Spin-Off— — (469,666)Depreciation expense(95,511) (92,750) (14,822)Dispositions— 11,941 —Balance at the end of the year$(660,808) $(565,297) $(484,488)100Table of ContentsITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A.    CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresThe Company's management, under the supervision and with the participation of the principal executive officer and principal financial officer, hasevaluated the effectiveness of the Company's disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the SecuritiesExchange Act of 1934, as amended (the "Exchange Act"), as of December 31, 2015 , which is the end of the period covered by this Annual Report on Form 10-K.In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well-designed andoperated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating thecost-benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded thatas of December 31, 2015 the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company inreports it files or submits under the Exchange Act is (i) recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified inthe United States Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to the Company's management, including theCompany's principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.Management's Report on Internal Control over Financial ReportingThe Company's management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined inExchange Act Rules 13a-15(f) and 15d-15(f). The Company's management conducted an assessment of the Company's internal control over financial reporting andconcluded it was effective as of December 31, 2015 . In making this assessment, management used the criteria established by the Committee of SponsoringOrganizations of the Treadway Commission in Internal Control - Integrated Framework (2013) .Ernst & Young LLP, the Company's independent registered accounting firm, issued an audit report on the effectiveness of the Company's internal controlover financial reporting as of December 31, 2015 , which is included on the following page of this Annual Report on Form 10-K.Changes in Internal Control Over Financial ReportingOther than the remediation of the material weakness identified on October 20, 2015 related to the accurate measurement and recording of revenue earnedunder a complex leasing arrangement, there have been no changes in the Company's internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended December 31, 2015 , that have materially affected, or are reasonably likely tomaterially affect, the Company's internal control over financial reporting.101Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and ShareholdersGaming and Leisure Properties, Inc. and SubsidiariesWe have audited Gaming and Leisure Properties, Inc. and Subsidiaries' internal control over financial reporting as of December 31, 2015, based oncriteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013framework) (the COSO criteria). Gaming and Leisure Properties, Inc. and Subsidiaries' management is responsible for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report onInternal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessaryin the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, Gaming and Leisure Properties, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reportingas of December 31, 2015, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balancesheets of Gaming and Leisure Properties, Inc. and Subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, changes inshareholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2015 of Gaming and Leisure Properties, Inc. andSubsidiaries and our report dated February 22, 2016 expressed an unqualified opinion thereon./s/ ERNST & YOUNG LLP Philadelphia, PennsylvaniaFebruary 22, 2016102Table of ContentsITEM 9B.    OTHER INFORMATIONNone103Table of ContentsPART IIIITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this item concerning directors is hereby incorporated by reference to the Company's definitive proxy statement for its 2016Annual Meeting of Shareholders (the " 2016 Proxy Statement"), to be filed with the U.S. Securities and Exchange Commission within 120 days after December 31,2015 , pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. Information required by this item concerning executive officers isincluded in Part I of this Annual Report on Form 10-K.ITEM 11.    EXECUTIVE COMPENSATIONThe information called for in this item is hereby incorporated by reference to the 2016 Proxy Statement.ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERSMATTERSThe information called for in this item is hereby incorporated by reference to the 2016 Proxy Statement.ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCEThe information called for in this item is hereby incorporated by reference to the 2016 Proxy Statement.ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICESThe information called for in this item is hereby incorporated by reference to the 2016 Proxy Statement.104Table of ContentsPART IVITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a) 1. Financial Statements. The following is a list of the Consolidated Financial Statements of the Company and its subsidiaries and supplementary data filed aspart of Item 8 hereof:Reports of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2015 and 2014Consolidated Statements of Income for the years ended December 31, 2015 , 2014 and 2013Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the years ended December 31, 2015 , 2014 and 2013Consolidated Statements of Cash Flows for the years ended December 31, 2015 , 2014 and 20132. Financial Statement Schedules:Schedule III. Real Estate and Accumulated Depreciation as of December 31, 2015 for GLPI.3. Exhibits, Including Those Incorporated by Reference.The exhibits to this Report are listed on the accompanying index to exhibits and are incorporated herein by reference or are filed as part of this annualreport on Form 10-K.105Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. GAMING AND LEISURE PROPERTIES, INC. By: /s/ PETER M. CARLINO Peter M. Carlino Chairman of the Board andChief Executive OfficerDated: February 22, 2016Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated.Signature Title Date /s/ PETER M. CARLINO Chairman of the Board and Chief Executive Officer(Principal Executive Officer) February 22, 2016Peter M. Carlino /s/ WILLIAM J. CLIFFORD Chief Financial Officer and Treasurer (Principal FinancialOfficer) February 22, 2016William J. Clifford /s/ DESIREE A. BURKE Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) February 22, 2016Desiree A. Burke /s/ WESLEY R. EDENS Director February 22, 2016Wesley R. Edens /s/ DAVID A. HANDLER Director February 22, 2016David A. Handler /s/ JOSEPH W. MARSHALL Director February 22, 2016Joseph W. Marshall /s/ E. SCOTT URDANG Director February 22, 2016E. Scott Urdang 106Table of ContentsEXHIBIT INDEXExhibit Description of Exhibit2.1 Separation and Distribution Agreement, dated November 1, 2013, by and between Penn National Gaming, Inc. and Gaming and LeisureProperties, Inc. (Incorporated by reference to Exhibit 2.1 to the Company's current report on Form 8-K filed on November 7, 2013). 2.2 Agreement and Plan of Merger, dated as of July 20, 2015, by and among Pinnacle Entertainment, Inc., Gaming and Leisure Properties, Inc. and GoldMerger Sub, LLC. (Incorporated by reference to Exhibit 2.1 to the Company's current report on Form 8-K filed on July 22, 2015). 3.1 Amended and Restated Articles of Incorporation of Gaming and Leisure Properties, Inc. (Incorporated by reference to Exhibit 3.1 to the Company'scurrent report on Form 8-K filed on October 15, 2013). 3.2 Amended and Restated Bylaws of Gaming and Leisure Properties, Inc. (Incorporated by reference to Exhibit 3.1 to the Company's current report onForm 8-K filed on November 24, 2014). 4.1 Indenture, dated as of October 30, 2013, among GLP Capital, L.P. and GLP Financing II, Inc., as Issuers, Gaming and Leisure Properties, Inc., asParent Guarantor, and Wells Fargo Bank, National Association, as Trustee. (Incorporated by reference to Exhibit 4.1 to the Company's current reporton Form 8-K filed on November 1, 2013). 4.2 Officer's Certificate of GLP Capital, L.P. and GLP Financing II, Inc., dated as of October 30, 2013, establishing the 2018 Notes and the 2023 Notes.(Incorporated by reference to Exhibit 4.2 to the Company's current report on Form 8-K filed on November 1, 2013). 4.3 Officer's Certificate of GLP Capital, L.P. and GLP Financing II, Inc., dated as of October 31, 2013, establishing the 2020 Notes. (Incorporated byreference to Exhibit 4.3 to the Company's current report on Form 8-K filed on November 1, 2013). 4.4 Investor Rights Agreement, dated as of November 1, 2013, by and among Gaming and Leisure Properties, Inc. and FIF V PFD LLC. (Incorporatedby reference to Exhibit 10.1 to the Company's current report on Form 8-K filed on November 5, 2013). 4.5# Form of Restricted Stock Performance Award under the Gaming and Leisure Properties, Inc. 2013 Long-Term Incentive Compensation Plan.(Incorporated by reference to Exhibit 4.1 to the Company's quarterly report on Form 10-Q filed on May 4, 2015). 4.6# Form of Restricted Stock Award under the Gaming and Leisure Properties, Inc. 2013 Long-Term Incentive Compensation Plan. (Incorporated byreference to Exhibit 4.2 to the Company's quarterly report on Form 10-Q filed on May 4, 2015). 10.1 Registration Rights Agreement, dated as of October 30, 2013, by and among GLP Capital, L.P., GLP Financing II, Inc., Gaming and LeisureProperties, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated and the other initial purchasers named therein, with respect to the 2018Notes. (Incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K filed on November 1, 2013). 10.2 Registration Rights Agreement, dated as of October 30, 2013, by and among GLP Capital, L.P., GLP Financing II, Inc., Gaming and LeisureProperties, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated and the other initial purchasers named therein, with respect to the 2023Notes. (Incorporated by reference to Exhibit 10.2 to the Company's current report on Form 8-K filed on November 1, 2013). 10.3 Registration Rights Agreement, dated as of October 31, 2013, by and among GLP Capital, L.P., GLP Financing II, Inc., Gaming and LeisureProperties, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated and the other initial purchasers named therein, with respect to the 2020Notes. (Incorporated by reference to Exhibit 10.3 to the Company's current report on Form 8-K filed on November 1, 2013). 10.4 Credit Agreement, dated as of October 28, 2013, among GLP Capital, L.P., as successor-by-merger to GLP Financing, LLC, each lender from timeto time party thereto and JPMorgan Chase Bank, N.A., as administrative agent. (Incorporated by reference to Exhibit 10.4 to the Company's currentreport on Form 8-K filed on November 1, 2013). 107Table of ContentsExhibit Description of Exhibit10.5 Amendment No. 1, dated as of July 31, 2015, to the Credit Agreement dated as of October 28, 2013 among GLP Capital, L.P., the several banks andother financial institutions party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and the various other parties thereto. (Incorporatedby reference to Exhibit 10.2 to the Company's Registration Statement on S-4 filed on August 28, 2015). 10.6 Master Lease, dated November 1, 2013, by and among GLP Capital L.P. and Penn Tenant LLC. (Incorporated by reference to Exhibit 10.1 to theCompany's current report on Form 8-K filed on November 7, 2013). 10.7 First Amendment to the Master Lease Agreement, dated as of March 5, 2014, by and among GLP Capital L.P. and Penn Tenant, LLC. (Incorporatedby reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q filed on May 12, 2014). 10.8 Second Amendment to the Master Lease Agreement, dated as of April 18, 2014, by and among GLP Capital L.P. and Penn Tenant, LLC.(Incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q filed on August 1, 2014). 10.9 Tax Matters Agreement, dated as of November 1, 2013, by and among Penn National Gaming, Inc. and Gaming and Leisure Properties, Inc.(Incorporated by reference to Exhibit 10.2 to the Company's current report on Form 8-K filed on November 7, 2013). 10.10 Tax Matters Agreement, dated as of July 20, 2015, by and among Pinnacle Entertainment, Inc. and Gaming and Leisure Properties, Inc.(Incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K filed on July 22, 2015). 10.11 Transition Services Agreement, dated November 1, 2013, by and among Penn National Gaming, Inc. and Gaming and Leisure Properties, Inc.(Incorporated by reference to Exhibit 10.3 to the Company's current report on Form 8-K filed on November 7, 2013). 10.12 Employee Matters Agreement, dated as of November 1, 2013, by and between Penn National Gaming, Inc. and Gaming and Leisure Properties, Inc.(Incorporated by reference to Exhibit 10.4 to the Company's current report on Form 8-K filed on November 7, 2013). 10.13# Gaming and Leisure Properties, Inc. 2013 Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company'sRegistration Statement on Form S-8 filed on October 31, 2013). 10.14* Amended and Restated Membership Interest Purchase Agreement, dated as of December 15, 2015, by and among Gaming and Leisure Properties,Inc., GLP Capital, L.P., PA Meadows LLC, PA Mezzco LLC and Cannery Casino Resorts, LLC. 10.15 Agreement of Sale, dated as of September 19, 2014, between Wyomissing Professional Center Inc. and GLP Capital, L.P. (Incorporated by referenceto Exhibit 10.1 to the Company's quarterly report on Form 10-Q filed on November 7, 2014). 10.16 Construction Management Agreement, dated as of September 24, 2014, between GLP Capital, L.P. and CB Consulting Group, LLC (Incorporated byreference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q filed on November 7, 2014). 21* Subsidiaries of the Registrant. 23* Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. 31.1* CEO Certification pursuant to rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. 31.2* CFO Certification pursuant to rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. 32.1* CEO Certification pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes - Oxley Act of 2002. 32.2* CFO Certification pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes - Oxley Act of 2002.108Table of ContentsExhibit Description of Exhibit101* Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at December 31, 2015 and 2014, (ii) theConsolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013, (iii) the Consolidated Statements of Changes inShareholders' Equity (Deficit) for the years ended December 31, 2015, 2014 and 2013, (iv) the Consolidated Statements of Cash Flows for the yearsended December 31, 2015, 2014 and 2013, and (v) the notes to the Consolidated Financial Statements. # Compensation plans and arrangements for executives and others.* Filed herewith. 109Exhibit 10.14Execution CopyAMENDED AND RESTATEDMEMBERSHIP INTEREST PURCHASE AGREEMENTdated as of December 15, 2015by and amongGAMING AND LEISURE PROPERTIES, INC.,as Parent,GLP CAPITAL, L.P.as Buyer,PA MEADOWS, LLC,as the Company,andPA MEZZCO, LLC,CANNERY CASINO RESORTS, LLC,together, as SellersPURSUANT TO FEDERAL RULE OF EVIDENCE 408 AND ANY APPLICABLESTATE RULES OF EVIDENCE, THIS DRAFT AGREEMENT IS PROVIDED INFURTHERANCE OF SETTLEMENT DISCUSSIONS AND SHALL NOT BEADMISSIBLE INTO EVIDENCE IN ANY PROCEEDING, NOR USEABLE FORANY OTHER PURPOSE.TABLE OF CONTENTS PageARTICLE I. PURCHASE AND SALE OF MEMBERSHIP INTERESTS1 Section 1.01Purchase and Sale of Membership Interests1 Section 1.02Structure of Transaction1 Section 1.03Retention of Assets2ARTICLE II. PURCHASE PRICE2 Section 2.01Purchase Price2 Section 2.02Tax Withholding2 Section 2.03Allocation3ARTICLE III. WORKING CAPITAL ADJUSTMENT AND OTHER ADJUSTMENTS3 Section 3.01Estimated Closing Statement3 Section 3.02Estimated Cage Cash Statement3 Section 3.03Final Working Capital and Cage Cash Adjustments4 Section 3.04Accounts Receivable; Accounts Payable; Deposits5ARTICLE IV. CLOSING6 Section 4.01Time and Place6 Section 4.02Deliveries and Actions by the Company and Sellers at Closing6 Section 4.03Deliveries and Actions by Buyer at Closing7ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLERS8 Section 5.01Organization of Sellers8 Section 5.02Authority; No Conflict; Required Filings and Consents8 Section 5.03Title to Membership Interests9 Section 5.04Litigation9ARTICLE VI. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY9 Section 6.01Organization of the Company; Capitalization10 Section 6.02Authority; No Conflict; Required Filings and Consents10 Section 6.03Financial Statements and Information11 Section 6.04Taxes12 Section 6.05Real Property13 Section 6.06Intellectual Property15 Section 6.07Agreements, Contracts and Commitments16 Section 6.08Litigation16 Section 6.09Environmental Matters16 Section 6.10Permits, Compliance with Laws17 Section 6.11Labor Matters18 Section 6.12Employee Benefits18 Section 6.13Brokers19 Section 6.14Title to Purchased Assets, Sufficiency of Purchased Assets19 Section 6.15Absence of Charges19 Section 6.16Insurance20 Section 6.17Certain Transactions21 Section 6.18No Other Representations and Warranties21iARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYER21 Section 7.01Organization 22 Section 7.02Authority; No Conflict; Required Filings and Consents22 Section 7.03Brokers23 Section 7.04Financing23 Section 7.05Licensability of Principals23 Section 7.06Permits; Compliance with Gaming Laws23 Section 7.07Litigation24 Section 7.08Solvency24 Section 7.09Due Diligence Investigation24ARTICLE VIII. COVENANTS25 Section 8.01Conduct of Business Prior to the Closing25 Section 8.02Access to Information and the Real Property; Furnishing of Financial Statements28 Section 8.03Governmental Approvals30 Section 8.04Supplemental Disclosure32 Section 8.05No Solicitation33 Section 8.06Publicity33 Section 8.07Certain Transactions33 Section 8.08Lien and Guaranty Release33 Section 8.09Title Policies 34 Section 8.10Survey34 Section 8.11Tax and Filing Matters34 Section 8.12Regulation S-X Rule 3-05 and 3-1436 Section 8.13Further Assurances37 Section 8.14Transfer of Assets37 Section 8.15Confidentiality37 Section 8.16Amendment of Company Governing Documents38 Section 8.17Customer List38 Section 8.18Marketing38 Section 8.19Capital Expenditures38 Section 8.20Casualty and Condemnation Proceeds38 Section 8.21Transfer to Third Party Operator; Notices and Consents39ARTICLE IX. CONDITIONS TO CLOSING39 Section 9.01Conditions to Each Party’s Obligation to Effect the Closing39 Section 9.02Additional Conditions to Obligations of Buyer40 Section 9.03Additional Conditions to Obligations of Sellers40ARTICLE X. TERMINATION40 Section 10.01Termination40 Section 10.02Effect of Termination41ARTICLE XI. SURVIVAL; INDEMNIFICATION42 Section 11.01Survival of Representations, Warranties, Covenants and Agreements42 Section 11.02Indemnification43 Section 11.03Procedure for Claims between Parties44ii Section 11.04Defense of Third Party Claims44 Section 11.05Limitations on Indemnity45 Section 11.06Exclusive Remedy47 Section 11.07Treatment of Indemnification Payments47ARTICLE XII. MISCELLANEOUS47 Section 12.01Definitions47 Section 12.02Governing Law; Arbitration; Consent to Jurisdiction; Waiver of Trial by Jury;Limitation on Damages57 Section 12.03Notices59 Section 12.04Interpretation59 Section 12.05Entire Agreement60 Section 12.06Severability60 Section 12.07Assignment60 Section 12.08Parties of Interest60 Section 12.09Counterparts60 Section 12.10Mutual Drafting60 Section 12.11Seller Parent Guarantee61 Section 12.12Amendment61 Section 12.13Non-Recourse61 Section 12.14Waiver 61 Section 12.15Further Assurances61 Section 12.16Amendment and Restatement 61EXHIBITSExhibit AStructure of TransactionExhibit BForm of Assignment of Membership InterestsExhibit CExample Net Working Capital CalculationExhibit DForm of Third Party Operator Confidentiality AgreementiiiAMENDED AND RESTATEDMEMBERSHIP INTEREST PURCHASE AGREEMENTTHIS AMENDED AND RESTATED MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “ Agreement ”) ismade and entered into as of December 15, 2015 (the “ Effective Date ”), by and among Gaming and Leisure Properties, Inc., aPennsylvania corporation (“ Parent ”), GLP Capital, L.P., a Pennsylvania limited partnership (“ Buyer ”), Cannery Casino Resorts,LLC, a Nevada limited liability company (“ Seller Parent ”), PA MezzCo, LLC, a Delaware limited liability company (“ Holdco ”,together with Seller Parent, “ Sellers ”), and PA Meadows, LLC, a Delaware limited liability company (the “ Company ”).Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in Section 12.01 .WHEREAS, Holdco is the beneficial and record owner of all of the issued and outstanding membership interests of theCompany (“ Membership Interests ”);WHEREAS, the parties hereto entered into that certain Membership Interest Purchase Agreement, dated as of May 13, 2014,and the First Amendment thereto, dated as of June 24, 2014 (together, the “ Original Agreement ”), pursuant to which Buyer agreedto acquire from Holdco, and Holdco agreed to sell to Buyer, all of Holdco’s right, title and interest in and to the issued andoutstanding Membership Interests in the manner described on Exhibit A hereto and otherwise on the terms and subject to theconditions set forth therein;WHEREAS, the parties hereto desire to amend and restate the Original Agreement in its entirety by entering into thisAgreement and in so doing completely restate, supersede and terminate in its entirety the Original Agreement with this Agreement;andWHEREAS, the parties hereto desire to enter into, or cause their applicable Affiliates to enter into, the AncillaryAgreements, and to perform or cause such Affiliates to perform their obligations thereunder as further described herein.NOW, THEREFORE, the parties hereto, in consideration of the premises and of the mutual representations, warranties andcovenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, agree as follows:ARTICLE I.PURCHASE AND SALE OF MEMBERSHIP INTERESTSSection 1.01 Purchase and Sale of Membership Interests . Upon the terms and subject to the conditions set forth in thisAgreement, at the Closing, Holdco shall sell to Buyer, and Buyer shall purchase from Holdco, the Membership Interests, free andclear of all Liens (other than restrictions arising under applicable securities Laws or Gaming Laws).Section 1.02 Structure of Transaction . The acquisition of the Membership Interests shall be structured in the stepsprovided in Exhibit A . Such structure may be modified by Buyer after the date hereof upon reasonable advance written notice to andwith the prior written consent of Sellers, which consent shall not be unreasonably withheld; provided , that the withholding of suchconsent shall not be considered unreasonable if such modifications economically adversely affect Sellers, the1Company or its Subsidiaries, materially delay the timing of the Closing or adversely affect the certainty of the Closing.Section 1.03 Retention of Assets . Notwithstanding anything to the contrary contained in this Agreement, Sellers and theirrespective Affiliates may retain and use, at their own expense, archival copies (but not the originals thereof) of all of the Contracts,books, records and other documents or materials of the Company, in each case, which (a) are in existence on or prior to the Closing,and (b) either (x) are used in connection with Sellers or any of their respective Affiliates’ businesses other than the Business or (y) ifSeller Parent, in good faith, determines that it or any of its Affiliates is reasonably likely to need access to, in connection with thepreparation or filing of any Tax Returns or compliance with any other Tax reporting obligations or other obligation under applicableLaw, or the defense (or any counterclaim, cross-claim or similar claim in connection therewith) or prosecution of any Proceeding orinvestigation (including any Tax audit or examination) against or by Seller Parent or any of Seller Parent’s Affiliates; provided , thatSellers shall, and shall cause their Affiliates to, hold such documents or materials relating to the Business, and all confidential orproprietary information contained therein, confidential pursuant to Section 8.15 .ARTICLE II.PURCHASE PRICESection 2.01 Purchase Price . At the Closing, as consideration for the Membership Interests, Buyer shall deliver or cause tobe delivered to Holdco (or its designee) by electronic transfer of immediately available funds to an account designated by Sellers acash payment equal to the sum of (a)(i) Four Hundred Thirty Million Dollars ($430,000,000), plus (ii) if the Closing does not occurby December 31, 2015, One Million Dollars ($1,000,000) on the first day of each calendar month, beginning January 1, 2016, untilthe Closing Date, excluding the first day of the calendar month in which the Closing occurs if Sellers deliver a notice in accordancewith Section 4.01 electing to consummate the Closing on the first Business Day following the end of the calendar month in which allof the conditions set forth in Article IX have been satisfied or waived (together with cash in the amount of Ten Million Dollars($10,000,000) previously paid by Buyer, the “ Base Purchase Price ”), plus (b) the Estimated Closing Payment (which may be apositive or negative number), plus (c) the Estimated Cage Cash Closing Payment (which may be a positive or negative number). TheBase Purchase Price, together with the Estimated Closing Payment and Estimated Cage Cash Closing Payment, is the “ ClosingPayment .”Section 2.02 Tax Withholding . Notwithstanding anything in this Agreement to the contrary, Buyer shall be entitled todeduct and withhold from any amounts otherwise payable under this Agreement to Sellers or any other Person such amounts as arerequired to be deducted or withheld under the Code, or any provision of applicable Law with respect to the making of such payment;provided , however , that (a) before making any such deduction or withholding, Buyer shall give Sellers notice of the intention tomake such deduction or withholding (such notice, which shall include the authority, basis and method of calculation for the proposeddeduction or withholding, shall be given within a commercially reasonable period of time of Buyer’s determination that it mustwithhold), (b) Buyer shall cooperate with Sellers, at Sellers’ expense, to the extent reasonable in efforts to obtain reduction of orrelief from such deduction or withholding and (c) Buyer shall timely remit to the appropriate Tax Authority any and all amounts sodeducted or withheld and timely file all Tax Returns and provide to Sellers such information statements and other documentsrequired to be filed or provided under applicable Tax Law. To the extent that amounts are so deducted and withheld and paid over tothe applicable Governmental Entity, such deducted and withheld amounts shall be treated2for all purposes of this Agreement as having been paid to Sellers or such other Person in respect of which such deduction andwithholding were made.Section 2.03 Allocation . Within ten (10) days of the Closing, Buyer shall provide Sellers with a proposed allocation of theClosing Payment among the Company’s assets for tax purposes. Sellers shall have the right to approve the proposed allocation. Inthe event the parties cannot agree on the allocation within thirty (30) days, the dispute shall be resolved by the Auditor. Theallocation shall be adjusted to reflect any adjustments between the Closing Payment and the Final Purchase Price, and subsequentadjustments to the Final Purchase Price, pursuant to this Agreement. Buyer and Sellers shall file all Tax Returns consistent with theforegoing allocation. Notwithstanding the foregoing, the allocation to the racing license (and the stock of Mount Laurel Racing, Inc.)shall be determined by Buyer in its reasonable discretion after consultation with Sellers, consistent with Exhibit A .ARTICLE III.WORKING CAPITAL ADJUSTMENT AND OTHER ADJUSTMENTSSection 3.01 Estimated Closing Statement . No less than five (5) Business Days prior to the Closing Date, Sellers shallprepare and deliver to Buyer a written closing statement certified by the Chief Financial Officer of Seller Parent (the “ EstimatedClosing Statement ”) of the Estimated Closing Net Working Capital, including the resulting Estimated Closing Net Working CapitalOverage (if any) or Estimated Closing Net Working Capital Shortage (if any), and including a reasonably detailed calculation of thecomponents of Net Working Capital, which Estimated Closing Statement shall be prepared in good faith and on a basis consistentwith the preparation of the Financial Information and the calculation of Net Working Capital set forth in Exhibit C . The amount ofthe Estimated Closing Net Working Capital Overage (if any) determined to be due and owing to Sellers pursuant to the EstimatedClosing Statement shall be paid by Buyer at the Closing pursuant to Section 2.01 . The amount of the Estimated Closing NetWorking Capital Shortage (if any) determined to be due and owing to Buyer by Sellers pursuant to the Estimated Closing Statementshall reduce the Closing Payment payable to Sellers at the Closing pursuant to Section 2.01 . The amount of such payment orreduction to the Closing Payment, as applicable, is referred to as the “ Estimated Closing Payment ”.Section 3.02 Estimated Cage Cash Statement . No less than five (5) Business Days prior to the Closing Date, Sellers shallprepare and deliver to Buyer a written closing statement certified by the Chief Financial Officer of Seller Parent (the “ EstimatedCage Cash Closing Statement ”) of the Estimated Closing Cage Cash, including the resulting Estimated Closing Cage Cash Overage(if any) or Estimated Closing Cage Cash Shortage (if any), and including a reasonably detailed calculation of the components ofCage Cash, which Estimated Cage Cash Closing Statement shall be prepared in good faith. The amount of the Estimated ClosingCage Cash Overage (if any) determined to be due and owing to Sellers pursuant to the Estimated Cage Cash Closing Statement shallbe paid by Buyer at the Closing pursuant to Section 2.01 . The amount of the Estimated Closing Cage Cash Shortage (if any)determined to be due and owing to Buyer pursuant to the Estimated Cage Cash Closing Statement shall reduce the Closing Paymentpayable to Sellers at the Closing pursuant to Section 2.01 . The amount of such payment or reduction to the Closing Payment, asapplicable, is referred to as the “ Estimated Cage Cash Closing Payment ”.3Section 3.03 Final Working Capital and Cage Cash Adjustments .(a) No more than ninety (90) days after the Closing Date, Buyer shall prepare and deliver to Sellers a written statementcertified by the Chief Financial Officer of Buyer (the “ Final Closing Statement ”) of the Final Closing Net Working Capital,including the resulting Final Closing Net Working Capital Overage (if any) or Final Closing Net Working Capital Shortage (if any),and including a reasonably detailed calculation of the various amounts of each component of Net Working Capital, which FinalClosing Statement shall be prepared in good faith and on a basis consistent with the preparation of the Financial Information and thecalculation of Net Working Capital set forth in Exhibit C . Any such amounts determined to be payable pursuant to the Final ClosingStatement shall be paid to either Sellers (in the case of a Final Closing Net Working Capital Overage) or Buyer (in the case of aFinal Closing Net Working Capital Shortage) pursuant to Section 3.03(e) (the “ Final Closing Payment ”).(b) No more than twenty (20) days after the Closing Date, Buyer shall prepare and deliver to Sellers a writtenstatement certified by the Chief Financial Officer of Buyer (the “ Final Cage Cash Closing Statement ”) of the Final Closing CageCash, including the resulting Final Closing Cage Cash Overage (if any) or Final Closing Cage Cash Shortage (if any), and includinga reasonably detailed calculation of the various amounts of each component of Cage Cash, which Final Closing Statement shall beprepared in good faith. Any such amounts determined to be payable pursuant to the Final Cage Cash Closing Statement shall be paideither to Sellers (in the case of a Final Closing Cage Cash Overage) or Buyer (in the case of a Final Closing Cage Cash Shortage)pursuant to Section 3.03(e) (the “ Final Cage Cash Closing Payment ”). The Closing Payment, as adjusted by the Final ClosingPayment and the Final Cage Cash Closing Payment, is referred to as the “ Final Purchase Price ”.(c) If Sellers disagree with the calculation of any amounts on the Final Closing Statement and/or the Final Cage CashClosing Statement (collectively, the “ Final Statements ”), Sellers shall, within ten (10) Business Days after their receipt of theapplicable Final Statement, notify Buyer of such disagreement in writing, setting forth in detail the particulars of such disagreement.Any amounts on the applicable Final Statement not disputed in writing by Sellers within ten (10) Business Days after receipt of theapplicable Final Statement shall be final, binding and conclusive for purposes of this Agreement. Buyer will provide Sellersreasonable access to any of Buyer’s and the Company’s records (including work papers and source documents) and relevantemployees not otherwise available to Sellers as a result of the transactions contemplated hereby, to the extent reasonably related toSellers’ review of the Final Statements. If any such notice of disagreement is timely provided, Buyer and Sellers shall usecommercially reasonable efforts for a period of ten (10) Business Days (or such longer period as they may mutually agree) to resolveany disagreements with respect to the calculation of any amounts set forth in the Final Statements (and which were previouslyidentified in writing by Sellers pursuant to the first sentence of this Section 3.03(c) ). If, at the end of such period, the parties areunable to fully resolve the disagreements, the parties shall refer the matter to Urish Popeck & Co., LLC (the “ Auditor ”) to resolveany remaining disagreements. The Auditor shall be instructed to (i) consider only such matters as to which there is a disagreement,(ii) determine, as promptly as practicable, whether the disputed amounts set forth in the applicable Final Statement were prepared inaccordance with the standards set forth in this Agreement, and (iii) deliver, as promptly as practicable but in any event within forty-five (45) days of the end of such 10-Business Day period (or such longer period as the parties may have mutually agreed), to Sellersand Buyer its determination in writing. The resolution for each disputed item contained in the Auditor’s determination shall be madesubject to the definitions and principles set forth in this Agreement, and shall be consistent with either the position of Sellers orBuyer. Sellers and Buyer shall bear their own expenses in the4preparation and review of the Estimated Closing Statement, the Estimated Cage Cash Closing Statement and Final Statements,except that the fees and expenses of the Auditor shall be paid one-half by Buyer and one-half by Sellers. The determination of theAuditor shall be final, binding and conclusive for purposes of this Agreement and not subject to any further recourse by Buyer,Sellers or their respective Affiliates, absent manifest error or fraud by Buyer, Sellers or the Auditor. The date on which an amountset forth in the Final Statements is finally determined in accordance with this Section 3.03(c) is hereinafter referred to as the “Determination Date .”(d) In the event the Auditor refuses engagement under this Section 3.03 , Buyer and Sellers shall mutually agree onanother nationally recognized firm of certified public accountants having no material relationship with the Company, Buyer, Sellersor their respective Affiliates to resolve any disputes regarding the Final Statements according to Section 3.03(c) . If within thirty (30)days, Buyer and Sellers fail to mutually agree on such firm, Buyer and Sellers shall thereafter cause the American ArbitrationAssociation to appoint the firm, and in making its determination with respect to such appointment, the American ArbitrationAssociation shall take into account, and attempt to avoid appointing an accounting firm with any significant preexisting relationshipwith the Company, Buyer or Sellers or their respective Affiliates. The firm selected in accordance with this Section 3.03 shall be the“Auditor” for purposes of this Agreement.(e) Any amounts determined to be due and owing to Sellers from Buyer or to Buyer from Sellers, as applicable,pursuant to this Section 3.03 shall be paid by Sellers to Buyer or by Buyer to Sellers, as applicable, by wire transfer of immediatelyavailable funds within two (2) Business Days after the applicable Determination Date.Section 3.04 Accounts Receivable; Accounts Payable; Deposits .(a) Accounts Receivable . After the Closing, Sellers shall promptly deliver to Buyer any cash, checks or other property thatthey or any of their Affiliates receive to the extent relating to the Accounts Receivable of the Business included in the Final ClosingNet Working Capital. After the Closing, Buyer shall promptly deliver to Sellers any cash, checks or other property that Buyer or itsAffiliates receive to the extent relating to any Accounts Receivable existing as of the Closing Date and not included in the FinalClosing Net Working Capital. Neither party nor their Affiliates shall agree to any settlement, discount or reduction of the AccountsReceivable belonging to the other party. Neither party nor their Affiliates shall assign, pledge or grant any security interest in theAccounts Receivable of the other party. (b) Accounts Payable . Each party and their Affiliates will promptly deliver to the other a true copy of any invoice, writtennotice of accounts payable or written notice of a dispute as to the amount or terms of any accounts payable received from thecreditor of such accounts payable to the extent such accounts payable is owed by the other party. Should either party discover it haspaid an accounts payable belonging to the other party, then Buyer or Sellers, as applicable, shall provide written notice of suchpayment to the other party and the other party shall promptly reimburse the party that paid such accounts payable all amounts listedon such notice.(c) Customer Deposits . Customer Deposits received by the Company or its Subsidiaries relating to rooms, services and/orevents relating to the period from and after the Closing shall be retained by the Company at the Closing and included in thecalculation of the Final Closing Net Working Capital. Sellers shall not have further liability or responsibility after Closing withrespect to any Customer Deposits relating to the period from and after the Closing and Sellers and their5Affiliates shall be entitled to retain Customer Deposits to the extent of rooms and/or services furnished by Sellers prior to theClosing. “ Customer Deposits ” include all security and other deposits, advance or pre-paid rents or other amounts and key money ordeposits (including any interest thereon).ARTICLE IV.CLOSINGSection 4.01 Time and Place . Unless this Agreement is earlier terminated pursuant to Article X , the closing of thetransactions contemplated by this Agreement, including the purchase and sale of the Membership Interests (the “ Closing ”), shalltake place either on (a) the earlier of (i) November 15, 2016 and (ii) three (3) Business Days after Buyer delivers written notice toSellers of Buyer’s election to consummate the Closing on an earlier date, but, in the case of each of clauses (i) and (ii), subject to thesatisfaction or waiver by the applicable party of the conditions set forth in Article IX on such date; or (b) if the conditions set forth inArticle IX are not so satisfied or waived on the date specified pursuant to clause (a) (other than those conditions to be satisfied orwaived at or upon the Closing), three (3) Business Days following the satisfaction or waiver by the applicable party of the conditionsset forth in Article IX (other than those conditions to be satisfied or waived at or upon the Closing). The date that the Closing occursin accordance with the preceding sentence is referred to as the “ Closing Date ”. The Closing shall be consummated throughmutually acceptable escrow closing instructions at such time and place as is agreed to by the parties, and shall be effective as of12:01 a.m., Eastern Time, on the Closing Date. Notwithstanding the foregoing, any party hereto may elect in its reasonablediscretion (by delivering written notice to the other parties hereto) to delay the Closing to the first Business Day following the end ofthe calendar month in which all of the conditions set forth in Article IX have been satisfied or waived, in which case: (x) the Closingshall be effective as of 12:01 a.m., Eastern Time on such date and (y) the Closing Deadline set forth in Section 10.01(b) shall beautomatically extended to one (1) Business Day following such date.Section 4.02 Deliveries and Actions by the Company and Sellers at Closing . At or prior to the Closing, the Companyand/or Sellers shall deliver, or shall cause to be delivered, to Buyer:(a) Sellers Certificates . The certificate required by Section 9.02(b) .(b) Membership Interests . An Assignment of Membership Interests substantially in the form attached as Exhibit B (the “Assignment of Membership Interests ”) conveying to Buyer all of the Membership Interests.(c) FIRPTA Certificate . A certificate of each Seller dated as of the Closing Date, in accordance with Treasury RegulationsSection 1.1445-2(b)(2), certifying that such Seller is not a foreign Person.(d) Resignations . Resignations (including release of claims), effective as of the Closing Date, of all directors and officers ofthe Company, unless otherwise designated by Buyer in advance no less than five (5) Business Days prior to the Closing Date.(e) Good Standing Certificates . A certificate of good standing of each Seller and the Company in each case, issued as of adate not earlier than ten (10) days prior to the Closing Date by the Secretary of State of the State in which each such Seller or theCompany, as applicable, is incorporated, organized or qualified to do business.6(f) Secretary’s Certificates . A certificate of the secretary of each Seller and the Company, dated the Closing Date, inform and substance reasonably satisfactory to Buyer, certifying as to: (i) the Governing Documents of such Seller or the Company,(ii) that there have been no amendments to such Governing Documents and that such Governing Documents are in full force andeffect as of the Closing Date, (iii) the resolutions of the board of directors, or the equivalent governing body if such Seller or theCompany is not a corporation, of each such Seller or the Company authorizing the transactions contemplated by this Agreement andthe execution, delivery and performance of this Agreement and each Ancillary Agreement to which such Seller or the Company is aparty, and (iv) specimen signatures and incumbency of all officers of such Seller or the Company authorized to execute thisAgreement and each Ancillary Agreement.(g) Release of Guarantees; UCC-3 Termination Statements . Letters or releases of guarantees, in form and substancereasonably satisfactory to Buyer, evidencing that all Indebtedness of the Company and its Subsidiaries has been or will be paid infull at the Closing from a portion of the Closing Payment and authorizing the Company, Buyer or its agents to file at the ClosingUCC-3 Termination Statements with respect to any Lien associated with such Indebtedness (including Liens securing suchIndebtedness of Seller Parent).(h) Exhibit A . Evidence, in form and substance reasonably satisfactory to Buyer, that any actions required to havebeen consummated by Sellers, the Company or any of its Subsidiaries before the Closing as set forth in Exhibit A hereto have beenconsummated.(i) Termination of Parent Services Agreement . Evidence, in form and substance reasonably satisfactory to Buyer, thatthe Parent Services Agreement, dated as of January 14, 2008, by and between Seller Parent and Washington Trotting Association,Inc. (as amended, the “ Parent Services Agreement ”), has been terminated, and none of Sellers or any of their respectiveSubsidiaries shall have any remaining obligations thereunder.(j) Title Affidavits . Such affidavits as the Title Insurer may reasonably require in order to omit from its title insurancepolicies all exceptions for (i) parties in possession claiming through Sellers, the Company or their respective Subsidiaries other thanunder the rights to possession granted under the Leases and the Third Party Leases; and (ii) mechanics’ liens relating to workcommissioned by Sellers, the Company or their respective Subsidiaries prior to the Closing and such other affidavits as the TitleInsurer may reasonably require to issue a non-imputation endorsement, if available.(k) Other Documents . Any other documents, instruments or agreements which are reasonably requested by Buyer thatare necessary to consummate the transactions contemplated hereby and have not previously been delivered.Section 4.03 Deliveries and Actions by Buyer at Closing . At or prior to the Closing, Buyer shall deliver to Sellers:(a) Buyer Certificates. The certificate required by Section 9.03(b) .(b) Closing Payment . The Closing Payment by wire transfer of immediately available funds to an account designated bySeller Parent; provided, however , that Seller Parent may direct Buyer to fund a portion of the Closing Payment to lenders to repayoutstanding Indebtedness of the Company or its Subsidiaries.7(c) Good Standing Certificates . A certificate of good standing of Buyer, issued as of a date not earlier than ten (10) daysprior to the Closing Date by the Secretary of State of the State in which Buyer, is incorporated, organized or qualified to do business.(d) Secretary’s Certificates . A certificate of the secretary of Buyer, dated the Closing Date, in form and substancereasonably satisfactory to the Company and Sellers, certifying as to: (i) the Governing Documents of Buyer, (ii) that there have beenno amendments to such Governing Documents and that such Governing Documents are in full force and effect as of the ClosingDate, (iii) the resolutions of the board of directors, or the equivalent governing body if Buyer is not a corporation, of Buyerauthorizing the transactions contemplated by this Agreement and the execution, delivery and performance of this Agreement andeach Ancillary Agreement to which Buyer is a party, (iv) specimen signatures and incumbency of all officers of Buyer authorized toexecute this Agreement and each Ancillary Agreement, and (v) the minute books of Buyer (if any).(e) Other Documents . Any other documents, instruments or agreements which are reasonably requested by Sellers that arenecessary to consummate the transactions contemplated hereby and have not previously been delivered.ARTICLE V.REPRESENTATIONS AND WARRANTIES OF SELLERSSellers hereby jointly and severally represent and warrant to Buyer as follows, except as expressly set forth herein and in thecorresponding section of the disclosure letter with respect to the representations and warranties of Sellers contained in this Article Vdelivered by Sellers to Buyer herewith (the “ Sellers Disclosure Letter ”). The Sellers Disclosure Letter shall be arranged inparagraphs corresponding to the numbered and lettered paragraphs contained in this Agreement and the disclosure in any paragraphshall, to the extent reasonably apparent that the matter disclosed is relevant to another paragraph in this Agreement, qualify suchother paragraph.Section 5.01 Organization of Sellers . Each Seller is duly organized or incorporated, as applicable, and validly existingunder the laws of its state of organization or incorporation, as applicable, and has all requisite power and authority to own, lease andoperate its assets and to carry on its business as now being conducted. Each Seller is duly qualified or licensed to do business and isin good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted byit makes such qualification or licensing necessary. Holdco is an indirect wholly-owned Subsidiary of Seller Parent.Section 5.02 Authority; No Conflict; Required Filings and Consents .(a) Each Seller has all requisite power and authority to enter into this Agreement and each of the Ancillary Agreements towhich it is a party and to consummate the transactions contemplated hereby and thereby and perform its obligations hereunder andthereunder. Each Seller’s execution and delivery of this Agreement and each Ancillary Agreement to which it is a party and theconsummation by each Seller of the transactions contemplated hereby and thereby and performance of its obligations hereunder andthereunder have been duly authorized by all necessary action on the part of Sellers. This Agreement has been, and each AncillaryAgreement will be at or prior to the Closing, duly executed and delivered by each Seller and, assuming the due authorization,execution and delivery by the other parties hereto and thereto, this Agreement constitutes, and each Ancillary Agreement when soexecuted and delivered will constitute, the valid and binding obligation of each8Seller, enforceable against such Seller in accordance with their respective terms, subject, as to enforcement, to (i) applicablebankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect affecting creditors’ rights generallyand (ii) general principles of equity.(b) The execution and delivery by each Seller of this Agreement and each Ancillary Agreement to which it is a party doesnot, and the consummation by each Seller of the transactions contemplated hereby and thereby and the compliance by such Sellerwith any provisions hereof or thereof will not, (i) conflict with or result in any material violation or material default under (with orwithout notice or lapse of time, or both), or require a consent or waiver under, or give rise to a right of termination, cancellation,modification or acceleration or material obligation or loss of any material benefit under (A) any provision of the GoverningDocuments of such Seller, or (B) any material Contract to which such Seller is a party, (ii) result in the creation of any Lien (otherthan Permitted Liens) on any of the Purchased Assets pursuant to any Contract to which any Seller is a party, or (iii) subject to thegovernmental filings and other matters referred to in Section 6.02(c) violate any Permit, Order or Law applicable to such Seller(c) No Permit or Order or authorization of, or registration or filing with, any Governmental Entity, is required by or withrespect to either Seller in connection with the execution and delivery of this Agreement or the Ancillary Agreements by either Seller,the compliance by either Seller with any of the provisions hereof or thereof, or the consummation by either Seller of the transactionsto which it is a party that are contemplated hereby, except for (i) any approvals and filing of notices required under the GamingLaws, (ii) filings and other application requests under the HSR Act, (iii) such Permits, Orders, registrations or filings related to, orarising out of, compliance with statutes, rules or regulations regulating the consumption, sale or serving of alcoholic beverages ortobacco, and (iv) any Permits, Orders, authorizations, registrations, or filings required by Buyer or any of its Subsidiaries, Affiliatesor key employees (including under the Gaming Laws).Section 5.03 Title to Membership Interests . Holdco is the record and beneficial owner of all Membership Interests, freeand clear of all Liens or any other restrictions on transfer other than restrictions on transfer arising under applicable securities Lawsand Gaming Laws. Sellers are not party to any option, warrant, purchase right or other Contract (other than this Agreement)obligating Sellers to sell, transfer, pledge or otherwise dispose of Membership Interests. Sellers are not a party to any voting trust,proxy or other agreement or understanding with respect to Membership Interests.Section 5.04 Litigation . There is no Proceeding against any Seller, pending or, to Sellers’ Knowledge, threatened against,any Seller before any Governmental Entity that, individually or in the aggregate, would be reasonably likely to (x) have a CompanyMaterial Adverse Effect or (y) materially impair or materially delay the Closing.ARTICLE VI.REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANYSellers hereby jointly and severally represent and warrant to Buyer as follows, except as expressly set forth herein and in thecorresponding section of the disclosure letter with respect to the representations and warranties of Sellers contained in this Article VI, delivered by Sellers to Buyer herewith (the “ Company Disclosure Letter ”). The Company Disclosure Letter shall be arranged inparagraphs corresponding to the numbered and lettered paragraphs contained in this Agreement and the disclosure in any paragraphshall, to the extent reasonably apparent that the matter disclosed is relevant to another paragraph in this Agreement, qualify suchother paragraph.9Section 6.01 Organization of the Company; Capitalization . Each of the Company and its Subsidiaries is duly organizedand validly existing under the laws of its state of organization, and has all requisite power and authority to own, lease and operate itsassets and to carry on the Business as now being conducted. The Company has no Subsidiaries other than those listed on Section6.01 of the Company Disclosure Letter and the Company does not own or hold the right to acquire any shares of stock or any othersecurity or interest, directly or indirectly, of or in any other Person. Each of the Company and its Subsidiaries is duly qualified orlicensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or thenature of the business conducted by it makes such qualification or licensing necessary. All of the membership interests and capitalstock of the Company and each of its Subsidiaries are duly authorized, validly issued, fully paid and nonassessable and were issuedin compliance with all applicable Laws. All of membership interests and capital stock of the Company and each of its Subsidiariesare directly or indirectly owned beneficially and of record by Holdco. No Person has any rights in, or rights to acquire from theCompany or any of its Subsidiaries, any other equity related interests of the Company or such Subsidiaries or any other securitiesconvertible into, or exercisable or exchangeable for, equity interests of the Company or such Subsidiaries. There are no outstandingoptions, warrants or other securities or subscription, preemptive or other rights convertible into or exchangeable or exercisable forany equity or voting interests of the Company or any of its Subsidiaries and there are no “phantom stock” rights, stock appreciationrights or other similar rights with respect to the Company or such Subsidiaries. To Sellers’ Knowledge, other than as set forth inSection 6.01 of the Company Disclosure Letter, none of the Company, any of its Subsidiaries or any of their respective predecessorshas conducted any business under or otherwise used for any purpose in any jurisdiction any fictitious name, assumed name, “d/b/a”trade name or other name.Section 6.02 Authority; No Conflict; Required Filings and Consents .(a) Sellers have made available to Buyer an accurate and complete copy of the Governing Documents of the Company andeach of its Subsidiaries, each as amended as of the date hereof and in full force and effect as of the date hereof. The Company hasnot violated its Governing Documents in any material respect. The Company has all requisite power and authority to enter into thisAgreement and each of the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby andthereby. The Company’s execution and delivery of this Agreement and each Ancillary Agreement to which it is a party and theconsummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessaryaction on the part of the Company. This Agreement has been, and each Ancillary Agreement to which the Company is a party willbe at or prior to Closing, duly executed and delivered by the Company and, assuming the due authorization, execution and deliveryby the other parties hereto and thereto, this Agreement constitutes, and each such Ancillary Agreement, when so executed anddelivered, will constitute the valid and binding obligations of the Company, enforceable against the Company in accordance withtheir respective terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similarlaws now or hereinafter in effect affecting creditors’ rights generally and (ii) general principles of equity.(b) Except as set forth in Section 6.02(b) of the Company Disclosure Letter, the execution and delivery by the Company ofthis Agreement and each Ancillary Agreement to which it is a party, the consummation by the Company of the transactionscontemplated hereby and thereby, and the compliance of the Company with any provisions hereof or thereof, does not and will not,(i) conflict with or result in any material violation of or material default under (with or without notice or lapse of time, or both), orrequire a consent or waiver under, or give rise to a right of termination, cancellation,10modification or acceleration of any material obligation or loss of any material benefit under, or result in the imposition or creation ofany Lien (other than a Permitted Lien) upon the Membership Interests or any Lien upon any of the Company’s or any of theSubsidiaries’ properties or assets (tangible or intangible) under, (A) any provision of the Governing Documents of the Company, or(B) any material Contract to which the Company is a party, or (ii) subject to the governmental filings and other matters referred to inclause (c) hereof, materially violate any Permit, Order or Law applicable to the Company.(c) No Permit or Order or authorization of, or registration or filing with, any Governmental Entity is required by or withrespect to the Company in connection with the execution and delivery of this Agreement or the Ancillary Agreements by theCompany or the consummation by the Company of the transactions to which it is a party that are contemplated hereby, except for(i) such Permits, Orders, registrations or filings related to, or arising out of, compliance with statutes, rules or regulations regulatingthe consumption, sale or serving of alcoholic beverages or tobacco, and (ii) any Permits, Orders, registrations or filings required byBuyer or any of its Subsidiaries, Affiliates or key employees (including under the Gaming Laws).Section 6.03 Financial Statements and Information .(a) Section 6.03(a) of the Company Disclosure Letter contains a true and complete copy of the (i) audited financialstatements of the Company as of and for the year ended December 31, 2013 (the “ Audited Financial Information ”) and (ii)unaudited financial statements of the Company as of and for the month ended March 31, 2014 (the “ Unaudited FinancialInformation ”) (together, the “ Financial Information ”). Except as noted therein, the Audited Financial Information was prepared inaccordance with GAAP and the Financial Information fairly presents, in all material respects, the financial position and results ofoperations of the Company as of such dates and for such periods, except, in the case of the Unaudited Financial InformationStatements, for normal year-end and audit adjustments and the absence of footnotes.(b) The Financial Information was prepared from the books and records of the Company, which (i) have been maintained inmaterial compliance with applicable legal and accounting requirements and reasonable business practices, and (ii) fairly reflect, inall material respects, all dealings and transactions in respect of the Business and the assets and liabilities thereof required to bereflected therein in accordance with GAAP or, in the cause of the Unaudited Financial Information, the Company’s accountingprinciples consistently applied.(c) Except (i) as set forth in the Financial Information, or (ii) as incurred since March 31, 2014 in the Ordinary Course ofBusiness, the Company has no Liabilities required to be reflected on a balance sheet in accordance with GAAP in an amount inexcess, individually or in the aggregate, of Two Hundred Fifty Thousand Dollars ($250,000).(d) Section 6.03(d) of the Company Disclosure Schedule presents the Company’s unaudited calculation of EBITDAM ofthe Company and its Subsidiaries as of October 31, 2015 for (i) the period beginning January 1, 2015 and ending October 31, 2015,and (ii) the period beginning November 1, 2014 and ending October 31, 2015, in each case including a reasonably detailedcalculation of each component of EBITDAM and otherwise prepared in good faith and on a basis consistent with the preparation ofthe Audited Financial Information and the past practices of Seller Parent.11Section 6.04 Taxes .(a) The Company and its Subsidiaries have timely filed or caused to be filed (taking into account any extension of timewithin which to file) with the appropriate Governmental Entities all income Tax Returns and other Tax Returns required to be filedby, or with respect to, each such entity and all such Tax Returns are complete and accurate in all material respects. The Companyand its Subsidiaries have timely paid all Taxes due and owing (whether or not shown on any Tax Return).(b) Except as set forth in Section 6.04 of the Company Disclosure Letter, there are no Proceedings with any GovernmentalEntities presently ongoing or pending in respect of any Taxes of the Company or its Subsidiaries. There are no deficiencies for Taxeswith respect to the Company or its Subsidiaries that have been claimed, proposed or assessed in writing by any Governmental Entity,which deficiencies have not yet been settled, except for such deficiencies that are being contested in good faith by appropriateproceedings.(c) There are no outstanding waivers extending the statute of limitation relating to a Tax assessment or deficiency of theCompany or its Subsidiaries, and no such waivers have been requested by or of the Company or any of its Subsidiaries.(d) Neither the Company nor any of its Subsidiaries has entered into any “closing agreement” as described in Section 7121of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).(e) Neither the Company nor any of its Subsidiaries has requested, has received or is subject to any written ruling of aGovernmental Entity or has entered into any written agreement with a Governmental Entity with respect to any Taxes.(f) Except as set forth in Section 6.04 of the Company Disclosure Letter, there are no Tax allocation or sharing agreementsor similar arrangements involving, on the one hand, the Company or any of its Subsidiaries and, on the other hand, a Person otherthan the Company or any of its Subsidiaries, and after the Closing Date neither the Company nor any of its Subsidiaries shall bebound by any such Tax allocation agreements or similar arrangements or have any liability thereunder for amounts due in respect ofperiods prior to the Closing Date.(g) Except as set forth in Section 6.04 of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries(i) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than the group of which theCompany is the parent) or (ii) has any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) underTreasury Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor or bycontract.(h) No written claim has been received from a jurisdiction in which Tax Returns have not been filed by the Company or anyof its Subsidiaries that it is or may be subject to taxation by or a filing requirement in such jurisdiction.(i) Neither the Company nor any of its Subsidiaries has a permanent establishment in any country other than the UnitedStates. 12(j) Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any itemof deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) a changein method of accounting (or the use of an incorrect method of accounting), except a change as required by Law, for a taxable period(or portion thereof) ending on or prior to the Closing Date, (ii) installment sale or open transaction disposition made on or prior tothe Closing Date, (iii) prepaid amount received on or prior to the Closing Date, or (iv) any election pursuant to Section 108(i) of theCode made effective on or prior to the Closing Date.(k) Neither the Company nor any of its Subsidiaries has engaged in a transaction that constitutes a “reportable transaction”as such term is defined in Treasury Regulation Section 1.6011-4(b).(l) None of the Company or any of its Subsidiaries has been a party to any distribution occurring during the last twoyears in which the parties to such distribution treated the distribution as one to which Section 355 of the Code (or any similarprovision of state, local or foreign Law) applied.(m) The Company and its Subsidiaries have withheld and paid to the applicable Governmental Entities all amountsrequired to be withheld from amounts owing to any employee, creditor, shareholder, independent contractor or third party.Section 6.05 Real Property .(a) The Company or a Subsidiary thereof identified in Section 6.05(a) of the Company Disclosure Letter have fee title to theReal Property described in Section 6.05(a) of the Company Disclosure Letter, and the Real Property so described constitutes all ofthe Real Property owned by the Company or its Subsidiaries or used in connection with the Business other than as set forth inSection 6.05(b) . Section 6.05(a) of the Company Disclosure Letter sets forth a complete list of all addresses and tax parcel numbersassociated with the Real Property owned by the Company or the applicable Subsidiary, together with a list of the Existing TitlePolicies and Title Commitments. Neither the Company nor any Subsidiary thereof has ever owned any other Real Property.(b) All Real Property leased by the Company or its Subsidiaries and all Real Property leased by any Seller and used in theBusiness is described on Section 6.05(b) of the Company Disclosure Letter together with a description of the lease, license, subleaseor other occupancy agreements and all amendments, modifications, supplements and assignments thereto (collectively, the “ Leases”). Neither the Company nor its Subsidiaries uses or occupies or requires the right to use or occupy any Real Property other than theReal Property identified in Section 6.05(a) and Section 6.05(b) of the Company Disclosure Letter.(c) Except as set forth in Section 6.05(c) of the Company Disclosure Letter or in the Title Commitments set forth in Section6.05(a) of the Company Disclosure Letter, no owned Real Property is subject to any Lien that is not a Permitted Lien.(d) Section 6.05(d) of the Company Disclosure Letter lists all leases, licenses and other agreements which permit any thirdparty to use or occupy any portion of the Real Property (collectively, the “ Third Party Leases ”).13(e) With respect to each of the Leases and the Third Party Leases, except as set forth in Section 6.05(e) of the CompanyDisclosure Letter:(i) the Lease or Third Party Lease, to Sellers’ Knowledge, is valid, binding, enforceable and in full force andeffect in accordance with its terms;(ii) as of the date of this Agreement, neither the Company, its Subsidiaries, nor, to Sellers’ Knowledge, anyother party to any Leases or Third Party Lease is in breach or default, and, to Sellers’ Knowledge, no event has occurredwhich, with notice or lapse of time, would constitute such a breach or default or permit termination under the Leases or anyThird Party Leases;(iii) no party to the Leases or Third Party Leases has delivered written notice of dispute to the other partiesthereto; and(iv) the rents forth in each Lease and each Third Party Lease is the actual rental being paid, and to Sellers’Knowledge, there are no separate agreements or understandings with respect to the same.(f) Except as described in Section 6.05(f) of the Company Disclosure Letter, to Sellers’ Knowledge, the Real Propertyowned by the Company and any Subsidiary thereof complies with all applicable zoning, building, subdivision, or land sales laws,rules, ordinances or regulations, including, without limitation, to the extent applicable, the American With Disabilities Act of 1990as amended to date and all orders and regulations promulgated thereto. Sellers have made available to Buyer true, legible andcomplete copies of certificates of occupancy and permits affecting the Real Property in Sellers’ possession. To Sellers’ Knowledge,there are no contractual or legal restrictions that preclude or restrict the ability to use the Real Property for the purposes for which itis currently being used. All existing water, sewer, steam, gas, electricity, telephone, cable, fiber optic cable, internet access and otherutilities required for the use, occupancy, operation and maintenance of the Real Property are adequate for the conduct of theBusiness as it is currently conducted. To Sellers’ Knowledge, there are no material latent defects or material adverse physicalconditions affecting the Real Property or any of the facilities, buildings, structures, erections, improvements, fixtures, fixed assetsand personalty of a permanent nature annexed, affixed or attached to, located on or forming part of the Real Property.(g) There are no condemnation proceedings or eminent domain proceedings of any kind pending or, to Sellers’ Knowledge,threatened against any Real Property.(h) All of the Real Property is occupied under a valid and current certificate of occupancy or similar permit. To Sellers’Knowledge, no governmental, fire, life safety or other inspection is required under applicable Law in connection with thetransactions contemplated by this Agreement.(i) To Sellers’ Knowledge, all improvements on the Real Property constructed by or on behalf of Sellers, the Company orany Subsidiary thereof or, constructed by or on behalf of any other Person, were constructed in compliance with all applicable Laws(including any building, planning or zoning Laws) affecting such Real Property. All of the Real Property has access to a public wayand utility services sufficient to conduct the Business as it is currently conducted.14(j) To Sellers’ Knowledge, no improvements on the Real Property and none of the current uses and conditions thereofviolate any Liens, applicable site plan approvals, zoning or subdivision regulations or urban redevelopment plans as modified by anyduly issued variances, and to Sellers’ Knowledge, no permits, licenses or certificates pertaining to the ownership or operation of allimprovements on the Real Property, other than those which are transferable with the Real Property, are required by anygovernmental authority having jurisdiction over the Real Property. Neither Sellers, the Company nor any Subsidiary thereof hasreceived any written notice of any default under any of the covenants, easements or restrictions affecting or encumbering any RealProperty or any constituent or portion thereof.(k) Other than pursuant to this Agreement, neither Sellers, the Company nor any Subsidiary thereof has entered into anycontract for the sale of any Real Property or any constituent or portion thereof. No Third Party Lease or other agreement affectingany Real Property contains any rights of first refusal or options to purchase the applicable Real Property or any portion thereof orany other similar rights.Section 6.06 Intellectual Property .(a) Section 6.06(a) of the Company Disclosure Letter sets forth a correct and complete list as of the date of this Agreementof the (i) patents and patent applications, (ii) trademark and service mark registrations and applications for registration thereof, (iii)copyright registrations and applications for registration thereof, and (iv) internet domain name registrations, in each case that areowned by the Company or any of its Subsidiaries, including for each item listed, as applicable, the owner, the jurisdiction, theapplication/serial number, the patent/registration number, the filing date, and the issuance/registration date.(b) The Company and its Subsidiaries own or possesses adequate licenses or otherwise have the right to use all theIntellectual Property that are material to the conduct of the Business, free and clear of Liens (other than Permitted Liens).(c) Except as set forth in Section 6.06(c) of the Company Disclosure Letter, to Sellers’ Knowledge, (i) none of theIntellectual Property owned by the Company or any of its Subsidiaries infringes upon, misappropriates, dilutes or otherwise violatesthe Intellectual Property of any other Person and (ii) no third party is currently infringing, misappropriating, diluting or otherwiseviolating any Intellectual Property owned by the Company or its Subsidiaries.(d) (i) No claims are pending or, to Sellers’ Knowledge, threatened, with regard to the ownership by the Company or any ofits Subsidiaries or the validity or enforceability of their respective Intellectual Property that is material to the conduct of theBusiness, and (ii) no claims are pending or, to Sellers’ Knowledge, threatened, that the conduct of the Company’s or its Subsidiaries’respective businesses as currently conducted infringes, misappropriates or otherwise violates the Intellectual Property rights of anyother Person.(e) The consummation of the transactions contemplated this Agreement will not: (i) result in the breach, modification,cancellation, termination or suspension of any agreement to which the Company or any of its Subsidiaries are a party for anyIntellectual Property rights that are material to the conduct of the Business, or (ii) result in the loss or impairment of the Company’sor any of its Subsidiaries’ ownership or right to use any Intellectual Property that is material to the conduct of the Business.15Section 6.07 Agreements, Contracts and Commitments .(a) Except for Contracts that are terminable by the Company or its Subsidiaries upon sixty (60) days’ notice or less withoutpenalty, Section 6.07(a) of the Company Disclosure Letter sets forth as of the date of this Agreement a complete, accurate andcurrent list of any Contract to which the Company or its Subsidiaries is a party (collectively the “ Material Contracts ”):(i) any Contract providing for aggregate annual payments to or by the Company or its Subsidiaries in excess of TwoHundred Fifty Thousand Dollars ($250,000),(ii) any Contract that grants to any Person the right to occupy (except pursuant to reservations made in the OrdinaryCourse of Business) any portion of the Real Property,(iii) any Contract that contains a covenant not to compete that restricts the Business of the Company or itsSubsidiaries in any geographic location,(iv) all partnership agreements, limited liability company agreements and joint venture agreements relating to theCompany or any of its Subsidiaries and(v) any Contract relating to the acquisition or sale of a business (or all or substantially all of the assets thereof)by the Company or any of its Subsidiaries.(b) Each Material Contract listed on Section 6.07(a) of the Company Disclosure Letter is a valid and binding obligation ofthe Company or a Subsidiary thereof and, to Sellers’ Knowledge, is a valid and binding obligation of each other party thereto, and isin full force and effect and enforceable by the Company or such Subsidiary in accordance with its terms, except as suchenforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now orhereinafter in effect affecting creditors’ rights generally and (ii) general principles of equity. As of the date of this Agreement, exceptas set forth in Section 6.07(b) of the Company Disclosure Letter, there is no breach or violation of or default by the Company orsuch Subsidiary or, to Sellers’ Knowledge, by any other party under any of the Material Contracts. Sellers have made available toBuyer a true, correct and complete copy of all Material Contracts listed on Section 6.07(a) of the Company Disclosure Letter,together with all amendments, waivers or other changes thereto.Section 6.08 Litigation . Other than as set forth in Section 6.08 of the Company Disclosure Letter, as of the date of thisAgreement, there is no Proceeding pending, or to Sellers’ Knowledge, threatened against, the Company or its Subsidiaries beforeany Governmental Entity. Other than as set forth in Section 6.08 of the Company Disclosure Letter, as of the date of this Agreement,neither the Company nor its Subsidiaries is subject to any Order of any Governmental Entity that, individually or in the aggregate,materially interfere with, or would be reasonably likely to materially interfere with, the ability of the Business to be conducted as itis currently conducted.Section 6.09 Environmental Matters . Except for matters set forth in Section 6.09 of the Company Disclosure Letter, (a) the Business is, and for the past three (3) years has been, in compliance in all respects with all Environmental Laws; (b) theCompany and its Subsidiaries possess all material Permits required under Environmental Laws with respect to operation of theBusiness, and are in compliance in all material respects with such Permits; (c) there is no pending or, to Sellers’ Knowledge,16threatened, claim, action, enforcement action, proceeding, notice of violation or notice of responsibility regarding compliance with,or liability under, Environmental Laws with respect to the Business; (d) neither the Company, nor any of its Subsidiaries, hasReleased any Hazardous Substance on, in, from, under or at any property currently or formerly owned, operated or leased by theCompany or any of its Subsidiaries in an amount, manner or concentration that could reasonably be expected to result in materialliability to the Company; (e) to Sellers’ Knowledge, no Hazardous Substance is present on, at or under the Real Property in anamount, manner or concentration that could reasonably be expected to result in material liability to the Company; and (f) in the pastthree (3) years, the Company has not received a written notice from any Governmental Entity issued to the Company underEnvironmental Law. The Company has provided or made available to Buyer all material documents, records and information in thepossession or reasonable control of the Company concerning any environmental or health and safety matter relevant to the Companyor its Subsidiaries or to any property currently or formerly owned, operated or leased by the Company or any of its Subsidiaries,including without limitation, material environmental audits, environmental risk assessments, site assessments, documentationregarding waste disposal, Permits issued under Environmental Laws, and reports or correspondence to or from GovernmentalEntities.Section 6.10 Permits; Compliance with Laws .(a) The Company, its Subsidiaries and, to Sellers’ Knowledge, the Company’s directors, officers and key employees holdall material Permits (including approvals of Gaming Authority) necessary for the conduct of the Business as currently conducted,each of which is in full force and effect. The Business is, and since January 1, 2013 has been, conducted in material compliance withapplicable Law (including the Gaming Laws). The Company does not know of any fact, circumstance or other reason relating to itthat would prevent the conditions to Closing set forth in Article IX from being satisfied or the Closing from occurring within thirteen(13) months of the Effective Date.(b) Neither the Company nor any of its Subsidiaries, nor any of the Company’s or its Subsidiaries’ “key persons” (asdefined under applicable Gaming Law), is or since January 1, 2013 has been, in conflict with, in default with respect to or inviolation of any Law (including Gaming Laws) applicable to the Company or any of its Subsidiaries or by which any property orasset of the Company or any of its Subsidiaries is bound or affected.(c) Other than as set forth in Section 6.10(c) of the Company Disclosure Letter, (i) none of the Company or any of itsSubsidiaries has received any written claim, demand, notice, complaint, court order or administrative order from any GamingAuthority or other Governmental Entity in the past three (3) years under, or relating to any violation or possible violation of, anyGaming Law which did or would be reasonably likely to result in an individual fine or penalty of $100,000 or more and (ii) toSellers’ Knowledge, no investigation or review is threatened by any Gaming Authority or other Governmental Entity with respect tothe Company or any of its Subsidiaries. To Sellers’ Knowledge, there are no facts, circumstances or conditions which if known byany Gaming Authority would reasonably be expected to result in the revocation, limitation, suspension, non-renewal, modification ortermination of a Gaming Approval, except to the extent resulting from, directly or indirectly, (i) the negotiation, execution orannouncement of this Agreement or the transactions contemplated hereby (including the impact of any of the foregoing onrelationships with customers, suppliers, licensors, employees or regulators (including any Gaming Authority)) or (ii) changes,effects, developments or circumstances to the extent arising from or relating to the identity of Parent or Buyer, or their ability toobtain the Gaming Approvals. None of the Company or any of its Subsidiaries has suffered a suspension, denial, non-renewal,limitation or revocation of any Permit or Gaming Approval.17Section 6.11 Labor Matters .(a) Sellers have made available to Buyer the following information for each Property Employee as of May 7, 2014:(i) name, job title or position; (ii) the base salary or current wages; and (iii) the most recent bonus paid, if any.(b) Except as set forth in Section 6.11(b) of the Company Disclosure Letter, the Company and its Subsidiaries are incompliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wagesand hours and occupational safety and health.(c) Except as set forth in Section 6.11(c) of the Company Disclosure Letter, (a) neither the Company nor any of itsSubsidiaries has experienced any strike, slowdown, work stoppage, lockout, material grievance, claim of unfair labor practices, orother collective bargaining dispute within the past three years that has not been dismissed or settled; (b) to Sellers’ Knowledge, noorganizational effort is presently being made or threatened by or on behalf of any labor union with respect to employees of theCompany or any of its Subsidiaries; and (c) no collective bargaining agreements with any labor organization are in effect withrespect to the Company or any of its Subsidiaries.Section 6.12 Employee Benefits .(a) Section 6.12(a) of the Company Disclosure Letter sets forth as of the date of this Agreement a list of each materialEmployee Benefit Plan. Each Employee Benefit Plan has been established, maintained and administered in accordance with its termsand complies in form and operation with the applicable requirements of ERISA, the Code and other applicable Laws, and other thanroutine claims for benefits, there is no claim or lawsuit pending or, to Sellers’ Knowledge, threatened against or arising out of orrelated to an Employee Benefit Plan.(b) With respect to each Employee Benefit Plan, the Company has made available to Buyer true and complete copies of (i)all plan documents, including all amendments thereto, (ii) all summary plan descriptions, (iii) the most recent annual report (Form5500 series) filed with the Internal Revenue Service, if applicable, (iv) the most recent determination or opinion letter, if any, issuedby the Internal Revenue Service, and (v) any related trust or funding agreement.(c) Each Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code has received a favorabledetermination letter from the Internal Revenue Service as to its qualified status or may rely on a prototype opinion letter from theInternal Revenue Service, or has timely filed or has time remaining in which to file an application for such determination from theInternal Revenue Service, and, to Sellers’ Knowledge, no fact or event has occurred that could reasonably be expected to cause theloss of such qualification.(d) Except as set forth in Section 6.12(d) of the Company Disclosure Letter, none of the Company or any of its Subsidiariescontributes to, or has, within the past six years, contributed to or had any obligation to contribute to any Employee Benefit Plan thatis a Title IV Plan or Multiemployer Plan.18(e) Except as set forth in Section 6.12(e) of the Company Disclosure Letter, there is no Employee Benefit Plan that is a“welfare benefit plan” within the meaning of Section 3(1) of ERISA that provides retiree or post-employment benefits to anyProperty Employees or to the employees of any of the Company’ ERISA Affiliates, other than pursuant to Section 4980B of theCode or any similar state Law.(f) As of the Closing, no amount that will be received as a result of or in connection with the consummation of thetransactions contemplated by this Agreement by any employee, officer, director or other service provider of the Company or any ofits Subsidiaries who is a “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) couldreasonably be expected to be an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code).(g) This Section 6.12 constitutes the sole and exclusive representations and warranties of the Company with respect to anymatters relating to any Employee Benefit PlanSection 6.13 Brokers . Except for the fees and commissions of Stifel, Nicolaus & Company, Incorporated (which fees andcommissions are the sole responsibility of Sellers), Sellers have not employed and no Person has acted directly or indirectly as abroker, financial advisor or finder for Sellers and Sellers have not incurred any liability for any brokerage fees, commissions orfinder’s fees in connection with the transactions contemplated by this Agreement.Section 6.14 Title to Purchased Assets; Sufficiency of Purchased Assets . The Company and its Subsidiaries have goodand marketable title to, or a valid leasehold interest in, the material tangible Personal Property constituting Purchased Assets, freeand clear of any Liens other than for Permitted Liens. To Sellers’ Knowledge, all of the material tangible Personal Propertyconstituting Purchased Assets, taken as a whole, are structurally sound, are in good operating condition and, taken as a whole, suchtangible Personal Property constituting Purchased Assets is not in need of maintenance or repairs except for ordinary, routinemaintenance and repairs. Except as set forth in Section 6.14 of the Company Disclosure Letter, the Purchased Assets, taken as awhole, are sufficient in all material respects for the continued conduct of the Business immediately after the Closing in substantiallythe same manner as conducted immediately prior to the Closing.Section 6.15 Absence of Changes . From December 31, 2013 through the Effective Date, the Business has been conductedin the Ordinary Course of Business. Since such date through the Effective Date, except as set forth in Section 6.15 of the CompanyDisclosure Letter, neither the Company nor any of its Subsidiaries:(a) made any material change in any method of accounting or accounting practice, policy or procedure other than asrequired by GAAP;(b) amended its Governing Documents;(c) (i) declared, set aside, made or paid any dividend or other distribution or payments (whether in cash, stock or property orany contribution thereof) in respect of any of its Membership Interests or (ii) redeemed or otherwise acquired any of its MembershipInterests, or issued any new Membership Interests;(d) merged or consolidated with any business or any corporation, partnership, limited liability company, association or otherbusiness organization or division thereof, acquired all or19substantially all of the assets from any Person or made any loans, advances or capital contributions to, or any investments in, anyPersons;(e) sold, leased, licensed or otherwise transferred any material assets or properties of the Company or any of itsSubsidiaries, other than in the Ordinary Course of Business consistent with past practice;(f) subjected any of the Purchased Assets to a Lien, other than Permitted Liens created in the Ordinary Course of Business;(g) incurred any Indebtedness, except for any Indebtedness that shall be fully repaid at Closing;(h) adopted a plan of complete or partial liquidation, dissolution, merger, consolidation, recapitalization or otherreorganization or taken any action for the appointment of a receiver, administrator, trustee or similar officer;(i) entered into, materially amended or terminated a Material Contract other than (i) in order to comply with applicableLaw, (ii) any termination at the expiration of its stated term, (iii) entries, amendments, terminations and renewals in the OrdinaryCourse of Business or (iv) as required by Applicable Law;(j) except as required by applicable Law or the terms of any Employee Benefit Plan in existence on the date of thisAgreement, as applicable, (i) materially increased the base salary of any officer of the Company or any of its Subsidiaries (other thanin the Ordinary Course of Business consistent with past practice), or (ii) entered into, adopted or amended, in any material respect,any Employee Benefit Plan in any manner that established or materially increased the compensation of any officer of the Companyor any of its Subsidiaries; or(k) authorized, or made any commitment with respect to, any single capital expenditure that is in excess of Fifty ThousandDollars ($50,000) or capital expenditures that are, in the aggregate, in excess of Two Hundred Fifty Thousand Dollars ($250,000),other than capital expenditures not in excess of Eight Million Dollars ($8,000,000) for the year ending December 31, 2014 that areconsistent with the amounts and anticipated timing of capital expenditures set forth in the Sellers’ budget for the year endingDecember 31, 2014 that has previously been provided to Buyer (the “ 2014 Budget ”).Section 6.16 Insurance . Section 6.16 of the Company Disclosure Letter sets forth as of the date of this Agreement a trueand complete list of all current insurance policies on which the Company or any of its Subsidiaries are named as insureds oradditional insureds. Sellers have made true and complete copies of all such insurance policies to Buyer. Such insurance policies areof the type and in the amounts customarily carried by Persons conducting a business similar to the Company and are sufficient forcompliance in all material respects with all applicable Laws and Material Contracts to which the Company or its Subsidiaries is aparty. As of the date hereof, each of such insurance policies is in full force and effect. Neither the Company nor any Subsidiary hasreceived any written notice regarding any cancellation, invalidation or since January 1, 2013, material increase in premiums ordeductibles of any such insurance policy. The execution and delivery of this Agreement by Sellers and the Company and theconsummation of the transactions contemplated by this Agreement and the Ancillary Agreements will not conflict with, require theconsent or approval of any insurer under, or result in any breach or violation of or default (with or without notice or lapse of time, orboth) under,20or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a benefit under, any of the insurancepolicies required to be listed on Section 6.16 of the Company Disclosure Letter.Section 6.17 Certain Transactions . Other than (i) as set forth in Section 6.17 of the Company Disclosure Letter and (ii) theParent Services Agreement, no current or former officer, director, member, partner, shareholder, record or beneficial owner of anysecurity of any class of the Company, or Affiliate of the Company, or an immediate family member of any of the foregoing (an “Affiliated Person ”) (a) is a party to any Contract with the Company or any of its Subsidiaries, (b) owns any asset, tangible orintangible, that is used in the Business, or (c) has any cause of action or other claim whatsoever against, or owes any amount to, theCompany or any of its Subsidiaries. To Sellers’ Knowledge, no current officer, member, partner, shareholder, record or beneficialowner of any security of any class of the Company, or Affiliate of the Company has any direct or indirect material interest in, or is orwas, a director, officer or employee of any Person that is a client, customer, supplier, lessor, lessee, debtor, creditor or competitor of,the Company. To Sellers’ Knowledge, no person employed by the Company or any of its Subsidiaries is a relative of any officer,director, member, partner, shareholder, record or beneficial owner of the Company or any of its Subsidiaries.Section 6.18 No Other Representations and Warranties . SELLERS MAKE NO REPRESENTATION OR WARRANTYTO BUYER, EXPRESS OR IMPLIED, WITH RESPECT TO THE BUSINESS, THE PURCHASED ASSETS, THE COMPANY,ITS SUBSIDIARIES OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY AS TOMERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FUTURE RESULTS, OTHER THAN AS EXPRESSLYPROVIDED IN ARTICLES V AND VI . WITHOUT LIMITING THE FOREGOING, SELLERS DO NOT MAKE ANYREPRESENTATION OR WARRANTY TO BUYER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY MANAGEMENTPRESENTATIONS (INCLUDING MONTHLY FINANCIAL REVIEWS), MARKETING MATERIALS, FINANCIALPROJECTIONS, FORECASTS, BUDGETS, OR THE IMPACT OF COMPETITION, WEATHER, OR OTHER FACTORSAFFECTING HISTORICAL, ACTUAL OR PROJECTED FINANCIAL PERFORMANCE RELATING TO THE BUSINESS.BUYER HEREBY ACKNOWLEDGES THAT, OTHER THAN AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THEBUSINESS, THE PURCHASED ASSETS, THE COMPANY AND ITS SUBSIDIARIES ARE BEING ACQUIRED “AS IS,WHERE IS” ON THE CLOSING DATE AND IN THEIR PRESENT CONDITION, AND BUYER HAS RELIED ON ITS OWNEXAMINATION AND INVESTIGATION OF THE BUSINESS, THE PURCHASED ASSETS, THE COMPANY AND ITSSUBSIDIARIES IN ELECTING TO ENTER INTO, AND CONSUMMATE THE TRANSACTIONS UNDER, THISAGREEMENT AND THE ANCILLARY AGREEMENTS. NO PATENT OR LATENT PHYSICAL CONDITION OR DEFECTIN ANY OF THE PURCHASED ASSETS, WHETHER OR NOT NOW KNOWN OR DISCOVERED, SHALL AFFECT THERIGHTS OF EITHER PARTY.ARTICLE VII.REPRESENTATIONS AND WARRANTIES OF BUYERBuyer represents and warrants to Sellers as follows, except as expressly set forth herein and in the corresponding section ofthe Disclosure Letter with respect to the representation and warranties of Buyer contained in this Article VII delivered by Buyer toSellers herewith (the “ Buyer Disclosure Letter ”). The Buyer Disclosure Letter shall be arranged in paragraphs corresponding to thenumbered and lettered paragraphs contained in this Agreement and the disclosure in any paragraph shall, to the21extent reasonably apparent that the matter disclosed is relevant to another paragraph in this Agreement, qualify such other paragraph.Section 7.01 Organization . Each of Parent and Buyer is duly organized and validly existing under the laws of its state oforganization and has all requisite power and authority to carry on its business as now being conducted. Each of Parent and Buyer isduly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operatedby it or the nature of the business conducted by it makes such qualification or licensing necessary.Section 7.02 Authority; No Conflict; Required Filings and Consents .(a) Each of Parent and Buyer has all requisite power and authority to enter into this Agreement and each AncillaryAgreement to which it is a party and to consummate the transactions contemplated hereby and thereby and perform its obligationshereunder and thereunder. Each of Parent’s and Buyer’s execution and delivery of this Agreement and each Ancillary Agreement towhich it is a party and the consummation by Parent and Buyer of the transactions contemplated hereby and thereby and performanceof its obligations hereunder and thereunder have been duly authorized by all necessary action on the part of Parent or Buyer, asapplicable. This Agreement has been, and each Ancillary Agreement will be at or prior to the Closing, duly executed and deliveredby Parent and Buyer, as applicable, and, assuming the due authorization, execution and delivery of the other parties hereto andthereto, this Agreement constitutes, and each Ancillary Agreement when so executed and delivered will constitute, the valid andbinding obligation of each of Parent and Buyer, enforceable against Parent and Buyer in accordance with their respective terms,subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereinafterin effect affecting creditors’ rights generally and (ii) general principles of equity.(b) The execution and delivery by each of Parent and Buyer of this Agreement and each Ancillary Agreement to which it isa party does not, and the consummation by Parent and Buyer of the transactions contemplated hereby and thereby and thecompliance by Parent and Buyer with any provisions hereof or thereof will not, (i) conflict with or result in any material violation ormaterial default under (with or without notice or lapse of time, or both), or require a consent or waiver under, or give rise to a rightof termination, cancellation, modification or acceleration or material obligation or loss of any material benefit under (A) anyprovision of the Governing Documents of Parent or Buyer, or (B) any material Contract to which Parent or Buyer is a party, or(ii) subject to the governmental filings and other matters referred to in Section 7.02(c) , violate any Permit, Order or Law applicableto Parent or Buyer.(c) No Permit or Order or authorization of, or registration or filing with, any Governmental Entity, is required by or withrespect to Parent, Buyer or their Affiliates in connection with the execution and delivery of this Agreement or the AncillaryAgreements by Parent or Buyer, the compliance by Parent and Buyer with any of the provisions hereof or thereof, or theconsummation by Parent and Buyer of the transactions that are contemplated hereby, except for (i) any approvals and filing ofnotices required under the Gaming Laws, (ii) filings and other application requests under the HSR Act, (iii) such Permits, Orders,registrations or filings related to, or arising out of, compliance with statutes, rules or regulations regulating the consumption, sale orserving of alcoholic beverages or tobacco, and (iv) any Permits, Orders, authorizations, registrations, or filings required by Sellers orthe Company or any of their Subsidiaries, Affiliates or key employees (including under the Gaming Laws).22Section 7.03 Brokers . Neither Parent, Buyer nor any of their Representatives have employed, and no Person has acteddirectly or indirectly as a broker, financial advisor or finder for Parent or Buyer and neither Parent nor Buyer has not incurred anyliability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement.Section 7.04 Financing . Parent’s and Buyer’s current cash availability or available borrowings under its credit facilitiesare sufficient to enable Parent and Buyer to make payment in full, in cash, of (a) the Closing Payment and (b) the Final ClosingPayment as contemplated by Section 2.01 and Section 3.02(a) . EACH OF PARENT AND BUYER HEREBYACKNOWLEDGES AND AGREES THAT THE RECEIPT BY BUYER OF ANY FINANCING FROM ANY PERSON ISNOT A CONDITION TO BUYER’S OBLIGATION TO PURCHASE THE MEMBERSHIP INTERESTS AT THECLOSING UNDER THIS AGREEMENT.Section 7.05 Licensability of Principals .(a) None of Parent, Buyer, their Subsidiaries or any of their respective current executive officers and directors (collectivelythe “ Buyer Related Parties ”) has ever withdrawn, been denied, or had revoked, a gaming license or related finding of suitability bya Governmental Entity or Gaming Authority. Parent, Buyer and each of the Buyer Related Parties are in good standing, and inmaterial compliance with all Gaming Laws, in each of the jurisdictions in which Parent, Buyer or any Buyer Related Party owns oroperates gaming facilities. Schedule 7.05(a) hereto sets forth a true and accurate list of all Buyer Related Parties required to be foundsuitable in connection with the Gaming Approvals for the Transaction (if Buyer is required to obtain such Gaming Approvals inaccordance with Section 8.03(c) ).(b) To Buyer’s Knowledge, there are no facts unknown to the Gaming Authorities, which if known to the GamingAuthorities, would (i) be reasonably likely to result in the denial, revocation, limitation or suspension of a gaming license currentlyheld or other Gaming Approval, or (ii) result in a negative outcome to any finding of suitability proceedings currently pending, orunder the suitability, licensing, Permits, orders, authorizations or proceedings necessary for the consummation of this Agreement.Buyer does not know of any fact, circumstance or other reason relating to it that it believes would prevent it or a Third PartyOperator from obtaining the necessary licenses under Gaming Approvals or the conditions to Closing set forth in Article IX frombeing satisfied or the Closing from occurring by the Closing Deadline.Section 7.06 Permits; Compliance with Gaming Laws .(a) Parent, Buyer, and to Buyer’s Knowledge, each of the Buyer Related Parties, and their respective directors, officers, keyemployees and Persons performing management functions similar to officers and partners, hold or have applied for all Permits andOrders of all Governmental Entities (including all authorizations under Gaming Laws) necessary to conduct the business andoperations of Parent and Buyer (the “ Buyer Permits ”), each of which is in full force and effect.(b) No event has occurred which permits, or upon the giving of notice or passage of time or both would permit, revocation,non-renewal, modification, suspension, limitation or termination of the Buyer Permits.23(c) Parent, Buyer, and to Buyer’s Knowledge, Buyer’s directors, officers, key employees and Persons performingmanagement functions similar to officers and partners are, and since November 1, 2013 have been, in material compliance with theterms of the Buyer Permits.(d) Neither Parent nor Buyer has not received written notice of any investigation or review by any Governmental Entitywith respect to Buyer that is pending, and, to Buyer’s Knowledge, no investigation or review is threatened, nor has anyGovernmental Entity indicated in writing any intention to conduct the same that would materially impair or materially delay theClosing.Section 7.07 Litigation . There is no Proceeding against Parent or Buyer, pending or, to Buyer’s Knowledge, threatenedagainst Parent or Buyer before any Governmental Entity, that, individually or in the aggregate, would be reasonably be likely to(x) have a Buyer Material Adverse Effect or (y) materially impair or materially delay the Closing.Section 7.08 Solvency . Neither Parent nor Buyer is entering into the transactions contemplated by this Agreement with theactual intent to hinder, delay or defraud either present or future creditors of the Company or its Subsidiaries. Buyer is Solvent as ofthe date of this Agreement, and Buyer will, after giving effect to all of the transactions contemplated by this Agreement, includingthe Financing, any alternative financing and the payment of the Closing Payment all other amounts required to be paid by Buyerpursuant to this Agreement, any payment of any outstanding indebtedness of the Company or its Subsidiaries contemplated by thisAgreement or the Commitment Letters, the payment of all other amounts required to be paid in connection with the consummationof the transactions contemplated by this Agreement and the payment of all related fees and expenses, be Solvent at and after theClosing Date. As used in this Section 7.08 , the term “Solvent” means, with respect to a particular date, that on such date, (a) the sumof the assets, at a fair valuation, of Buyer (and, after the Closing, the Company and its Subsidiaries) (on a consolidated basis) and ofeach of them (on a stand-alone basis) will exceed their debts, (b) each of Buyer (and, after the Closing, the Company and itsSubsidiaries) (on a consolidated basis) and each of them (on a stand-alone basis) has not incurred and does not intend to incur, anddoes not believe that it will incur, debts beyond its ability to pay such debts as such debts mature, and (c) each of Buyer (and, afterthe Closing, the Company and its Subsidiaries) (on a consolidated basis) and each them (on a stand-alone basis) has sufficient capitaland liquidity with which to conduct its business. For purposes of this Section 7.08 , “debt” means any liability on a claim, and“claim” means any (i) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed,contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and (ii) any right to an equitableremedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reducedto judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.Section 7.09 Due Diligence Investigation . Each of Parent and Buyer has had an opportunity to discuss the business,management, operations and finances of the Business with Sellers, its applicable Affiliates and their respective Representatives andhas had an opportunity to inspect the Purchased Assets. Each of Parent and Buyer has conducted its own independent investigationof the Business. In making its decision to execute and deliver this Agreement and the Ancillary Agreements and to consummate thetransactions contemplated hereunder and thereunder, each of Parent and Buyer has relied solely upon the representations andwarranties of Sellers set forth in Articles V and VI (and acknowledges that such representations and warranties are the onlyrepresentations and warranties made by Sellers) and has not relied upon any other information provided by, for or on behalf ofSellers or their Affiliates or their respective Representatives, to Parent or Buyer in connection with the24transactions contemplated by this Agreement and the Ancillary Agreements. Each of Parent and Buyer has entered into thetransactions contemplated by this Agreement and the Ancillary Agreements with the understanding, acknowledgement andagreement that no representations or warranties, express or implied, are made with respect to any management presentations(including monthly financial reviews), marketing materials, financial projections, forecasts, budgets, or the impact of competition,weather, or other factors affecting historical, actual or projected financial performance relating to the Business. Each of Parent andBuyer further agrees that it is not relying on and has no legal claim predicated on any statements made by Sellers, whether written ororal, with respect to any management presentations (including monthly financial reviews), marketing materials, financial projections,forecasts, budgets, or the impact of competition, weather, or other factors affecting historical, actual or projected financialperformance relating to the Business. Each of Parent and Buyer acknowledges that no current or former stockholder, director,officer, employee, affiliate or advisor of Sellers or their Affiliates has made or is making any representations, warranties orcommitments whatsoever regarding the subject matter of this Agreement or the Ancillary Agreements, express or implied.ARTICLE VIII.COVENANTSSection 8.01 Conduct of Business Prior to the Closing .(a) During the period from the Effective Date and continuing until the earlier of the termination of this Agreement or theClosing (the “ Pre-Closing Period ”), subject to any written instructions of any Governmental Entity and to the limitations set forthbelow, the Company shall, and Sellers shall cause the Company to (except to the extent as expressly provided by this Agreement orto the extent that Buyer shall otherwise grant its prior consent in writing, which consent may not be unreasonably withheld,conditioned or delayed) carry on the Business in the Ordinary Course of Business. Without limiting the generality of the foregoing(except as expressly provided by this Agreement, to the extent that Buyer shall otherwise grant its prior consent in writing, whichconsent may not be unreasonably withheld, conditioned or delayed, or as disclosed on Section 8.01 of the Company DisclosureLetter), during the Pre-Closing Period, neither the Company nor its Subsidiaries shall, and Sellers shall cause the Company and itsSubsidiaries not to:(i) make any material change in any method of accounting or accounting practice, policy or procedure other than asrequired by GAAP;(ii) amend its Governing Documents;(iii) (A) declare, set aside, make or pay any dividend or other distribution or payments (whether in cash, stock orproperty or any contribution thereof) in respect of any of its membership interests or capital stock or (B) redeem or otherwiseacquire any of its membership interests or capital stock;(iv) merge or consolidate with any business or any corporation, partnership, limited liability company, association orother business organization or division thereof, or acquire all or substantially all of the assets from any Person;25(v) issue or sell or encumber any (A) Membership Interests, (B) interests of any kind in any of the Company’sSubsidiaries, or (C) any securities convertible into, or rights to acquire, any Membership Interests or interests in any of theCompany’s Subsidiaries;(vi) (A) purchase any equity interests in or securities of, or make any other investment in or loans or advances to,any Person, or (B) except in the Ordinary Course of Business, acquire any material assets that would constitute PurchasedAssets;(vii) sell, lease, license or otherwise transfer any material assets or properties of the Company or any of itsSubsidiaries, other than (A) as set forth in Section 8.01(a) of the Company Disclosure Letter, (B) in the Ordinary Course ofBusiness and which, individually, do not exceed Fifty Thousand Dollars ($50,000) or which, in the aggregate, do not exceedTwo Hundred Fifty Thousand Dollars ($250,000), or (C) replacements of assets (provided that any asset that is not leased orlicensed may not be replaced with another that is leased or licensed under this clause (C));(viii) subject any of the Purchased Assets to a Lien, other than Permitted Liens created in the Ordinary Course ofBusiness;(ix) incur any Indebtedness, except for any Indebtedness that shall be fully repaid at Closing, amounts to thePennsylvania Gaming Control Board from the Property Tax Relief Reserve Fund and pension liabilities in the OrdinaryCourse of Business;(x) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, recapitalization or otherreorganization or take any action for the appointment of a receiver, administrator, trustee or similar officer;(xi) enter into, materially amend or terminate a Material Contract other than (A) in order to comply with applicableLaw, (B) any termination at the expiration of its stated term, or (C) entries, amendments, terminations and renewals in theOrdinary Course of Business;(xii) except as required by applicable Law or the terms of any Employee Benefit Plan in existence on the date of thisAgreement, as applicable, (A) materially increase the base salary of any officer of the Company or any of its Subsidiaries(other than in the Ordinary Course of Business consistent with past practice), or (B) enter into, adopt or amend, in anymaterial respect, any Employee Benefit Plan in any manner that establishes or materially increases the compensation of anyofficer of the Company or any of its Subsidiaries;(xiii) authorize, or make any commitment that will remain unfunded at Closing, in whole or in part, with respect to,any single capital expenditure that is in excess of One Hundred Thousand Dollars ($100,000) or capital expenditures that are,in the aggregate, in excess of Two Hundred Fifty Thousand Dollars ($250,000), other than unfunded capital expendituresremaining at Closing that (A) do not exceed, in the aggregate, Five Million Dollars ($5,000,000) and (B) are consistent withthe amounts and anticipated timing of capital expenditures set forth in the 2014 Budget or, if such commitments are made insubsequent years, in the budgets prepared by Sellers with respect to such years, which budgets shall be prepared in theOrdinary Course of Business and provided to Buyer as promptly as practicable following their creation;26(xiv) take any action, or fail to take any action, where such action or inaction would reasonably be expected toprevent the consummation of the Closing in the manner set forth in Exhibit A hereto, as may be modified in accordance withSection 1.02 at the time of the proposed action or inaction;(xv) except as required by applicable Law, make or change any Tax election, settle or compromise any Tax liabilityor Tax refund claim, change any method of accounting or any accounting period, extend any statute of limitations period forthe assessment of any Tax, file any income or other Tax Return (or amended income or other Tax Return) or enter into anyclosing or similar agreements with respect to Taxes;(xvi) fail to use commercially reasonable efforts to maintain in effect all material insurance policies or to obtainalternative insurance policies in replacement thereof;(xvii) waive, release or assign any material rights or material claims relating to the Business, the Company or any ofits Subsidiaries, except as contemplated by this Agreement or in the Ordinary Course of Business;(xviii) enter into any material transaction or transaction outside of the Ordinary Course of Business with anyAffiliate;(xix) enter into any settlement, consent decree or other similar agreement or arrangement with a third party orGovernmental Entity other than (i) as does not involve the institution of mandated new procedures or other business conductor the imposition of equitable or similar relief on the Company and (ii) is not reasonably likely to result in the revocation,limitation or suspension of any Permit of the Company, any of its Subsidiaries or the Business;(xx) engage in any new line of business;(xxi) enter into any new material contracts, leases, licenses or other agreements respecting, or place or create anyLiens (other than Permitted Liens) on any Real Property, or materially amend any Lease or Third Party Lease or consent toany sublease or assignment thereunder, other than leases of slot machines, provided that during the Pre-Closing Period, thetotal number of leased slot machines at the Casino shall not exceed three hundred (300);(xxii) enter into any material contract, lease, sublease, license or other agreement to lease or purchase any new parcelof real property;(xxiii) enter into any new, or materially modify any existing, collective bargaining or any other similar substantiveagreement with any labor organization, unless the failure to do so would constitute a breach of any duty or obligation of theCompany or its Subsidiaries under applicable Law;(xxiv) engage in any plant closing or layoff that would give rise to an obligation to provide any notice requiredpursuant to the WARN Act; or(xxv) enter into a Contract to do any of the foregoing, or to authorize or announce an intention to do any of theforegoing.27(b) It is agreed and understood that if Buyer does not grant or deny consent to a proposed action within five (5) BusinessDays of its receipt of the written request by Sellers to take such proposed action, Buyer shall be deemed to have consented to suchproposed action notwithstanding any other provision of Section 8.01(a) ; provided , that any written request by Sellers under thisclause (b) shall also substantially simultaneously be sent via email to each of William Clifford, Brandon Moore and Desiree Burke.(c) Except as expressly contemplated by this Agreement, nothing contained in this Agreement shall give Buyer, directly orindirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Closing. Prior to the Closing, themanagement of the Company shall exercise, consistent with and in accordance with the terms and conditions of this Agreement,complete control and supervision over the operations of the Company and its Subsidiaries.(d) In addition, notwithstanding anything in this Agreement (including the restrictions set forth in the first paragraph of thisSection 8.01 ), nothing herein shall preclude Sellers or the Company or any of their respective Affiliates from taking any action (i) tomaintain the viability and marketability of the Casino or to prevent the destruction, removal, wasting, deterioration, or impairment ofthe Casino (including, but not limited to, regular repair and maintenance efforts, continuation of any planned capital expenditures,and marketing and promotional programs) or (ii) to use any available cash to prepay the Indebtedness of the Company or itsSubsidiaries.Section 8.02 Access to Information and the Real Property; Furnishing of Financial Statements .(a) Upon reasonable notice, subject to applicable Law, including antitrust Laws and Gaming Laws, the Company shall, andSellers shall cause the Company to, afford Buyer’s Representatives (including, for the avoidance of doubt, the Representatives of theThird Party Operator, as applicable) reasonable access, during normal business hours, during the Pre-Closing Period, to the RealProperty (including the Casino) and to the properties, books, Contracts and records of the Company and its Subsidiaries(collectively, the “ Inspection ”) and to the officers, directors, director-level employees, accountants, counsel, consultants, advisors,agents and other representatives of the Company to discuss the business or financial condition of the Company and the otherinformation provided under Section 8.02(c) (collectively, “ Senior Personnel Access ”); provided, however, that (i) Buyer shallprovide the Company and Sellers with at least two (2) Business Days’ prior notice of any Inspection, and reasonable advance noticeprior to any request for Senior Personnel Access, in accordance with Section 12.03 ; (ii) if the Company so requests, Buyer’sRepresentatives shall be accompanied by a Representative of the Company; (iii) except as provided in Section 8.02(c) , Buyer shallnot initiate contact with employees or other Representatives of the Company or its Subsidiaries without the prior consent of Sellers;(iv) Buyer’s Representatives shall not be entitled to perform any physical testing of any nature with respect to any portion of theReal Property without the Company’s prior written consent, and the execution of an access agreement between the Company andBuyer; (v) neither Buyer nor its Representatives shall materially interfere with the Business; (vi) with respect to any inspection of thegaming areas in the Casino (floor, casino cage, accounting, and Pennsylvania Gaming Control Board security areas), Buyer andSellers shall agree on the date, time and scope of the inspection and also obtain the concurrence of the Pennsylvania Gaming ControlBoard; and (vii) Buyer shall, at its sole cost and expense, repair any damage to the Purchased Assets or any other property owned bya Person other than Buyer caused by Inspection, and shall reimburse the Company for any loss caused by any Inspection, and restorethe Purchased Assets or such other28third-party property to substantially similar condition as existed prior to such Inspection, and shall indemnify, defend and holdharmless Sellers, the Company and its Affiliates from and against any personal injury or property damage claims, liabilities,judgments or expenses (including reasonable attorneys’ fees) incurred by any of them arising or resulting therefrom.(b) During the Pre-Closing Period, Sellers shall furnish or cause the Company to furnish to Buyer, promptly after theybecome available, (i) any monthly financial statements of the Company that it prepares in the Ordinary Course of Business, and (ii)within sixty (60) days of the end of each fiscal quarter, a balance sheet and income statement for such fiscal quarter, prepared inaccordance with GAAP.(c) During the Pre-Closing Period, Sellers shall cooperate with Buyer in connection with Buyer’s attempts to find a ThirdParty Operator, with such cooperation limited to actions that Sellers and the Company take in the ordinary course of business,including by providing reasonably requested information related to the infrastructure and operations of the Casino (including,without limitation, planning and analysis relating to past, current and prospective operating results, operating procedures,information systems and strategic information in connection with Buyer’s strategic planning processes and the Transactions). Sellersshall furnish or cause the Company to furnish to Buyer reports created by the Company in the ordinary course of business regardingthe operation of the Casino, specifically the daily operating reports, monthly financial reviews and monthly financial statements, butshall have no obligation to generate additional reporting for Buyer. Notwithstanding anything in Section 8.02(a) above to thecontrary and without prejudice to any other rights of Buyer hereunder, the Company shall, and Sellers shall cause the Company to,afford Buyer’s Representatives (including, for the avoidance of doubt, the Representatives of the Third Party Operator, asapplicable) to meet (including, without limitation, by phone) during the Pre-Closing Period with any or all of Seller Parent’s ChiefFinancial Officer, the Chief Financial Officer of the Casino and/or the General Manager of the Casino, each during normal businesshours as often as Buyer shall so reasonably request to review Casino operations and the Company’s financial condition. Buyerhereby expressly disclaims any claims based on the content, completeness, or accuracy of any information reviewed or presentedduring such meetings or in any materials or information otherwise furnished by Sellers (or their agents or Representatives) pursuantto this Section 8.02(c) (e.g., daily operating reports, monthly financial reviews and monthly financial statements), other than asotherwise expressly provided in Article IV .(d) Buyer hereby acknowledges and agrees that it is primarily responsible for the process of finding a Third Party Operator,developing and making presentations and conveying information to prospective Third Party Operators, and that the role of Sellersand the Company only is to provide information to Buyer as provided in this Section 8.02 in support of Buyer’s efforts.(e) During the Pre-Closing Period, Sellers shall, promptly after becoming aware thereof, advise Buyer in writing of (i) anyevent, condition, fact or circumstance reasonably likely to have a Company Material Adverse Effect, (ii) any written notice or othercommunication from any third Person alleging that the consent of such third Person is or may be required in connection with thetransactions contemplated by this Agreement, (iii) any material default under any material Contract or event which, with notice orlapse of time or both, would become such a default on or prior to the Closing, and (iv) any material adverse change in, or anytermination of, or threatened termination in writing of, the business relationship between the Company or any of its Subsidiaries, onthe one hand, and any key customer or supplier, on the other hand. No such notification or absence of notification shall affect any ofthe representations or warranties of Sellers hereunder, or the conditions to the obligations of the parties contained herein or otherwiseaffect the remedies available hereunder.29Section 8.03 Governmental Approvals .(a) To the extent required under the Gaming Laws, required or requested by a Governmental Entity or as otherwisenecessary to secure the required approval of a Governmental Entity (including the Gaming Approvals) to the transactionscontemplated hereby, Sellers and the Company shall, and shall cause any of their respective Affiliates or Representatives to, asapplicable: (i) duly submit one or more petitions with the applicable Governmental Entities with respect to the Gaming Approvals, inaddition to any new, amended or supplemental applications; (ii) take such action(s) and respond in a timely manner and in good faithto any requests for action, information, attestations or any other materials or documents; (iii) attend any hearings, meetings or otherevents with respect to such approval(s); and (iv) comply with the terms and conditions of all Gaming Approvals; provided , however, that Sellers and the Company shall not be required to take any such actions to the extent (but only to the extent) such action(s)would have a material financial impact on Sellers, the Company or its Subsidiaries (in which case Buyer shall have the right toterminate this Agreement and the provisions of Section 10.01(g) will apply).(b) Buyer may identify a third party operator of the Casino (the “ Third Party Operator ”) and enter into a definitiveagreement with such Third Party Operator to operate the Casino (the “ Gaming Operating Agreement ”) in a manner that complieswith all Gaming Laws without the receipt by Buyer of a Category 1 license for the Casino; provided , however , that (x) the ThirdParty Operator shall not be a competitor of the Company identified by Sellers to Buyer in Section 8.03(b) of the CompanyDisclosure Letter and (y) in the event Buyer elects to enter into a Gaming Operating Agreement, the closing of the transactions underthe Gaming Operating Agreement shall occur no earlier than the Closing hereunder.(c) In the event that Buyer and the Third Party Operator enter into the Gaming Operating Agreement and Buyer agrees to atransfer of the Purchased Assets to the Third Party Operator that requires HSR Approval, concurrently with the execution of theGaming Operating Agreement, Buyer shall notify Sellers of such transfer in writing, and as promptly as practicable, but in no eventlater than three (3) Business Days after entry into the Gaming Operating Agreement, the Company and the Third Party Operatorshall file all required applications and documents in connection with obtaining HSR Approval and act diligently and promptly toobtain HSR Approval by no later than the Closing Deadline and reasonably cooperate with each other, in connection with themaking of all filings and the obtaining of all such HSR Approval. Subject to applicable Laws relating to the exchange ofinformation, prior to making any application or material written communication to or filing with any Governmental Entity withrespect to HSR Approval, Sellers, the Company, Buyer and the Third Party Operator shall provide each other with drafts thereof andafford the other a reasonable opportunity to comment on such drafts. The Company and the Third Party Operator shall use bestefforts to schedule and attend any hearings or meetings with Governmental Entities to obtain HSR Approval as promptly aspracticable, and, to the extent permitted by the Governmental Entity, the Company and the Third Party Operator shall offer the otherthe opportunity to participate in all telephonic conferences and all meetings with any Governmental Entity to the extent relating toHSR Approval. Sellers, the Company, Buyer and the Third Party Operator shall, as reasonably practicable, consult with each other,subject to applicable Laws relating to the exchange of information (including antitrust Laws) regarding all the non-confidentialinformation relating to Buyer, the Third Party Operator, Sellers, the Company and any of their respective Affiliates orRepresentatives which appear in any filing made with, or written materials submitted to, any third party or any Governmental Entityto the extent made or submitted in connection with the transactions contemplated by this Agreement.30Buyer shall include provisions in the Gaming Operating Agreement requiring the Third Party Operator to comply with the foregoing.(d) Prior to making any application or material written communication to or filing with any Governmental Entity withrespect to the Gaming Approvals, Buyer or the Third Party Operator shall provide Sellers with drafts thereof and afford Sellers areasonable opportunity to comment on such drafts; provided , that (i) the opportunity to review shall not include any information thatcontains proprietary or confidential information of Buyer, the Third Party Operator or any of their respective Representatives, and(ii) the time periods for submission of such applications and written materials set forth in this Agreement, if any, shall automaticallybe extended for each day of delay caused by Sellers’ review. To the extent permitted by the Governmental Entity, Buyer or the ThirdParty Operator shall offer Sellers the opportunity to participate in all telephonic conferences and all meetings with any GovernmentalEntity to the extent relating to the Gaming Approvals, excluding any meetings or interviews relating to the suitability of Buyer, theThird Party Operator or its Representatives. Buyer or the Third Party Operator, shall, to the extent practicable, consult with Sellerson all the non-confidential information relating to Sellers, the Company, or any of their respective Affiliates or Representativeswhich appear in any filing made with, or written materials submitted to, any third party or any Governmental Entity to the extentmade or submitted in connection with the transactions contemplated by this Agreement. The Gaming Operating Agreement shallrequire the Third Party Operator to comply with the foregoing.(e) Each of Buyer, on the one hand, and Sellers and the Company, on the other hand shall promptly notify the other inwriting of any pending or, to the knowledge of Buyer or Sellers (as the case may be), threatened Proceeding or investigation by anyGovernmental Entity or any other Person (i) challenging or seeking material damages in connection with the transactionscontemplated by this Agreement or (ii) seeking to restrain or prohibit the consummation of such transactions.(f) If any Proceeding is instituted (or threatened to be instituted) challenging the transaction contemplated by thisAgreement or the Ancillary Agreements as violative of any applicable Law, Buyer shall, and shall cause its Affiliates to, cooperatewith Sellers and take any and all necessary steps to contest and resist, except insofar as Buyer and Sellers may otherwise agree, anysuch Proceeding, including any Proceeding that seeks a temporary restraining order or preliminary injunction that would prohibit,prevent or restrict consummation of the transactions contemplated by this Agreement. Buyer shall permit Sellers to participate in thedefense of such Proceeding with counsel of its choosing. Buyer shall, and shall cause its Affiliates to maintain an open dialogue withthe Office of Enforcement Counsel, the Bureau of Licensing and other staff members of the Pennsylvania Racing Commission andPennsylvania Gaming Control Board to ensure that Buyer and its Affiliates address any concerns of the Pennsylvania GamingControl Board with respect to the Transaction promptly as such concerns arise. In the event that the Pennsylvania RacingCommission or Pennsylvania Gaming Control Board raises a concern regarding Buyer’s interest in the Endeka Development, Buyershall cooperate with the Pennsylvania Gaming Control Board to address any such concerns in a manner that will permit theTransaction to proceed, including, without limitation, by agreeing to any modification to the manner in which Buyer participates inthe Endeka Development.(g) Without limiting the foregoing, unless such consents are no longer required (e.g., because the Existing CreditAgreements have terminated), Sellers agree to use, and to cause the Company to use, their commercially reasonable efforts to obtainthe consents set forth in Section 8.04(h) of the Company Disclosure Letter.31(h) Notwithstanding anything to the contrary set forth herein, Buyer shall have no obligation to take any action or refrainfrom taking any action as required by this Section 8.03 to the extent that, in the reasonable judgment of Parent, such action orinaction would reasonably be expected to (i) adversely affect Parent’s qualification as a real estate investment trust under the Code,(ii) be inconsistent with the terms of the Private Letter Ruling dated September 28, 2012 issued to Penn National Gaming, Inc. by theInternal Revenue Service (the “ Penn National PLR ”), (iii) require the divestiture of any of Buyer’s interest in Hollywood Casino,(iv) result in a breach or violation of the Master Lease, dated November 1, 2013, between Buyer and Penn Tenant, LLC, or (v)require Parent and its Affiliates to take any material action that is non-customary for gaming transactions of the type contemplatedby this Agreement. Buyer shall not, and shall cause its Affiliates not to, intentionally take any action that would be reasonably beexpected to cause the provisions set forth in foregoing clause (i) through (v) to prohibit the actions required by this Section 8.03 . (i) During the Pre-Closing Period, Buyer may share all confidential information relating to the Company, the Business andthe Casino with any potential Third Party Operator (as defined below), provided , that (A) such potential Third Party Operator entersinto a confidentiality agreement with Buyer in substantially the form attached hereto as Exhibit D and (B) Buyer may not share anymarketing information relating to the Company, the Business or the Casino with the Persons listed in Section 8.03(i) of the CompanyDisclosure Letter without the prior written consent of Sellers.(j) If at any time Buyer believes Sellers have failed to comply with their obligations under Section 8.03(a) , Buyer shallpromptly notify Sellers of such specific action or failure to cooperate and specify steps necessary to address the issue. If Sellers donot take such specific action(s) within a reasonably prompt period following such notice, the parties shall submit the dispute tobinding arbitration which shall be resolved pursuant to Section 12.02 . If the arbitrators determine that Sellers have breached theirobligations under Section 8.03(a) , Buyer shall be entitled to specific performance. If the arbitrators determine that Sellers havewillfully breached their obligations under Section 8.03(a) with the intention of causing a required approval from a GovernmentalEntity (including the Gaming Approvals) not to be received or to be materially delayed, then Buyer shall be entitled to (i) specificperformance or (ii) elect to terminate the Agreement and the provisions of Section 10.01(h) will apply. Irrespective of how thearbitrators find on the merits, the arbitrators shall specifically have the power to extend the Closing Deadline by an appropriateamount of time to account for the delay occasioned by the dispute and arbitration, provided that the arbitrators find that Buyer hasbrought the dispute to arbitration in good faith.Section 8.04 Supplemental Disclosure .(a) Promptly following the end of each fiscal quarter ending March 31, June 30, September 30 and December 31 during thePre-Closing Period, Sellers and the Company shall to supplement or amend the Company Disclosure Letter with respect to anymatter discovered after the date hereof that, if existing or known at the date hereof, would have been required to be set forth ordescribed in the Company Disclosure Letter; provided , that for the purpose of the rights and obligations of the parties hereunder,any such supplemental or amended Company Disclosure Letter shall not be deemed to have been disclosed as of the date of thisAgreement for purposes of Article XI unless so agreed in writing by Buyer.(b) Buyer shall promptly notify Sellers of, and furnish Sellers any information it may reasonably request with respect to, theoccurrence to Buyer’s knowledge of any event or condition32or the existence to Buyer’s knowledge of any fact that would cause any of the conditions to Sellers’ obligation to consummate thetransactions contemplated hereby not to be fulfilled.(c) Sellers shall promptly notify Buyer of, and furnish Buyer any information it may reasonably request with respect to, theoccurrence to Sellers’ knowledge of any event or condition or the existence to Sellers’ knowledge of any fact that would cause anyof the conditions to Buyer’s obligation to consummate the transactions contemplated hereby not to be fulfilled.Section 8.05 No Solicitation . During the Pre-Closing Period, Sellers and the Company shall not, and they shall direct theirrespective Representatives not to, directly or indirectly, (a) solicit or initiate, or take any other action to facilitate knowingly,including, without limitation, by entering into a non-disclosure agreement with any Person other than Buyer or its Representatives,any inquiries or proposals regarding an Acquisition Proposal, (b) engage in negotiations or discussions with any Person other thanBuyer or its Representatives concerning any Acquisition Proposal, (c) continue any prior discussions or negotiations with any Personother than Buyer or its Representatives concerning any Acquisition Proposal or (d) accept, or enter into any agreement concerning,any Acquisition Proposal with any Third Party, including, without limitation, any non-disclosure, confidentiality or other agreementof similar effect, or consummate any Acquisition Proposal. If any such proposals or offers for an Acquisition Transaction arereceived by Sellers and in Sellers’ reasonable judgment such proposals or offers are bona fide, Sellers shall promptly inform Buyerin writing of all relevant details with respect to the foregoing.Section 8.06 Publicity . Sellers, on the one hand, and Buyer, on the other hand, shall agree on the form and content of theinitial press release regarding the transactions contemplated hereby and thereafter shall consult with each other before issuing,provide each other the opportunity to review and comment upon, and negotiate in good faith to agree upon, any press release or otherpublic statement with respect to any of the transactions contemplated hereby and shall not issue any such press release or make anysuch public statement prior to such consultation and prior to considering in good faith any such comments, except as may berequired by applicable Law. Notwithstanding anything to the contrary herein, Buyer and Seller Parent may make any publicstatement in response to questions by the press, analysts, investors or those attending industry conferences or financial analystsconference calls or in connection with a financing, so long as any such statements are not inconsistent with previous press releases,public disclosures or public statements made jointly by Buyer and Seller Parent or made by one party and reviewed by the other anddo not reveal non-public information regarding the transactions contemplated by this Agreement.Section 8.07 Certain Transactions . From the Effective Date until the Closing Date, Buyer shall not, and shall not permitany of its Affiliates to, acquire or agree to acquire by merging or by consolidating with, or by purchasing assets of or equity of, orany other manner, any business or any corporation, partnership, association or other business organization or division thereofengaged in the gaming business in the Commonwealth of Pennsylvania if such acquisition or agreement to acquire could reasonablybe expected to adversely affect Buyer’s ability to obtain the Gaming Approvals or to consummate the transactions contemplated bythis Agreement, as applicable.Section 8.08 Lien and Guaranty Release . Prior to the Closing, Sellers shall obtain, or shall cause the Company to obtain,any filings, releases, discharges, deeds and other documents necessary to evidence the release by all financial institutions and otherPersons to which any Indebtedness (including guarantee obligations in respect of indebtedness of Seller Parent or its otherSubsidiaries) of the Company or its Subsidiaries is outstanding of all Liens in connection therewith relating to the33Purchased Assets, the Membership Interests, the Business or the Company (“ Lender Liens ”), and all obligations (includingguarantee obligations) of the Company or its Subsidiaries in respect of such Indebtedness (“ Loan Obligations ”), on or prior to theClosing Date.Section 8.09 Title Policies .(a) Section 6.05(a) of the Company Disclosure Letter sets forth (i) the Company’s existing Owner’s Title Insurance Policieson the owned Real Property designated on Section 6.05(a) of the Company Disclosure Letter as tax parcel number 520-010-00-00-0019-01 and (ii) the existing Lender’s Title Insurance Policies on the owned and leased Real Property designated on Section 6.05(a)and Section 6.05(b) of the Company Disclosure Letter as tax parcel numbers 520-011-00-00-0016-02, 520-011-00-00-0016-00C,and 520-010-00-00-0019-01 (the “ Existing Title Policies ”) and the Title Commitments issued to its lenders on or about April 1,2014, for the owned Real Property designated on Section 6.05(a) of the Company Disclosure Letter as tax parcel numbers 520-011-00-00-0016-02, 520-011-00-00-0016-00C, and 520-010-00-00-0019-01 (the “ Title Commitments ”), copies of which have beenmade available to Buyer. Buyer hereby acknowledges receipt of the Existing Title Policies and Title Commitments as evidence ofthe status of the Company’s or its Subsidiaries’ title to the Real Property as reflected in the Existing Title Policies and the TitleCommitments and acceptance of all matters thereon as Permitted Liens.(b) Sellers shall, and shall cause the Company to, reasonably cooperate with Buyer to obtain a non-imputation endorsement,if available (collectively, the “ Endorsement ”), to the Existing Title Policies, and Buyer shall be responsible for all costs andexpenses thereof. Buyer agrees to accept valid and insurable fee simple title to the Real Property subject to the Permitted Liens.Section 8.10 Survey . Section 8.10 of the Company Disclosure Letter sets forth a list of the most current ALTA Surveysfor the owned Real Property designated on Section 6.05(a) of the Company Disclosure Letter as tax parcel numbers 520-011-00-00-0016-02, 520-011-00-00-0016-00C, and 520-010-00-00-0019-01 (the “ Existing Surveys ”), copies of which have been madeavailable to Buyer. Seller’s lenders obtained ALTA surveys on the Real Property designated on Section 6.05(a) of the CompanyDisclosure Letter as tax parcel numbers 520-011-00-00-0016-02, 520-011-00-00-0016-00C, and 520-010-00-00-0019-01 (the “Lender’s Surveys ”), copies of which have been made available to Buyer. Buyer agrees to accept the Real Property subject to allmatters shown by the Existing Surveys and the Lender’s Surveys. At Buyer’s option, and at Buyer’s sole cost and expense, Buyermay obtain updated and recertified Lender’s Surveys or current, certified ALTA surveys with respect to the Real Property identifiedin Section 6.05(a) of the Company Disclosure Letter (the “ Surveys ”). Sellers shall, and shall cause the Company to, reasonablycooperate with Buyer in connection with the foregoing.Section 8.11 Tax and Filing Matters .(a) Buyer shall prepare or cause to be prepared and timely file or cause to be timely filed any Tax Returns of the Companyfor all periods ending on or prior to the Closing Date that are required to be filed after the Closing Date and for any Straddle Period,and Buyer shall pay or cause to be paid all Taxes due with respect to such Tax Returns (subject to Buyer’s right to indemnification inthis Agreement). Such Tax Returns shall be prepared by treating items on such Tax Returns in a manner consistent with the pastpractices of the Company and its Subsidiaries, as applicable, with respect to such items, except as required by applicable Law. Buyershall submit a copy of each such Tax Return to Sellers at least twenty (20) days prior to filing for Sellers’ review, comment andapproval, which34approval shall not be unreasonably withheld. Sellers shall provide any comments and approve or disapprove any such Tax Returnswithin ten (10) days of receiving such Tax Return. Buyer shall incorporate any comments reasonably requested by Sellers. Anydisputes shall be resolved by a nationally recognized neutral accounting firm selected jointly by Buyer and Sellers. Notwithstandingany of the foregoing, Buyer shall determine all tax reporting for the transactions taken pursuant to Exhibit A , and Sellers shall nothave the right to comment on or approve, nor shall Sellers have the obligation to indemnify Buyer for any, such tax positions. Unlessotherwise required by Law, in the event Buyer or any of its Affiliates (including after the Closing Date, the Company) shall amendany Tax Return of the Company or its Subsidiaries or make, revoke or amend any election relating to Taxes or take any other actionafter the Closing, in each case, with respect to or relating to a Pre-Closing Tax Period or Straddle Period of the Company or itsSubsidiaries that results in any increase in the Tax liability in respect of a Pre-Closing Tax Period or a Straddle Period, Sellers’indemnification obligations pursuant to this Agreement shall not be increased as a result of such action or by the amount of such Taxliability.(b) All transfer, recording, documentary, sales, use, stamp, registration and other such Taxes (including real estate transferor similar Taxes that arise from any indirect transfer of property as a result of the transfer of the Membership Interests), related fees(including any penalties, interest and additions to Tax) incurred with respect to the purchase and sale of the Membership Interestspursuant to this Agreement (“ Transfer Taxes ”) and any fees for applications, consents, approvals, Permits, registrations or filingsmade or sought pursuant to this Agreement shall be borne fifty percent (50%) by Buyer and fifty percent (50%) by Sellers (otherthan any Taxes related to transactions that are contemplated by Exhibit A , other than the sale of the Membership Interests of theCompany by Sellers to Buyer pursuant to this Agreement, which shall be borne by Buyer). Sellers, the Company and Buyer shallreasonably cooperate in preparing and filing all Tax Returns relating to Transfer Taxes. Sellers shall not pay any Transfer Taxes forwhich Buyer is liable without first consulting with Buyer and its advisors; provided Sellers may pay any such Transfer Tax if Buyerhas not responded to Sellers’ reasonable efforts to consult with Buyer and its advisors within five (5) Business Days.(c) Buyer and Sellers agree to furnish or cause to be furnished to the other, upon reasonable request, as promptly aspracticable, such information and assistance relating to Taxes, including, without limitation, access to books and records, as isreasonably necessary for the filing of all Tax Returns by Buyer or Sellers, the making of any election relating to Taxes, thepreparation for any audit by any taxing authority and the prosecution or defense of any claim, suit or proceeding relating to any Tax.Buyer and Sellers shall retain all books and records with respect to Taxes for a period of at least seven (7) years following theClosing Date.(d) Buyer, the Company and its Subsidiaries shall promptly notify Sellers upon receipt of written notice of any inquiries,claims, assessments, audits or similar events with respect to Taxes relating to any Tax Period ending on or before the Closing Dateor any Straddle Period (any such inquiry, claim, assessment, audit or similar event, a “ Tax Contest ”). Sellers shall have the right tocontrol (at Sellers’ own expense) the conduct and resolution of any Tax Contest to the extent the Tax Contest relates to Taxes forwhich the Sellers must indemnify the Buyer pursuant to this Agreement, provided that Buyer shall have the right to participate insuch Tax Contests (at its own expense) and Sellers shall not resolve such Tax Contest in a manner that could reasonably be expectedto have an adverse impact on Buyer, the Company or its Subsidiaries without the Buyer’s prior written consent. If Sellers shall havethe right to control the conduct and resolution of such Tax Contest but elect in writing not to do so, then Buyer shall have the right tocontrol the conduct and resolution of such Tax Contest, provided, however , that Buyer shall keep Sellers reasonably informed of allmaterial35developments in such Tax Contest on a timely basis, and Buyer shall not resolve such Tax Contest in a manner that could reasonablybe expected to have an adverse impact on Sellers’ Tax liability or indemnification obligations under this Agreement without Sellers’written consent, which shall not be unreasonably withheld.(e) Sellers shall be entitled to the amount of any refund or credit of Taxes of the Company and its Subsidiaries to the extentsuch Taxes were paid by the Company or its Subsidiaries before the Closing Date which refund or credit is actually recognized byBuyer or its Subsidiaries, including the Company and its Subsidiaries, on or after the Closing Date, net of any cost to Buyer or itsSubsidiaries attributable to the obtaining and receipt of such a refund or credit (including Taxes), except to the extent such refund orcredit arises as a result of a carryback of a loss or other tax benefit from a Tax period (or portion thereof) beginning after the ClosingDate, or was included as an asset in the calculation of the Net Working Capital as finally determined pursuant to the Final ClosingStatement, or is a refund of Taxes to the extent it is incurred as a result of the transactions set forth in Exhibit A . Buyer shall pay, orcause to be paid, to Sellers any amount to which Sellers are entitled pursuant to the prior sentence within two Business Days of thereceipt or recognition of the applicable refund or credit by Buyer or its Subsidiaries. To the extent requested by Sellers, Buyer or itsSubsidiaries will reasonably cooperate with Sellers in obtaining such refund or credit, including through the filing of amended TaxReturns for periods ending before or on the Closing Date or refund claims.(f) In the event of any conflict or overlap between the provisions of this Section 8.11 and Article XI , the provisions of thisSection 8.11 shall control.Section 8.12 Regulation S-X Rule 3-05 and 3-14 .(a) Notwithstanding anything herein to the contrary (including for the avoidance of doubt, Section 8.06 hereof), in the eventthat, as a result of the consummation of the transactions contemplated hereby, Parent and/or Buyer is required to file financialstatements with the Securities and Exchange Commission (“ SEC ”) under either Regulation S-X Rule 3-05 or Rule 3-14 (the “ S-XFinancial Statements ”), if required prior to the Closing, Sellers shall prepare and deliver to Buyer such S-X Financial Statements. Inaddition, in the event that, at any time following the Closing, Parent and/or Buyer determines in good faith that it is required to filewith the SEC (or furnish to the SEC) any financial statements relating to the Company and/or the Business (in addition to the S-XFinancial Statements) under any applicable Law (including as a result of actions taken by Parent and/or Buyer, such as an offering ofsecurities or the acquisition or one or more businesses or other assets that, when aggregated with the Company, require Parent and/orBuyer to file financial statements of the Company, either on a stand-alone basis or consolidated with the financial statements of suchother businesses or assets), then Sellers shall, at the sole cost and expense of Buyer, prepare and deliver to Buyer such financialstatements as Parent and/or Buyer so determines are required to be filed or furnished with the SEC, and any such financialstatements that are as of a fiscal year end or for a fiscal year shall be audited and accompanied by an unqualified opinion of aninternationally recognized independent accounting firm. Any S-X Financial Statements or other financial statements prepared bySellers pursuant to this Section 8.12(a) shall be prepared in accordance with GAAP, applied on a consistent basis, throughout theperiods covered, shall present fairly the financial condition of the Company and/or the Business as of the respective dates thereofand the results of operations and cash flows for the periods covered thereby.36(b) From and after the Closing, upon the request of Parent or Buyer, Sellers shall (i) use their reasonable best efforts tocause their independent accounting firm to deliver to the SEC any auditor’s consent that is required to be included in any filing withthe SEC that includes or incorporates by reference the S-X Financial Statements or other financial statements prepared by Sellerspursuant to this Section 8.12 to the extent Parent or Buyer conducts or intends to conduct an offering of securities (and if theregistration statement, prospectus or offering memorandum for such offering includes or incorporates by reference the S-X FinancialStatements or other financial statements prepared by Sellers pursuant to this Section 8.12 ), use their commercially reasonable effortsto cause their independent accounting firm to deliver a letter containing statements and information of the type ordinarily included inaccountant’s “comfort letters” with respect to the S-X Financial Statements or other financial statements prepared by Sellerspursuant to this Section 8.12 contained or incorporated by reference in any such document relating to any such offering, in each case,within the period reasonably requested by Parent or Buyer. In addition, in connection with any SEC filing required to be made byParent and/or Buyer (or any SEC review of such filing), Sellers shall permit Parent, Buyer and their authorized Representatives tohave reasonable access, during normal business hours and upon reasonable advance notice, to the properties, books and records ofSellers and their Affiliates relating to the Company for the purpose of preparing any such SEC filing or responding to SECquestions, comments or requests on such SEC filing, and to cause their Representatives to cooperate in such preparation or response.Section 8.13 Further Assurances . Without prejudice to any of the other provisions of this Article VIII, each of the partiesto this Agreement shall use its commercially reasonable efforts to: (a) fulfill and cause to be fulfilled the conditions to Closing to besatisfied by it under this Agreement; (b) comply promptly with all legal requirements which may be imposed on such party withrespect to the transactions contemplated hereby and will promptly cooperate with and furnish information to any other party heretoin connection with any such requirements imposed upon such other party in connection with the transactions contemplated hereby;(c) obtain and make (and will cooperate with the other parties in obtaining or making) any consent, authorization, order or approvalof, or any registration, declaration, or filing with, or an exemption by, any Governmental Entity, or other third party, required to beobtained or made by such party or its Affiliates in connection with the transactions contemplated hereby or the taking of any actioncontemplated by this Agreement; and (d) at the request of another party hereto, execute and deliver such other instruments and doand perform such other acts and things as may be reasonably necessary or desirable for effecting completely the consummation ofthe transactions contemplated hereby.Section 8.14 Transfer of Assets . Except as provided in Section 6.14 of the Company Disclosure Letter, to the extent thatSellers or any of their Affiliates (other than the Company and its Subsidiaries) holds at or prior to the Closing any asset, property orright that is exclusively used or held for use in connection with the Business (which shall include, notwithstanding anything to thecontrary in Section 6.14 of the Company Disclosure Letter, the Intellectual Property listed in Section 8.14 of the CompanyDisclosure Letter), Sellers shall, and shall cause such Affiliates, to promptly, and in any event prior to the Closing, transfer or assignsuch asset, property or right to the Company or one of its Subsidiaries.Section 8.15 Confidentiality . From and after the Closing, Sellers shall, and shall cause their Affiliates to, hold, and shalluse their reasonable best efforts to cause their, and their respective Representatives to hold, in confidence any and all information,whether written or oral, concerning the Company, the Purchased Assets and the Business, except to the extent that such Person canshow that such information (a) is in the public domain through no fault of Sellers or any of their Affiliates,37(b) is lawfully acquired by them after the Closing from sources which are not prohibited from disclosing such information by a legal,contractual or fiduciary obligation, (c) is reasonably relevant for enforcing Sellers’ rights or defending against assertions by Buyer orits Affiliates and is disclosed to any Governmental Entity or an arbitrator or other involved party in connection with any Proceedinginvolving (i) a dispute between Buyer and Sellers or their respective Affiliates, or (ii) the interpretation, entry into, performance,breach or termination of this Agreement or the Ancillary Agreements, (d) is disclosed with the written consent of Buyer or (e) asrequired by applicable Law, Order or judicial or administrative process. If Sellers or any of their Affiliates are compelled to discloseany such information by judicial or administrative process or by other requirements of Law or Order, such Person shall promptlynotify Buyer in writing and shall disclose only that portion of such information which such Person is advised by its counsel is legallyrequired to be disclosed; provided that such Person shall exercise its reasonable best efforts to obtain an appropriate protective orderor other reasonable assurance that confidential treatment will be accorded such information. Without prejudice to the rights andremedies otherwise available in this Agreement, the parties each acknowledge that money damages may not be an adequate remedyfor any breach of this Section 8.15 , and that Buyer will be entitled to specific performance and other equitable relief by way ofinjunction in respect of a breach or threatened breach of any this Section 8.15 .Section 8.16 Amendment of Company Governing Documents . On or prior to Closing, Sellers and Buyer shall, and Sellersshall cause the Company to, cooperate to execute an amendment and restatement of the Company’s limited liability companyagreement, which shall become effective upon Closing, to reflect Buyer (or its designee) as the sole member and the owner of recordof all of the outstanding Membership Interests.Section 8.17 Customer List . From and after the Closing until the four (4) year anniversary of the Closing Date, Sellersshall not, and shall cause their Affiliates not to (a) make any direct marketing to the customers on the Customer List for any casinoproperty within a seventy-five (75)-mile radius of the Casino or (b) sell or license the Customer Database or any portion thereof to athird party that makes any direct marketing to the customers on the Customer List for any property within a seventy-five (75)-mileradius of the Casino. Sellers shall provide copies of the Customer List and the Customer Database to Buyer promptly followingreceipt of the Gaming Approvals.Section 8.18 Marketing . During the Pre-Closing Period, the Company shall not cease or substantially reduce any ongoingmarketing activities relating to the Casino, including marketing activities relating to the Customer List and/or the CustomerDatabase.Section 8.19 Capital Expenditures . During the Pre-Closing Period, except to the extent Buyer consents (such consent no tobe unreasonably withheld, delayed or conditioned), the Company shall continue to make capital expenditures in the Ordinary Courseof Business and in an amount not less than Five Million Dollars ($5,000,000) in each calendar year, reasonably allocated pro rataover the course of such year.Section 8.20 Casualty and Condemnation Proceeds .(a) In the event that, during the Pre-Closing Period, (i) there is any damage, destruction or other casualty affecting any RealProperty, or any condemnation or eminent domain proceeding is completed with respect to the Real Property, and (ii) the Companyor its Subsidiaries receive any insurance proceeds from such casualty or governmental award in such condemnation or eminent38domain proceeding (in either case, “ Casualty and Condemnation Proceeds ”), then the Company may not distribute such Casualtyand Condemnation Proceeds to Sellers.(b) In the event that, during the Pre-Closing Period, (i) there is any damage, destruction or other casualty affecting any RealProperty, or any condemnation or eminent domain proceeding is completed with respect to the Real Property, and (ii) Sellers receiveany Casualty and Condemnation Proceeds, then (A) if Sellers receive the Casualty and Condemnation Proceeds during the Pre-Closing Period, Sellers shall contribute such proceeds (net of legal expenses reasonably incurred in connection with pursuing theproceeds or award) to the Company prior to the Closing, and (B) if Sellers receive the Casualty and Condemnation Proceeds after theClosing, Sellers shall promptly deliver such proceeds (net of legal expenses reasonably incurred in connection with pursuing theproceeds or award) in connection with pursuing the proceeds or award) to the Company.(c) With respect to any insurance claims for events described in this Section 8.20 , Buyer shall have the right to participatein any settlements and related discussions with the applicable insurance company, and Sellers shall take into consideration Buyer’srequests with respect thereto as part of its negotiations with the applicable insurance company. In addition, without the prior writtenconsent of Buyer, which consent may be granted or withheld in Buyer’s sole, good faith discretion, Sellers shall not agree to anysettlement or other resolution of any open insurance claim that would reasonably be expected to result in Casualty andCondemnation Proceeds exceeding Fifty Thousand Dollars ($50,000) individually.Section 8.21 Transfer to Third Party Operator; Notices and Consents . If any Contract with a third party to which theCompany or its Subsidiaries are a party and listed or otherwise identified on Section 8.21 of the Company Disclosure Letter would,as a result of the transfer of the Purchased Assets to the Third Party Operator in connection with the Closing, require (a) notice to beprovided to such third party and/or (b) the consent of such third party, then reasonably promptly after Buyer and the Third PartyOperator have entered into the Gaming Operating Agreement in accordance with Section 8.03(b)(i) and Buyer has provided Sellerswritten notice describing in reasonable detail the intended transfer of the Purchased Assets to such Third Party Operator, Sellers shallprovide such notices and use commercially reasonable efforts to obtain such consents during the Pre-Closing Period; provided ,however , that Buyer shall reimburse Sellers for the out-of-pocket costs reasonably incurred by Sellers, the Company or itsSubsidiaries in connection with seeking such consents.ARTICLE IX.CONDITIONS TO CLOSINGSection 9.01 Conditions to Each Party’s Obligation to Effect the Closing . The respective obligations of each party to thisAgreement to effect the Closing shall be subject to the satisfaction of each of the following conditions on or prior to the Closing:(a) No Injunctions . No Governmental Entity of competent jurisdiction shall have issued any moratorium, or enacted,issued, promulgated, enforced or entered any Order or Law which is in effect and which prevents or prohibits the consummation of,or that makes it illegal for any party hereto to consummate the transactions contemplated by this Agreement.(b) Gaming Approvals . All Gaming Approvals shall have been obtained and shall be in full force and effect.39Section 9.02 Additional Conditions to Obligations of Buyer . The obligation of Buyer to effect the Closing is subject to thesatisfaction of the following conditions prior to the Closing, any of which may be waived in whole or in part in writing exclusivelyby Buyer:(a) Representations and Warranties . The Fundamental Representations of Sellers contained in Article V and Article VI(disregarding all qualifications as to materiality or Company Material Adverse Effect) shall be true and correct at and as of theClosing as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlierdate), except where the failure of such representations and warranties to be true and correct would not, individually or in theaggregate, be reasonably likely to result in a Company Material Adverse Effect.(b) Closing Certificate . Buyer shall have received a certificate signed on behalf of Sellers by an executive officer of Sellersor the Company to the effect of clause (a) above.(c) Deliverables . Sellers and the Company shall have delivered executed copies of the Ancillary Agreements and otherclosing deliverables described in Article III and Article IV to be delivered by them (including the Estimated Closing Statement andEstimated Cage Cash Closing Statement).(d) Lien Releases . Sellers shall have obtained full, absolute and unconditional releases of all Lender Liens and LoanObligations.(e) Minimum Cage Cash . At the Closing, the Company and its Subsidiaries shall have Cage Cash on hand at the RealProperty in an amount not less than Ten Million Dollars ($10,000,000).Section 9.03 Additional Conditions to Obligations of Sellers . The obligations of Sellers to effect the Closing are subject tothe satisfaction of each of the following conditions prior to the Closing, any of which may be waived in whole or in part in writingexclusively by Sellers:(a) Representations and Warranties . The Fundamental Representations of Buyer contained in Article VII (disregarding allqualifications as to materiality or Buyer Material Adverse Effect) shall be true and correct at and as of the Closing as if made at andas of such time, except where the failure of such representations and warranties to be true and correct would not, individually or inthe aggregate, be reasonably likely to result in a Buyer Material Adverse Effect. (b) Closing Certificate . Sellers shall have received a certificate signed on behalf of Buyer by an executive officer of Buyerto the effect of clause (a) above.(c) Deliverables . Buyer shall have delivered executed copies of the Ancillary Agreements and other closing deliverablesdescribed in Article IV to be delivered by it.ARTICLE X.TERMINATIONSection 10.1 Termination . This Agreement may be terminated at any time prior to the Closing (with respect to Section10.01(b) or Section 10.01(c) , by written notice by Sellers or Buyer, as applicable, to the other):(a) by mutual written agreement of Sellers and Buyer;40(b) by Sellers, if the Closing does not occur prior to November 16, 2016 (the “ Closing Deadline ”) and each of theconditions to Closing set forth in Section 9.02 have been satisfied (or are capable of being satisfied); provided , that Sellers shallhave no right to terminate if Sellers are in breach of their obligations under Section 8.03(a) ;(c) by Sellers, if the Pennsylvania Gaming Control Board has made a final, non-appealable determination that thePennsylvania Gaming Control Board will not issue to Buyer and/or the Third Party Operator all Gaming Approvals required by thePennsylvania Gaming Control Board for Buyer or the Third Party Operator to operate the Category 1 gaming facility;(d) by Sellers or Buyer if a court of competent jurisdiction or other Governmental Entity (other than the PennsylvaniaGaming Control Board or Harness Racing Commission) shall have issued a non-appealable final Order or taken any other non-appealable final action (other than as a result of the failure to obtain the Gaming Approvals), in each case, having the effect ofpermanently restraining, enjoining or otherwise prohibiting the Closing and the transactions contemplated hereby;(e) by Buyer, if a condition to Closing set forth in Section 9.02 has not been satisfied (or is not capable of being satisfied)by the Closing Deadline and each of the conditions to Closing set forth in Section 9.03 have been satisfied (or are capable of beingsatisfied) by the Closing Deadline;(f) by Buyer, if all of the conditions set forth in Sections 9.01 and 9.03 have been satisfied or waived and Sellers haverefused to effect the Closing in accordance with Article IV (after notice and an opportunity to cure, in which case the ClosingDeadline shall be extended by the amount of any such cure period);(g) by Buyer, in accordance with Section 8.03(a) (following a determination by Sellers not to take a specific action requiredor requested of Sellers by a Governmental Entity as specified in Section 8.03(a) because it would have a material financial impact onSellers, the Company or its Subsidiaries); or(h) by Buyer, in accordance with Section 8.03(j) (following a determination by the arbitrators that Sellers did not take aspecific action required or requested of Sellers by a Governmental Entity as specified in Section 8.03(a) ).Section 10.02 Effect of Termination .(a) Liability . In the event of termination of this Agreement pursuant to Section 10.01 , this Agreement shall immediatelybecome void and there shall be no liability on the part of Buyer or Sellers or their respective Affiliates or Representatives, other thanas set forth in Section 10.02 .(b) In the event of a termination of this Agreement by Sellers pursuant to Sections 10.01(b) , 10.01(c) or 10.01(d) , Sellersshall be entitled to recover all damages resulting from the failure of the Closing of the Transaction to occur on or before the ClosingDeadline, including, without limitation, costs incurred in connection with remarketing the Company and its Subsidiaries or theirassets to a new buyer. In the event that, following such termination, Sellers sell the Company or substantially all of its assets to oneor more buyers for less than the Base Purchase Price (a “ Shortfall Sale ”), Sellers shall be entitled, as their sole and exclusiveremedy and as liquidated damages hereunder, to (1) the difference between the Base Purchase Price and the aggregate purchase price41paid by such buyer(s) in a Shortfall Sale (the “ Purchase Price Shortfall ”), (2) PLUS all out-of-pocket documented costs incurred bySellers or their Affiliates in connection with such sale to a third party, LESS (3) the amount of any and all damages previouslyawarded to Sellers as a result of the termination of this Agreement pursuant to this Section 10.02 . Any provision of this Agreementto the contrary (including, without limitation, any provision of Section 12.02 ) shall be of no effect and shall not operate to limit orcap Sellers’ recovery of the damages set forth in this Section 10.02(b) in any Proceeding or claim seeking damages followingtermination pursuant to Section 10.01(b) . Buyer shall not be entitled to avoid liability in the event of such a termination on thegrounds that Sellers breached any representation or warranty, failed to comply with any covenant or obligation, or failed to complywith any condition set forth in Article IX ; provided , however , that, and notwithstanding anything in this Agreement to the contrary,Sellers shall not be entitled to any damages of any kind or in any amount hereunder if (x) such failure of the Closing to occur by theClosing Deadline (in the case of termination pursuant to Section 10.01(b) ) or such non-appealable determination or Order (in thecase of termination pursuant to Sections 10.01(c) or 10.01(d) ) was due in significant part to the failure of Sellers to comply withtheir obligations set forth in Section 8.03(a) , or (y) in the event of termination by Buyer pursuant to Section 10.01(g) .(c) In the event of a termination of this Agreement by Buyer pursuant to (A) Section 10.01(c) (where such non-appealabledetermination was due in significant part to the failure of Sellers to comply with their obligations set forth in Section 8.03(a) ), (B)Section 10.01(e) , Section 10.01(f) or Section 10.01(h) , or (C) Section 10.01(g) , then, in each such case, Sellers shall pay to Buyer,as its sole and exclusive remedy and as liquidated damages, the amount of $10,000,000, payable by wire transfer of immediatelyavailable funds as promptly as possible (but in any event within three (3) Business Days) to an account designated by Buyerfollowing termination of this Agreement. In the event that this Agreement is terminated pursuant to foregoing clause (A) or (B) and,within twelve (12) months of the date of such termination, Sellers enter into an agreement to sell the Company or substantially all ofits assets one or more buyer(s) for more than the Base Purchase Price, upon the consummation of such sale, Buyer shall further beentitled to the difference between the Base Purchase Price and the aggregate purchase price paid by such buyer(s) in such sale.(d) Fees and Expenses . Except as otherwise expressly provided in this Agreement, all fees and expenses incurred inconnection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses,whether or not the Closing is consummated. Any cancellation charges of the Title Insurer shall be paid by the party who breachedthis Agreement, and, if no party breached this Agreement, then each of Sellers and Buyer shall pay one-half of such cancellationcharges.(e) Specific Performance and Other Remedies . For the avoidance of doubt, prior to exercising any right of terminationunder Section 10.01 , the non-breaching parties may seek specific enforcement or other available remedies in accordance withSection 12.02(d) ; provided , that a party may not seek specific performance if the other party terminates this Agreement underSection 10.01(c) or Section 10.01(d) .ARTICLE XI.SURVIVAL; INDEMNIFICATIONSection 11.01 Survival of Representations, Warranties, Covenants and Agreements .42(a) The representations and warranties made by Sellers, the Company and Buyer in this Agreement shall survive theClosing until twelve (12) months after the Closing Date, provided, however , that (i) the representations and warranties made inSection 5.01 (Organization of Sellers), Section 5.02(a) (Authority), Section 5.02(b)(i) (No Conflict With OrganizationalDocuments), Section 5.03 (Title to Membership Interests), Section 6.01 (Organization of the Company), Section 6.02(a) (Authority),Section 6.02(b)(i) (No Conflict With Organizational Documents), Section 6.13 (Brokers), Section 7.01 (Organization), Section7.02(a) (Authority); Section 7.02(b)(i) (No Conflict With Organizational Documents), Section 7.03 (Brokers) (collectively, the “Fundamental Representations ”) shall survive indefinitely and (ii) the representations and warranties in Section 6.04 (Taxes) shallsurvive until thirty (30) days following the expiration of the statute of limitations applicable to the collection of the applicable Taxthat is the subject of such representations. The period of time a representation or warranty survives the Closing pursuant to thepreceding sentence shall be the “ Survival Period ” with respect to such representation or warranty. The parties agree that no claimmay be brought based upon, directly or indirectly, any of the representations and warranties contained in this Agreement after theSurvival Period with respect to such representation or warranty. The termination of the representations and warranties providedherein shall not affect a party in respect of any good faith claim made by such party in reasonable detail in writing received by anIndemnifying Party prior to the expiration of the applicable Survival Period provided herein. Any written claim with respect to abreach of any covenant or other agreement in this Agreement to be performed at or prior to the Closing by Sellers or Buyer may begiven at any time prior to the date that is twelve (12) months following the Closing Date and, from and after such date, no claim forindemnification for a breach of such covenant or agreement may be made hereunder.Section 11.02 Indemnification .(a) From and after the Closing, Sellers, jointly and severally, shall indemnify, save and hold harmless Buyer and itsAffiliates and its and their respective Representatives (each, a “ Buyer Indemnified Party ” and collectively, the “ Buyer IndemnifiedParties ”) from and against any and all costs, losses, Liabilities, obligations, damages, claims, and expenses (whether or not arisingout of third-party claims), including interest, penalties, reasonable attorneys’ fees and any amounts paid in settlement of theforegoing (herein, “ Damages ”), incurred in connection with, arising out of, or resulting from:(i) any breach of any representation or warranty made by Sellers in Article V or Article VI ;(ii) any breach of any covenant or agreement to be performed by Sellers in this Agreement, or any covenant oragreement to be performed by the Company in this Agreement prior to the Closing; or(iii) any Taxes of the Company or any of its Subsidiaries (or Taxes for which the Company or any of itsSubsidiaries is liable pursuant to Treasury Regulation Section 1.1502-6 (or any similar or corresponding provision of state orlocal Law), as a transferee or successor or otherwise) incurred in Pre-Closing Tax Periods. In the case of any Straddle Period:(A) the amount of any Taxes based on or measured by income or receipts, sales or use taxes, employment taxes, orwithholding taxes of such Person for the Pre-Closing Tax Period shall be determined based on an interim closing of thebooks as of the close of business on the Closing Date (and for such purpose, the taxable period of any partnership, other pass-through entity or any “controlled foreign corporation” within the meaning of Section 957 of the Code43in which such Person holds a beneficial interest shall be deemed to terminate at such time) and (B) the amount of any otherTaxes of such Person for a Straddle Period that relates to the Pre-Closing Tax Period shall be deemed to be the amount ofsuch Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxableperiod ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.Notwithstanding the foregoing, Sellers shall not be required to indemnify Buyer for any Taxes (1) resulting fromimplementing the transaction steps as provided in Exhibit A (other than the sale of the Membership Interests of the Companyby Sellers to Buyer pursuant to this Agreement); (2) included as a Liability in the calculation of the Net Working Capital asfinally determined pursuant to the Final Closing Statement; or (3) attributable to actions by Buyer as described in the lastsentence of Section 8.11(a) .(b) From and after the Closing, Buyer shall indemnify, save and hold harmless Sellers, the Company and their respectiveAffiliates and its and their Representatives and successors (each, a “ Seller Indemnified Party ” and collectively, the “ SellerIndemnified Parties ”) from and against any and all Damages incurred in connection with, arising out of, or resulting from:(i) any breach of any representation or warranty made by Buyer in Article VII ; or(ii) any breach of any covenant or agreement to be performed by Buyer in this Agreement.Section 11.03 Procedure for Claims between Parties . If a claim for Damages is to be made by a Buyer Indemnified Partyor Seller Indemnified Party (each, an “ Indemnified Party ”) entitled to indemnification hereunder, such party shall give writtennotice briefly describing the claim and, to the extent then ascertainable, the monetary damages sought (each, a “ Notice ”) to theindemnifying party hereunder (the “ Indemnifying Party ” and collectively, the “ Indemnifying Parties ”) as soon as practicable aftersuch Indemnified Party becomes aware of any fact, condition or event which may give rise to Damages for which indemnificationmay be sought under this Article XI . Any failure to submit any such notice of claim to the Indemnifying Party shall not relieve anyIndemnifying Party of any liability hereunder, except to the extent that the Indemnifying Party was actually prejudiced by suchfailure.Section 11.04 Defense of Third Party Claims .(a) If any Proceeding is initiated against an Indemnified Party by any third party (each, a “ Third Party Claim ”) for whichindemnification under this Article XI may be sought, Notice thereof, together with copies of all notices and communication relatingto such Third Party Claim, shall be given to the Indemnifying Party as promptly as practicable. The failure of any Indemnified Partyto give timely Notice hereunder shall not affect rights to indemnification hereunder, except to the extent that the Indemnifying Partywas actually prejudiced by such failure.(b) If it so elects to do so, the Indemnifying Party shall be entitled to:(i) take control of the defense and investigation of such Third Party Claim if the Indemnifying Party by writtennotice to the Indemnified Party;44(ii) employ and engage attorneys of its own choice ( provided that such attorneys are reasonably acceptable to theIndemnified Party) to handle and defend the same, unless the named parties to such Proceeding include both one or moreIndemnifying Parties and an Indemnified Party, and the Indemnified Party has reasonably concluded that there may be one ormore legal defenses or defense strategies available to such Indemnified Party that are different from or additional to thoseavailable to an applicable Indemnifying Party or that there exists a conflict of interest, in which event such Indemnified Partyshall be entitled to separate counsel ( provided that such counsel is reasonably acceptable to the Indemnifying Party); and(iii) compromise or settle such Third Party Claim, which compromise or settlement shall be made (x) only with thewritten consent of the Indemnified Party, such consent not to be unreasonably withheld, conditioned or delayed, or (y) if suchcompromise or settlement contains an unconditional release of the Indemnified Party in respect of such claim, without anyadmission of wrongdoing of any nature whatsoever to or by such Indemnified Party, and provides only for monetarydamages that will be paid in full by the Indemnifying Party.(c) If the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnified Party shall reasonablycooperate with the Indemnifying Party and its attorneys in the investigation, trial and defense of such Third Party Claim and anyappeal arising therefrom; provided, however, that the Indemnified Party may, at its own cost, participate in the investigation, trialand defense of such lawsuit or action and any appeal arising therefrom. The parties shall reasonably cooperate with each other in anynotifications to insurers.(d) If the Indemnifying Party fails to assume the defense of such Third Party Claim within thirty (30) calendar days afterreceipt of the Notice, the Indemnified Party against which such Third Party Claim has been asserted will have the right to undertakethe defense, compromise or settlement of such Third Party Claim; provided, however, that such Third Party Claim shall not becompromised or settled without the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld,conditioned or delayed.(e) If the Indemnified Party assumes the defense of the Third Party Claim, the Indemnified Party will keep theIndemnifying Party reasonably informed of the progress of any such defense, compromise or settlement.Section 11.05 Limitations on Indemnity .(a) No Buyer Indemnified Party shall seek, or be entitled to, indemnification from any of Sellers pursuant to Section11.02(a)(i) (other than with respect to a breach of any Fundamental Representation or Section 6.04 (Taxes)) unless the aggregateclaims for Damages of the Buyer Indemnified Parties for which indemnification is sought pursuant to Section 11.02(a)(i) (other thanwith respect to a breach of any Fundamental Representation or Section 6.04 (Taxes)) exceed Five Million Dollars ($5,000,000), inwhich event Sellers shall be liable for all such Damages in excess of Two Million Five Hundred Thousand Dollars ($2,500,000).(b) No Buyer Indemnified Party shall seek, or be entitled to, indemnification from any of Sellers (i) pursuant to Section11.02(a)(i) (other than with respect to a breach of any Fundamental Representation or Section 6.04 (Taxes)) to the extent theaggregate claims for Damages of the Buyer Indemnified Parties for which indemnification is sought pursuant to Section 11.02(a)(i) (other than45with respect to a breach of any Fundamental Representation or Section 6.04 (Taxes)) exceed an amount equal to Thirty MillionDollars ($30,000,000) or (ii) pursuant to Section 11.02(a) (including with respect to a breach of any Fundamental Representation orSection 6.04 (Taxes)) to the extent the aggregate claims for Damages of the Buyer Indemnified Parties for which indemnification issought pursuant to Section 11.02(a) (including with respect to a breach of any Fundamental Representation or Section 6.04 (Taxes))exceed an amount equal to the Base Purchase Price.(c) Sellers shall have no obligation under this Article XI to indemnify any Buyer Indemnified Party with respect to (i) anyDamage that is a Liability to the extent reflected in the final determination of the Final Statements or the calculation of the FinalClosing Net Working Capital or the Final Closing Cage Cash, (ii) any Damage to the extent such Damage does not exceed theamount of any reserves for such Damage as reflected in the final determination of the Final Statements or the calculation of the FinalClosing Net Working Capital or the Final Closing Cage Cash, (iii) any matter that was subject of a dispute that was resolvedpursuant to the terms of Section 3.03 , (iv) any Liability for Taxes that result from the implementation of the transaction steps asprovided in Exhibit A (other than the sale of the Membership Interests of the Company by Sellers to Buyer pursuant to thisAgreement), or (v) any Liability for Taxes attributable to actions taken by Buyer as described in the last sentence of Section 8.11(a) .(d) In calculating the amount of any Damages payable to a Buyer Indemnified Party hereunder, the amount of the Damages(i) shall not be duplicative of any other Damage for which an indemnification claim has been made and (ii) shall be computed net ofany amounts actually recovered by such Buyer Indemnified Party or its Affiliates under any insurance policy or otherwise withrespect to such Damages. If Sellers pay a Buyer Indemnified Party for a claim and subsequently insurance proceeds in respect ofsuch claim are collected by the Buyer Indemnified Parties, then the Buyer Indemnified Party promptly shall remit the insuranceproceeds up to the amount paid by Sellers to the Buyer Indemnified Party. The Buyer Indemnified Parties shall use commerciallyreasonable efforts to obtain from any applicable insurance company any insurance proceeds in respect of any claim for which theBuyer Indemnified Parties seek indemnification under this Article XI .(e) Upon and becoming aware of any event which is reasonably likely to give rise to losses subject to indemnificationhereunder, each Buyer Indemnified Party shall use commercially reasonable efforts to mitigate the losses arising from such events,including incurring costs only to the minimum extent necessary to remedy the event which gives rise to losses.(f) The amount of any recovery by the Buyer Indemnified Parties pursuant to this Article XI shall be reduced by foreign,federal, state and/or local Tax benefits actually realized by such Buyer Indemnified Party in the taxable year that the Damage isincurred.(g) No Indemnifying Party shall be liable to an Indemnified Party hereunder for (i) any punitive damages, except wheresuch damages are recovered by a third party from such Indemnified Party in connection with Damages indemnified hereunder or (ii)any lost profits, diminution in value, consequential damages, special damages, incidental damages, indirect damages, exemplarydamages or other unforeseen damages. In no event shall any multiples or similar valuation methodology (whether based on “multipleof profits,” “multiple of earnings,” “multiple of cash flows” or similar items) be used in calculating the amount of any Damages.46Section 11.06 Exclusive Remedy .(a) After the Closing, except with respect to fraud, the indemnities provided in this Article XI shall constitute the sole andexclusive remedy of any Indemnified Party for Damages arising out of, resulting from or incurred in connection with any claimsregarding matters arising under or otherwise relating to this Agreement; provided, however; that this exclusive remedy for Damagesdoes not preclude a party from bringing an action for specific performance or other equitable remedy to require a party to perform itsobligations under this Agreement. Without limiting the foregoing, Buyer, Buyer, Seller Parent and Sellers each hereby waive (and,by their acceptance of the benefits under this Agreement, each Buyer Indemnified Party and Seller Indemnified Party herebywaives), from and after the Closing, any and all rights, claims and causes of action (other than claims of, or causes of action arisingfrom, fraud) such party may have against the other party arising under or based upon this Agreement or any schedule, exhibit,disclosure letter, document or certificate delivered in connection herewith, and no legal action sounding in tort, statute or strictliability may be maintained by any party (other than a legal action brought solely to enforce or pursuant to the provisions of thisArticle XI ).(b) Without limiting the foregoing, the Buyer Indemnified Parties and Seller Indemnified Parties hereby waive and agreenot to seek (whether under any Environmental Law or otherwise) any statutory or common law remedy (whether for contribution,equitable indemnity or otherwise) against any Indemnifying Party with regard to any liability arising under Environmental Law orrelated to Hazardous Substances, except solely in accordance with the exclusive remedy provided in this Article XI .Section 11.07 Treatment of Indemnification Payments . All indemnification payments made pursuant to this Article XIshall be treated by the parties for income Tax purposes as adjustments to the Final Purchase Price, unless (a) otherwise requiredpursuant to a “determination” (as defined in Section 1313(a) of the Code or any similar provision of state, local or foreign Law) or(b) Buyer and Sellers shall otherwise agree in writing.ARTICLE XII.MISCELLANEOUSSection 12.01 Definitions .(b) For purposes of this Agreement, the term:“ Accounts Receivable ” means all accounts receivable (including receivables and revenues for food, beverages, telephoneand casino credit), notes receivable or overdue accounts receivable, in each case, due and owing by any third party.“ Acquisition Proposal ” means any sale or other disposition (whether by merger, reorganization, recapitalization orotherwise) of all or substantially all of the capital stock or assets of the Company and its Subsidiaries, taken as a whole.“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly, through one or moreintermediaries, controls, is controlled by, or is under common control with, such first-mentioned Person.“ Ancillary Agreements ” means the Assignment of Interests.47“ Business ” means the business conducted by the Company and its Subsidiaries as of the date of this Agreement or as of theClosing Date.“ Business Day ” means each day, other than a Saturday, Sunday or other day on which commercial banks in New York,New York are authorized or required by law to close.“ Buyer’s Knowledge ” means the actual knowledge of William Clifford, Brandon Moore or Desiree Burke.“ Buyer Material Adverse Effect ” means changes, events, circumstances or effects that have had, will have or would bereasonably likely to have a material adverse effect on Buyer’s ability to perform its obligations hereunder, obtain any GamingApproval or to consummate the transactions contemplated hereby.“ Cage Cash ” means all cash and cash equivalents located at the Casino’s cages.“ Casino ” means (a) the casino located on the Real Property and commonly known as The Meadows Casino and (b) theracetrack located on the Real Property.“ Code ” means the Internal Revenue Code of 1986, as amended.“ Company Material Adverse Effect ” means a material and adverse effect on the financial condition, assets or results ofoperations of the Company and its Subsidiaries, taken as a whole; provided, that the following shall not be taken into account indetermining whether a Company Material Adverse Effect has occurred: (a) general conditions (or changes therein) in the (i) travel,hospitality or gaming industries, which do not have an adverse effect on the Company that is disproportionate relative to the effectsuch conditions have on other participants in the gaming industry in the states in which the Company or its Subsidiaries conductoperations, or in the jurisdiction where the Company or Subsidiaries operate or (ii) the financial, banking, currency or capitalmarkets, (b) any change in GAAP, (c) any change in applicable Law, including any change in Law permitting or expanding casinogambling (such as electronic gaming machines or table games) in the States of Pennsylvania, West Virginia or Ohio, which does nothave an adverse effect on the Company that is disproportionate relative to the effect such conditions have on other participants in thegaming industry in the states in which the Company or its Subsidiaries conduct operations, (d) any change, event or effect resultingfrom the entering into or public announcement of the transactions contemplated by this Agreement, (e) any change, event or effectresulting from any act of terrorism, commencement or escalation of armed hostilities in the U.S. or internationally, (f) earthquakes,hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires, weather conditions and other force majeure events in the United Statesor any other country, which do not have an adverse effect on the Company that is disproportionate relative to the effect suchconditions have on other participants in the gaming industry in the states in which the Company or its Subsidiaries conductoperations, (g) acts by Sellers, the Company or its Subsidiaries carried out at the express written request of Buyer, (h) the taking ofany action contemplated by this Agreement and/or any of the Ancillary Agreements, and (i) the failure of the Company to meet anyfinancial or other projections.“ Confidentiality Agreement ” means the agreement entered into as of February 20, 2014 between Seller Parent and Buyer.“ Consolidated Interest Charges ” means, for the year ending December 31, 2015, for the Company and its Subsidiaries on aconsolidated basis, the sum of (a) all interest, premium payments,48debt discount, fees, charges and related expenses of the Company and its Subsidiaries paid in cash in connection with borrowedmoney or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance withGAAP (but excluding any interest imputed as a result of purchase accounting), plus (b) the portion of rent expense of the Companyand its Subsidiaries with respect to such year under capital leases that is treated as interest in accordance with GAAP, minus(c) interest income of the Company and its Subsidiaries during such period; provided that Consolidated Interest Charges shall notinclude (i) any fees or expenses paid in connection with the Existing Credit Agreements, (ii) any non-cash interest or deferredfinancing costs, (iii) any amortization or write-down of deferred financing fees, debt issuance costs, discounted liabilities,commissions, fees and expenses, (iv) any expensing of bridge, commitment and other financing fees and (v) penalties and interestrelated to taxes.“ Consolidated Net Income ” means, for the year ending December 31, 2015, for the Company and its Subsidiaries on aconsolidated basis, the net income of the Company and its Subsidiaries from operations for that year. For the avoidance of doubt,“Consolidated Net Income” will include promotional item tax refunds for the tax year ending December 31, 2015 accrued by theCompany and its Subsidiaries as part of such net income but will exclude any tax refunds applicable to prior periods.“ Consulting Agreement ” means the Consulting Agreement, dated as of May 13, 2014, by and among Buyer, Seller Parent,Holdco and the Company, which has terminated.“ Contract ” means any oral or written agreement, contract, lease, sublease, license, sublicense, mortgage, indenture,instrument, power of attorney, note, loan, evidence of indebtedness, purchase order, letter of credit, settlement agreement, franchiseagreement, or employment agreement.“ Customer Database ” means all customer databases, customer lists, historical records of customers and any otherinformation collected by Sellers with respect to customers of the Casino, including any information used in connection withmarketing and promoting the Casino.“ Customer List ” means the names of customers in the Customer Database who have visited the Casino during the twenty-four (24) month period prior to the Closing.“ EBITDAM ” means for the fiscal year ending December 31, 2015, for the Company and its Subsidiaries on a consolidatedbasis, an amount equal to Consolidated Net Income for such year plus the following to the extent deducted in calculating suchConsolidated Net Income, without duplication: (a) pre-opening expenses during such year, (b) prepayment penalties and expensesincurred in connection with the refinancing of the Existing Credit Agreements during such year, (c) Consolidated Interest Chargesfor such year, (d) depreciation and amortization expense during such year, (e) the Management Compensation incurred during suchyear, (f) the provision for Federal, state, local and foreign income taxes payable (including, without limitation, any penalties orinterest relating to such taxes or arising from tax examinations), (g) legal fees and expenses related to the negotiation and executionof (i) this Agreement and the Settlement Agreement and the consummation of the transactions contemplated hereby and thereby or(ii) amendments to the Existing Credit Agreements incurred during such year, and (h) other extraordinary, unusual or non-recurringcharges, expenses or losses during such year (to the extent not otherwise covered by the foregoing clauses (a) through (g)), minus(A) extraordinary, unusual or non-recurring gains during such year.“ Endeka Development ” means the proposed development of a racing and gaming facility in Mahoning Township,Pennsylvania.49“ Employee Benefit Plan ” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA),excluding any Multiemployer Plan, and each other stock purchase, stock option, severance, employment, change-in-control, bonus,incentive, deferred compensation or other material employee benefit or material compensation plan, program or arrangement (otherthan individual contracts or agreements), that is maintained, sponsored or contributed to by the Company or its Subsidiaries onbehalf of Property Employees.“ Environment ” means ambient air (including indoor air), vapors, surface water, groundwater, wetlands, drinking watersupply, land surface, or subsurface strata and biota.“ Environmental Laws ” means all applicable and legally enforceable Laws relating to the protection of human health andsafety, Hazardous Substances, pollution, or restoration or protection of the Environment.“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.“ Estimated Closing Cage Cash ” means Sellers’ good faith estimate of the Cage Cash of the Company, on a consolidatedbasis, as of the Closing.“ Estimated Closing Cage Cash Overage ” means the amount, if any, by which the Estimated Closing Cage Cash is greaterthan the Target Cage Cash.“ Estimated Closing Cage Cash Shortage ” means the amount, if any, by which the Estimated Closing Cage Cash is less thanthe Target Cage Cash.“ Estimated Closing Net Working Capital ” means Sellers’ good faith estimate of the Net Working Capital of the Company,on a consolidated basis, as of the Closing.“ Estimated Closing Net Working Capital Overage ” means the amount, if any, by which the Estimated Closing Net WorkingCapital is greater than the Target Net Working Capital.“ Estimated Closing Net Working Capital Shortage ” means the amount, if any, by which the Estimated Closing Net WorkingCapital is less than the Target Net Working Capital.“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgatedthereunder.“ Existing Credit Agreements ” means, collectively, (a) the First Lien Credit Agreement dated as of October 2, 2012 andmade between Cannery Casino Resorts, LLC and Washington Trotting Association, Inc. as Borrowers, Deutsche Bank TrustCompany Americas, as Administrative Agent, Collateral Agent and L/C Issuer and the joint lead arrangers and lenders namedtherein and (b) the Second Lien Credit Agreement dated as of October 2, 2012 and made between Cannery Casino Resorts, LLC andWashington Trotting Association, Inc. as Borrowers, Deutsche Bank Trust Company Americas, as Administrative Agent andCollateral Agent and the joint lead arrangers and lenders named therein.“ Final Closing Cage Cash ” means the Cage Cash of the Company, on a consolidated basis, as of the Closing as set forth inthe Final Cage Cash Closing Statement.“ Final Closing Net Working Capital ” means the Net Working Capital of the Company, on a consolidated basis, as of theClosing as set forth in the Final Closing Statement.50“ Final Closing Cage Cash Overage ” means the amount, if any, by which the Final Closing Cage Cash is greater than theEstimated Closing Cage Cash.“ Final Closing Cage Cash Shortage ” means the amount, if any, by which the Final Closing Cage Cash is less than theEstimated Closing Cage Cash.“ Final Closing Net Working Capital Overage ” means the amount, if any, by which the Final Closing Net Working Capital isgreater than the Estimated Closing Net Working Capital.“ Final Closing Net Working Capital Shortage ” means the amount, if any, by which the Final Closing Net Working Capitalis less than the Estimated Closing Net Working Capital.“ GAAP ” means generally accepted accounting principles in the United States.“ Gaming Approvals ” means an order by the Pennsylvania Racing Commission and/or Pennsylvania Gaming Control Boardeither (a) approving the Petition for Change in Control of the Company from Sellers to Buyer and, finding the Third Party Operatorsuitable to hold a Category 1 license and approving the operation of the Casino under the Gaming Operating Agreement, or (b)approving the Petition for Change in Control of the Company from Sellers to Buyer and finding Buyer suitable to hold a Category 1license as contemplated by and upon the terms set forth in this Agreement.“ Gaming Authorities ” means any Governmental Entity with regulatory control or jurisdiction over the conduct of lawfulgaming or gambling in any jurisdiction and within the Commonwealth of Pennsylvania, specifically the Pennsylvania GamingControl Board.“ Gaming Laws ” means any federal, state, local or foreign statute, ordinance (including zoning), rule, regulation, permit(including land use), consent, registration, finding of suitability, approval, license, judgment, Order, decree, injunction or otherauthorization, including any condition or limitation placed thereon, governing or relating to casino, gaming or horseracing activitiesor operations.“ Governing Documents ” means, with respect to any particular entity, (a) if a corporation, the articles or certificate ofincorporation and the bylaws of such corporation; (b) if a limited liability company, the articles of organization or certificate offormation and operating agreement, regulations, limited liability company agreement, or company agreement of such limited liabilitycompany; (c) if another type of entity, any other charter or similar document adopted or filed in connection with the creation,formation or organization of such entity; and (d) any amendment or supplement to any of the foregoing.“ Governmental Entity ” means court, arbitral body administrative agency, commission, Gaming Authority or othergovernmental or regulatory authority or instrumentality.“ Hazardous Substance ” means any material, substance or waste that is regulated as hazardous, toxic, or radioactive, or as apollutant or contaminant under applicable Environmental Law, including but not limited to petroleum, petroleum by-products,friable asbestos, urea formaldehyde insulation, toxic mold, polychlorinated biphenyls, flammable or explosive substances, orpesticides.“ Hollywood Casino ” means Buyer’s or its Affiliates’ casino located at 777 Hollywood Boulevard, Grantville, Pennsylvaniaand commonly known as Hollywood Casino at Penn National Race Course.51“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.“ HSR Approval ” means the expiration or termination of the applicable waiting period (or extension thereof) under the HSRAct and the receipt or making of any other consent, authorization, order, approval, declaration and filing required thereunder.“ Indebtedness ” of any Person means (a) indebtedness for borrowed money, including any related interest, prepaymentpenalties or premiums, fees and expenses, (b) amounts owing as deferred purchase price for property or services (other than tradepayables and accrued expenses that are current liabilities), including all capital leases, seller notes and “earn-out” payments, (c)indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security, including any relatedinterest, prepayment penalties or premiums, fees and expenses, (d) net obligations under any interest rate, currency or other hedgingagreement or reimbursement obligations in connection with letters of credit, or (e) guarantees with respect to any indebtedness ofany other Person of a type described in clauses (a) through (d) above.“ Intellectual Property ” means all intellectual property or other proprietary rights of every kind, foreign or domestic,including all patents, patent applications, inventions (whether or not patentable), processes, technologies, discoveries, apparatus,know-how, trade secrets, trademarks, trademark registrations and applications, domain names, trade dress, service marks, servicemark registrations and applications, trade names, and all goodwill associated with the foregoing, copyright registrations,copyrightable and copyrighted works, databases, software, rights of publicity, rights of privacy, moral rights, customer lists andconfidential marketing and customer information.“ Law ” means any foreign or domestic law, statute, code, ordinance, resolution, rule, regulation, Order, judgment, writ,stipulation, award, injunction, decree or arbitration award, policies, guidance, court decision, rule of common law or finding.“ Liability ” or “ Liabilities ” means, with respect to any Person, any liability or obligation of such Person, whether known orunknown, absolute or contingent, accrued or unaccrued, or liquidated or unliquidated.“ Liens ” means any mortgage, deed of trust, pledge, option, right of first refusal or first offer, conditional sale, lien, securityinterest, claims, pledges, agreements, limitations on voting rights, conditional or installment sale agreement, charges or other claimsor rights of third parties of any kind or other encumbrances or restrictions on transfer of any nature.“ Management Compensation ” means any and all fees, expenses and other monies due and payable, from time to time, bythe Company or any of its Subsidiaries due to Millennium Management Group II, LLC or Seller Parent, or an affiliate of eitherthereof.“ Multiemployer Plan ” shall have the meaning set forth in Section 3(37) of ERISA.“ Net Working Capital ” means the sum of (a) the cash and cash equivalents; restricted cash; accounts receivable (net ofallowance); inventories; prepaid income tax; other prepaid expenses; and deferred income of the Company and its Subsidiariesmeasured on a consolidated basis, but excluding all deferred income tax assets, minus (b) the accounts payable, other; accruedpayroll and related; accrued construction in process; progressive jackpot and slot club; accrued taxes (but excluding deferred taxliabilities); and licenses of the Company and its Subsidiaries measured on a consolidated basis, with each amount determined inaccordance with GAAP applied on a basis consistent with the52past practices of the Company, its Subsidiaries and their respective Affiliates. Notwithstanding the foregoing, “Net WorkingCapital” shall not include any Cage Cash or Casualty and Condemnation Proceeds. For illustrative purposes, attached as Exhibit C isa calculation of the net working capital as of March 31, 2014.“ Order ” means any judgment, award, decision, order, decree, writ, injunction, assessment or ruling entered or issued by anyGovernmental Entity.“ Ordinary Course of Business ” shall describe any action taken by a Person if such action is consistent with such Person’spast practices and is taken in the ordinary course of such Person’s normal day-to-day operations.“ Permit ” means permits, licenses, approvals, certificates, findings of suitability and other registrations, authorizations andexemptions of and from all applicable Governmental Entities.“ Permitted Liens ” means, with respect to the Company (a) Liens for ground rents, water charges, sewer rates, assessmentsand other governmental charges not delinquent or which are currently being contested in good faith by appropriate proceedings; (b)Liens for Taxes, including assessments, not yet delinquent or Taxes being contested in good faith by appropriate proceedings and forwhich adequate reserves have been booked on the Company’s financial statements in accordance with GAAP; (c) Liens arising byoperation of law such as materialmen, mechanics, carriers, landlord workmen, repairmen, vendor and similar liens which are notfiled of record and similar charges not delinquent or which are filed of record, but are being contested in good faith by appropriateproceedings or that are otherwise not material; (d) Liens in respect of judgments or awards with respect to which the Company shallin good faith currently be prosecuting an appeal or other Proceeding for review; (e) covenants, conditions and restrictions (includingzoning and subdivision restrictions), rights of way, encroachments, protrusions, easements, leases, reservations or other similarcharges or encumbrances and other matters of public record, or defects and irregularities in title to, property or assets of theCompany or its Subsidiaries; (f) rights of tenants under operating leases; (g) Liens affecting the lessor or licensor under a Third PartyLease; (h) with respect to the Real Property, all exceptions described in the Existing Title Policies, the Title Commitments or theEndorsement and all matters disclosed by the Existing Surveys and Lender’s Surveys; (i) terms and conditions of licenses, permitsand approvals for the Real Property, Laws of any Governmental Entity having jurisdiction over the Real Property, and (j) any Lienthat will be released and discharged at or prior to the Closing, including, without limitation, Liens under the Existing CreditAgreements.“ Person ” means an individual, corporation, limited liability company, partnership, association, trust, unincorporatedorganization or other entity.“ Personal Property ” means all personal property owned or leased by the Company on the Closing Date.“Post-Closing Tax Period ” means any Tax period beginning after the Closing Date and that portion of any Straddle Periodbeginning after the Closing Date.“ Pre-Closing Tax Period ” means any taxable period (including the portion of a Straddle Period) ending on or before theClosing Date.“ Proceeding ” means any lawsuit, litigation, arbitration, mediation, action or proceeding by or before any GovernmentalEntity.53“ Property Employees ” means employees of Sellers and their Subsidiaries who are employed by the Company or anySubsidiary of the Company.“ Purchased Assets ” means all assets owned by the Company or its Subsidiaries.“ Real Property ” means the real property described on Section 6.05(a) and Section 6.05(b) of the Company DisclosureLetter.“ Release or Released ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,escaping, leaching, dumping, or disposing to, into or through the Environment.“ Representatives ” means, with respect to a party, its Affiliates, members, directors, officers, employees, advisors, agents orother representatives.“ Sellers’ Knowledge ” means the actual knowledge of William Paulos, William Wortman, Tom Lettero, Sean Sullivan andDavid Wiegmann.“ Settlement Agreement ” means that certain Settlement Agreement and Mutual Released, dated as of the date hereof, by andamong Parent, Buyer, the Company and Sellers, as amended, modified or supplemented from time to time in accordance with itsterms.“ Straddle Period ” means any Tax period beginning before or on and ending after the Closing Date.“ Subsidiary ” means, with respect to any party, any corporation or other organization, whether incorporated orunincorporated, of which (a) such party or any other Subsidiary of such party is a general partner or managing member or (b) at least50% of the securities or other equity interests having by their terms voting power to elect a majority of the board of directors orothers performing similar functions with respect to such corporation or other organization that is, directly or indirectly, owned orcontrolled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries.“ Target Cage Cash ” means Fourteen Million Five Hundred Thousand Dollars ($14,500,000).“ Target Net Working Capital ” means Zero Dollars ($0).“ Tax Return ” means any report, return (including any information return), claim for refund, election, estimated Tax filing orpayment, request for extension, document, declaration or other information or filing supplied or required to be supplied to anyGovernmental Entity with respect to Taxes, including attachments thereto and amendments thereof.“ Taxes ” means any and all taxes, charges, fees, levies, tariffs, duties, liabilities, impositions or other assessments in thenature of a tax (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto)imposed by any Governmental Entity, including income, franchise, gross receipts, profits, gaming, live entertainment, excise, real orpersonal property, unclaimed property, environmental, sales, use, lodging, value-added, ad valorem, withholding, social security,retirement, employment, unemployment, workers’ compensation, occupation, service, license, net worth, capital stock, payroll,franchise, gains, stamp, transfer and recording taxes.54“ Title Insurer ” means First American Title Insurance Company.“ Title IV Plan ” means any “pension plan” under Section 3(2) of ERISA that is subject to Title IV of ERISA (other than aMultiemployer Plan).“ Transaction ” means the purchase and sale of the hereunder Membership Interests and the other transactions contemplatedby this Agreement or the Ancillary Agreements.“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and analogous state andlocal Law.(c) The following are defined elsewhere in this Agreement, as indicated below:TermSection “2014 Budget”Section 6.15(k)“Affiliated Person” Section 6.17“Agreement”Preamble“Assignment of Membership Interests”Section 4.02(b)“Audited Financial Information”Section 6.03(a)“Auditor” Section 3.03(c)“Base Purchase Price”Section 2.01“Buyer” Preamble“Buyer Disclosure Letter”Section 7“Buyer Indemnified Party”Section 11.02(a)“Buyer Indemnified Parties” Section 11.02(a)“Buyer Permits”Section 7.06(a)“Buyer Related Parties” Section 7.05(a)“Casualty and Condemnation Proceeds”Section 8.20(a)“Closing” Section 4.01“Closing Date”Section 4.01“Closing Deadline”Section 10.01(b)“Closing Payment” Section 2.01“Company” Preamble“Company Disclosure Letter”Section 6“Customer Deposits” Section 3.03(c)“Damages” Section 11.02(a)“Determination Date”Section 3.03(c)“Endorsement”Section 8.09(b)“Effective Date”Preamble“Estimated Cage Cash Closing Payment”Section 3.02“Estimated Cage Cash Closing Statement”Section 3.02“Estimated Closing Payment” Section 3.01“Estimated Closing Statement”Section 3.01“Existing Surveys” Section 8.10“Existing Title Policies”Section 8.09(a)“Final Cage Cash Closing Payment”Section 3.03(b)55“Final Cage Cash Closing Statement”Section 3.03(b)“Final Closing Payment”Section 3.03(a)“Final Closing Statement” Section 3.03(a)“Final Purchase Price”Section 3.03(b)“Final Statements”Section 3.03(c)“Financial Information”Section 6.03(a)“Fundamental Representations”Section 11.01(a)“Gaming Operating Agreement”Section 8.03(c)“Holdco”Preamble“HSR Approval”Section 8.03(c)“Indemnified Party” Section 11.03“Indemnifying Party”Section 11.03“Indemnifying Parties”Section 11.03“Inspection”Section 8.02(a)“Leases”Section 6.05(b)“Lender Liens”Section 8.08“Lender’s Surveys” Section 8.10“Loan Obligations”Section 8.08“Material Contracts”Section 6.07(a)“Membership Interests”Recitals“Notice” Section 11.03“Parent”Preamble“Parent Services Agreement”Section 4.02(i)“Penn National PLR” Section 8.03(h)“Pre-Closing Period” Section 8.01(a)“Purchase Price Shortfall”Section 10.02(a)“SEC” Section 8.12(a)“Section Period”Section 2.02(b)“Seller Indemnified Party”Section 11.02(b)“Seller Indemnified Parties” Section 11.02(b)“Seller Parent”Preamble“Sellers”Preamble“Sellers Disclosure Letter”Section 5“Seller Obligations”Section 12.11“Senior Personnel Access”Section 8.02(a)“Shortfall Sale”Section 10.02(a)“Surveys” Section 8.10“Survival Period”Section 11.01(a)“S-X Financial Statements”Section 8.12(a)“Tax Contest” Section 8.11(d)“Third Party Claim” Section 11.04(a)“Third Party Leases” Section 6.05(d)“Third Party Operator”Section 8.03(c)“Title Commitments”Section 8.09(a)“Transfer Taxes” Section 8.11(b)“Unaudited Financial Information” Section 6.03(a)56Section 12.02 Governing Law; Arbitration; Consent to Jurisdiction; Waiver of Trial by Jury; Limitation on Damages .(a) This Agreement and the transactions contemplated hereby, and all disputes between the parties under or related to thisAgreement or the facts and circumstances leading to its execution, whether in contract, tort or otherwise, shall be governed by andconstrued in accordance with the Laws of the State of New York applicable to contracts executed in and to be performed entirelywithin the State of New York, without regard to the conflicts of laws principles thereof that would require the application of theLaws of any other jurisdiction.(b) ANY CLAIM, DISPUTE, OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AMENDEDAGREEMENT AND ANY TRANSACTION CONTEMPLATED HEREFUNDER, OR THE BREACH, TERMINATION,ENFORCEMENT, INTERPRETATION OR VALIDITY THEREOF, INCLUDING THE DETERMINATION OF THE SCOPEOR APPLICABILITIY OF THIS AGREEMENT TO ARBITRATGE, SHALL BE DETERMINED SOLELY ANDEXCLUSIVELY BY BINDING ARBITRATION BEFORE A PANEL OF THREE NEUTRAL ARBITRATORS; EACH SIDESHALL APPOINT A NEUTRAL ARBITRATOR, AND THE TWO PARTY-APPOINTED ARBITRATORS SHALL SELECTTHE CHAIR OF THE PANEL FROM THE JAMS PANEL OF NEUTRALS IN ACCORDANCE WITH THE JAMSCOMPREHENSIVE ARBITRATION RULES & PROCEDURES AND THE JAMS EXPEDITED PROCEDURES (THE " JAMSRULES "). THE ARBITRATION SHALL BE CONDUCTED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEWYORK FOR AGREEMENTS MADE IN AND TO BE PERFORMED IN THAT STATE. THE ARBITRATION SHALL BEADMINISTERED BY JAMS PURSUANT TO THE JAMES RULES AND THE JAMES EXPEDITED PROCEDURES. THEAWARD IN ANY ARBITRATION MUST BE ISSUED WITHIN ONE HUNDRED (100) DAYS (AND DISCOVERY LIMITEDACCORDINGLY) OF THE COMMENCEMENT OF THE ARBITRATION PER THE JAMS RULES. THE ARBITRATIONHEARING SHALL BE LIMITED TO THREE (3) DAYS, EXCEPT ADDITIONAL HEARING TIME MAY BE ALLOWED TOTHE EXTENT THAT A PARTY SHOWS GOOD CASUSE THAT ADDITIONAL TIME IS NECESSARY OR THAT THEARBITRATORS REASONABLY REQUEST ADDITIONAL TIME TO CONDUCT THE HEARING. THE ARBITRATIONSHALL BE CONDUCTED IN NEW YORK, NEW YORK. THE SELECTION OF THE ARBITRATION PANEL SHALL BECONDUCTED WITHIN THE 100-DAY PERIOD FROM COMMENCEMENT OF THE ARBITRATION TO ISSUANCE OFTHE AWARD, AND THE SELECTION PROCESS SHALL NOT BE GROUNDS TO DELAY OR EXTEND THE 100-DAYPERIOD. IN ANY ARBITRATION PURSUANT TO THIS PROVISION, THE PREVAILING PARTY SHALL BE AWARDEDALL FEES AND COSTS ASSOCIATED WITH THE DISPUTES SUBJECT TO ARBITRATION, INCLUDING, WITHOUTLIMITATION, ATTORNEYS’ FEES, EXPENSES, COSTS (INCLUDING EXPERT WITNESS FEES AND COSTS OFVENDORS) AND ARBITRATOR FEES.(c) Subject to the binding arbitration provisions set forth in Section 12.02(b) above, each of the parties hereto (a) consents tosubmit itself to the personal jurisdiction of the Federal and state courts in the Borough of Manhattan, the City of New York for anyjudicial action or proceeding arising out of or relating to this Agreement, including any action to confirm, vacate, challenge, orenforce an award issued pursuant to Section 12.02(b) , and irrevocably agrees that any such action or proceeding shall be heard anddetermined only in such New York state or federal court; provided, however , that such submission to jurisdiction is solely for thepurpose referred to in this paragraph and shall not be57deemed to be a general submission to the jurisdiction of such courts or any other courts other than for such purpose, (b) agrees that itwill not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court (includingmotions challenging personal jurisdiction, subject matter jurisdiction, venue, or asserting forum non conveniens ) and (c) agrees thatit will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court otherthan such state or Federal court. Each of the parties hereto irrevocably consents to the service of any summons and complaint andany other process in any other action relating to the transactions contemplated by this Agreement, on behalf of itself or its property,by the personal delivery of copies of such process to such party. Nothing in this Section 12.02(c) shall affect the right of any partyhereto to serve legal process in any other manner permitted by law.(d) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDERTHIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBYIRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY (ANDHANDLED INSTEAD BY BINDING ARBITRATION) IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLYARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED INCONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTYCERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTYHAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OFLITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THEIMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEENINDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS ANDCERTIFICATIONS IN THIS SECTION 12.02(d) .(e) The parties hereby acknowledge and agree that if a party fails to perform its agreements and covenants hereunder,including if the party fails to take all actions as are necessary on its part to consummate the Transaction, such failure could causeirreparable injury to the non-breaching party, for which damages, even if available, may not be an adequate remedy. Accordingly,except as otherwise limited by this Agreement, in the event of such a failure, the non-breaching party shall be permitted to seek anissuance of injunctive relief or a specific performance remedy (in each case, without the requirement to post any bond or othersecurity), from any court of competent jurisdiction.(f) Notwithstanding anything in this Agreement to the contrary, except in the case of fraud, no party hereto shall be liableunder this Agreement for (i) any punitive damages, except where such damages are recovered by a third party from an IndemnifiedParty in connection with Damages indemnified hereunder, (ii) any lost profits, diminution in value, consequential damages, specialdamages, incidental damages, indirect damages, exemplary damages or other unforeseen damages or (iii) any damages under anymultiples or similar valuation methodology (whether based on “multiple of profits,” “multiple of earnings,” “multiple of cash flows”or similar items), in each case, whether based on contract, tort, strict liability, other Law or otherwise and whether or not arisingfrom any other party’s sole, joint or concurrent negligence, strict liability or other fault.(g) Other than as set forth in Section 10.02 , in the event of any breach by Sellers or the Company of any representation,warranty, covenant or other provision of this Agreement, Buyer’s sole and exclusive remedy prior to the consummation of theClosing for such breach shall be injunctive relief or specific performance pursuant to Section 12.02(c) . For the avoidance of doubt,after the58Closing, Buyer shall be entitled to indemnification for such breach to the extent provided in Article XI . Buyer shall have no right tooffset any amounts owed to it against any amount it owes to Sellers or the Company under this Agreement.Section 12.03 Notices . All notices, requests, claims, demands and other communications required or permitted to be givenhereunder will be in writing and will be given or made by delivery in person, by courier service, by facsimile (with a copy sent byanother means specified herein), or by registered or certified mail (postage prepaid, return receipt requested). Except as providedotherwise herein, notices delivered by hand or by courier service shall be deemed given upon receipt; notices delivered by facsimileshall be deemed given twenty-four (24) hours after the sender’s receipt of confirmation of successful transmission; and noticesdelivered by registered or certified mail shall be deemed given seven (7) days after being deposited in the mail system. All noticesshall be addressed to the parties at the following addresses (or at such other address for a party as will be specified by like notice):if to Buyer, to:Gaming and Leisure Properties, Inc.825 Berkshire Blvd, Suite 400Wyomissing PA, 19610Attention: William J. CliffordFacsimile: (610) 401-2901with a copy, which shall not constitute notice, to:Goodwin Procter LLPThe New York Times Building620 Eighth AvenueNew York, NY 10018Attention: Yoel KranzFacsimile: (212) 355-3333if to Sellers, or the Company (prior to the Closing), to:Cannery Casino Resorts, LLC9107 W. Russell RoadLas Vegas, Nevada 89148Attention: Tom LetteroFacsimile: (702) 856-5101with a copy, which shall not constitute notice, to:Latham & Watkins LLP355 South Grand AvenueLos Angeles, California 90071Attention: Steven B. StokdykFacsimile: (213) 891-8763Section 12.04 Interpretation . When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules,such reference shall be to an Article, Section or Exhibit or Schedule59of this Agreement unless otherwise indicated. Unless the context otherwise requires: (a) a reference to a document includes allamendments or supplements to, or replacements or novations of, that document; (b) the use of the term “including” means“including, without limitation”; (c) the word “or” shall be disjunctive but not exclusive; (d) unless expressly provided otherwise, themeasure of a period of one month or year for purposes of this Agreement shall be that date of the following month or yearcorresponding to the starting date; provided that if no corresponding date exists, the measure shall be that date of the followingmonth or year corresponding to the next day following the starting date (for example, one month following February 18 is March 18,and one month following March 31 is May 1); (e) a reference to an entity includes any successor entity, whether by way of merger,amalgamation, consolidation or other business combination; (f) reference to a word defined hereunder shall apply equally to both thesingular and plural forms of the terms defined; (g) a reference to”$” or “dollars” mean the lawful currency of the United States; and(h) Buyer, Sellers and the Company will be referred to herein individually as a “party” and collectively as “parties.” The nameassigned to this Agreement, the table of contents and headings contained in this Agreement are for reference purposes only and shallnot affect in any way the meaning or interpretation of this Agreement. The phrase “made available” in this Agreement shall meanthat the information referred to has been made available if requested by the party to whom such information is to be made available.Section 12.05 Entire Agreement . This Agreement, the Ancillary Agreements and the Confidentiality Agreement constitutethe entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect tothe subject matter hereof.Section 12.06 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of beingenforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in fullforce and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any mannermaterially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of beingenforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties asclosely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.Section 12.07 Assignment . Without the prior written consent of the other party, neither this Agreement nor any of therights, interests or obligations hereunder shall be assigned to any other Person. Any assignment in violation of the precedingsentence shall be void, and no assignment shall relieve the assigning party of any of its obligations hereunder.Section 12.08 Parties of Interest . Except as set forth in Article XI , this Agreement shall be binding upon and inure solelyto the benefit of each party hereto and their respective successors and assigns, and nothing in this Agreement, express or implied isintended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of thisAgreement.Section 12.09 Counterparts . This Agreement may be executed by facsimile or electronic mail transmission and/or in oneor more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed tobe an original but all of which taken together shall constitute one and the same agreement.Section 12.10 Mutual Drafting . Each party hereto has participated in the drafting of this Agreement, which each partyacknowledges is the result of extensive negotiations between the parties.60In the event that any ambiguity or question of intent arises, this Agreement shall be construed as if drafted jointly by the parties, andno presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisionsof this Agreement.Section 12.11 Seller Parent Guarantee . Seller Parent unconditionally and irrevocably guarantees as a continuingobligation, the due and punctual payment and performance by Holdco and the Company of all of the covenants, agreements andother obligations of Holdco and the Company to Buyer set forth in this Agreement (the “ Seller Obligations ”), and if Holdco or theCompany fails to pay any amount or perform any Seller Obligations when due in accordance with the terms and conditions of thisAgreement, Seller Parent shall pay such amount to Buyer and perform such obligation forthwith upon receiving written demandtherefor from Buyer. Seller Parent shall be liable under this guarantee as if it were a primary obligor and not merely as a surety. Theguarantee hereunder shall be a continuing guarantee and shall remain in full force and effect until all Seller Obligations have beenpaid and performed in full. This guarantee is in addition to, and independent of, any lien, guarantee or other security or right orremedy now or at any time hereafter held by or available to Buyer. More than one demand may be made under this guarantee.Demands made from time to time under this guarantee may be enforced irrespective of whether any steps or proceedings are or willbe taken against Buyer to recover the indebtedness claimed under this guarantee or whether any other guarantee or security to whichBuyer may be entitled in respect thereof is or will be enforced.Section 12.12 Amendment . This Agreement may not be amended except by an instrument in writing signed on behalf ofeach of Buyer, Sellers and the Company.Section 12.13 Non-Recourse . This Agreement may only be enforced against, and any claim, action, suit or other legalproceeding based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance of this Agreement,may only be brought against the entities that are expressly named as parties hereto and then only with respect to the specificobligations set forth herein with respect to such party. No past, present or future director, officer, employee, incorporator, manager,member, partner, stockholder, Affiliate, agent, attorney or other Representative of any party hereto or of any Affiliate of any partyhereto, or any of their successors or permitted assigns, shall have any liability for any obligations or liabilities of any party heretounder this Agreement or for any claim or action based on, in respect of or by reason of the transactions contemplated hereby.Section 12.14 Waiver . Any party may waive compliance with any of the agreements or conditions contained herein. Anyagreement on the part of a party hereto to any such waiver shall be valid only if set forth in a written instrument signed on behalf ofsuch party.Section 12.15 Further Assurances . In case at any time after the Closing any further action is necessary to carry out thepurposes of this Agreement, the parties shall take all commercially reasonable action necessary (including executing and deliveringfurther notices, assumptions, releases and acquisitions).Section 12.16 Amendment and Restatement . This Agreement amends, restates, supersedes and terminates in its entiretythe Original Agreement.(Signature Page Follows)61IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by their respective duly authorizedofficers as of the date first written above. BUYERGLP Capital, L.P., a Pennsylvania limited partnershipBy: /s/ Peter M. CarlinoName: Peter M. CarlinoIts: Chief Executive Officer of Gaming and LeisureProperties, Inc, its general partner PARENTGAMING AND LEISURE PROPERTIES, INC., aPennsylvania corporationBy: /s/ Peter M. CarlinoName: Peter M. CarlinoIts: Chief Executive OfficerHOLDCOPA MEZZCO, LLC, a Delaware limited liability companyBy: /s/ William PaulosName: William PaulosIts: Manager SELLER PARENTCANNERY CASINO RESORTS, LLC, a Nevada limitedliability companyBy: /s/ William PaulosName: William PaulosIts: Manager62COMPANYPA MEADOWS, LLC, a Delaware limited liabilitycompanyBy: /s/ William PaulosName: William PaulosIts: Manager63Exhibit 21Subsidiaries of Gaming and Leisure Properties, Inc. (a Pennsylvania corporation) Name of Subsidiary State or OtherJurisdiction ofIncorporationLouisiana Casino Cruises, Inc. (d/b/a Hollywood Casino Baton Rouge) LouisianaPenn Cecil Maryland, Inc. (d/b/a Hollywood Casino Perryville) MarylandGLP Capital Partners, LLC PennsylvaniaGLP Capital, L.P. PennsylvaniaGLP Holdings, Inc. PennsylvaniaGLP Financing I, LLC DelawareGLP Financing II, Inc. DelawareGLP Midwest Properties I, LLC DelawareGold Merger Sub, LLC DelawareExhibit 23Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1) Registration Statement (Form S-8 No. 333-192017) pertaining to the 2013 Long Term Incentive Compensation Plan;(2) Registration Statement (Form S-4 No. 333-196662) of Gaming and Leisure Properties, Inc. and Subsidiaries and(3) Registration Statement (Form S-4 No. 333-206649) of Gaming and Leisure Properties, Inc. and Subsidiaries.of our reports dated February 22, 2016 , with respect to the consolidated financial statements and schedule of Gaming and Leisure Properties, Inc. and Subsidiariesand the effectiveness of internal control over financial reporting of Gaming and Leisure Properties, Inc. and Subsidiaries, included in this Annual Report (Form 10-K) for the year ended December 31, 2015./s/ Ernst & YoungPhiladelphia, PennsylvaniaFebruary 22, 2016Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 I, Peter M. Carlino, certify that: 1. I have reviewed this annual report on Form 10-K of Gaming and Leisure Properties, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. February 22, 2016/s/ Peter M. Carlino Name: Peter M. Carlino Chief Executive OfficerExhibit 31.2 CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 I, William J. Clifford, certify that: 1. I have reviewed this annual report on Form 10-K of Gaming and Leisure Properties, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. February 22, 2016/s/ William J. Clifford Name: William J. Clifford Chief Financial OfficerExhibit 32.1 CERTIFICATION PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 200218 U.S.C. SECTION 1350 In connection with the annual report of Gaming and Leisure Properties, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter M. Carlino, Chief Executive Officer of the Company, certify,pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ Peter M. Carlino Peter M. Carlino Chief Executive Officer February 22, 2016Exhibit 32.2 CERTIFICATION PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002,18 U.S.C. SECTION 1350 In connection with the annual report of Gaming and Leisure Properties, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Clifford, Chief Financial Officer of the Company, certify,pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ William J. Clifford William J. Clifford Chief Financial Officer February 22, 2016

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