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UNIT PURCHASE AGREEMENT

Purchase and Sale Agreement

UNIT PURCHASE AGREEMENT | Document Parties: BOYD GAMING CORP | COAST HOTELS AND CASINOS, INC | SILVERADO SOUTH STRIP, LLC You are currently viewing:
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BOYD GAMING CORP | COAST HOTELS AND CASINOS, INC | SILVERADO SOUTH STRIP, LLC

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Title: UNIT PURCHASE AGREEMENT
Governing Law: Nevada     Date: 10/31/2006
Industry: Casinos and Gaming    

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Exhibit 2.1

UNIT PURCHASE AGREEMENT

dated as of July 25, 2006

by and among

BOYD GAMING CORPORATION,

COAST HOTELS AND CASINOS, INC.,

SILVERADO SOUTH STRIP, LLC,

AND

MICHAEL J. GAUGHAN

 






TABLE OF CONTENTS

 

 

Page

ARTICLE I

PURCHASE AND SALE OF UNITS

1

 

 

 

     Section 1.1

     Purchase and Sale of Units

1

     Section 1.2

     Closing

1

     Section 1.3

     Deliveries by Seller and LLC

2

     Section 1.4

     Deliveries by Buyer

2

 

 

 

ARTICLE II

CERTAIN CLOSING TRANSACTIONS

3

 

 

 

     Section 2.1

     Transfer of Assets

3

     Section 2.2

     Excluded Assets

4

     Section 2.3

     Retention of Assets

4

     Section 2.4

     Assignability and Consents

4

     Section 2.5

     Removal of Excluded Assets and Designated Personal Property

6

     Section 2.6

     Assumption of Liabilities

6

     Section 2.7

     Delivery of Deed and Title Policy

8

     Section 2.8

     Termination of Certain Agreements

8

     Section 2.9

     Construction Costs

8

     Section 2.10

     Transfer Deliveries at Closing

8

     Section 2.11

     Proration of Property Taxes

9

 

 

 

ARTICLE III

PURCHASE PRICE

10

 

 

 

     Section 3.1

     Purchase Price

10

     Section 3.2

     Escrow

10

     Section 3.3

     Working Capital and Cash Adjustment

10

     Section 3.4

     Allocation of Purchase Price

12

 

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER PARENT

12

 

 

 

     Section 4.1

     Organization of Seller, Seller Parent and LLC

12

     Section 4.2

     Authority; No Conflict; Required Filings and Consents

13

     Section 4.3

     Property

14

     Section 4.4

     Title to Assets

14

     Section 4.5

     Contracts

14

     Section 4.6

     Employee Benefits

15

     Section 4.7

     Brokers

15

     Section 4.8

     Units

15

     Section 4.9

     Intellectual Property

16

     Section 4.10

     Fairness Opinion

17

     Section 4.11

     Legal Proceedings

17

     Section 4.12

     Offering Materials

17

     Section 4.13

     Receipt of Required Lender Consents

18

     Section 4.14

     Disclaimer of other Representations and Warranties

18

 

 

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

18

 

 

 

     Section 5.1

     Authority; No Conflict; Required Filings and Consents

18

     Section 5.2

     Brokers

19

     Section 5.3

     No Knowledge of Inaccuracy

19

     Section 5.4

     Stock Ownership

20

     Section 5.5

     Accredited Investor Status

20

 

 

 

ARTICLE VI

COVENANTS

20

 

 

 

     Section 6.1

     Conduct of Business

20

     Section 6.2

     Cooperation; Notice; Cure

22

     Section 6.3

     FCC Licenses

23

     Section 6.4

     Employee Matters

23

     Section 6.5

     Access to Information and the Property; Confidentiality

25

     Section 6.6

     Governmental Approvals

27

     Section 6.7

     Publicity

29

     Section 6.8

     Further Assurances and Actions

29

     Section 6.9

     Transfer Taxes; HSR Filing Fee; Transaction Expenses

30

     Section 6.10

     Offering; Stock Repurchase; Option Cancellation

31

     Section 6.11

     Reservations; Loyalty Program; Guests; Chips

33

     Section 6.12

     Transfer of Utilities; Insurance

34

     Section 6.13

     Replacement Signage

35

     Section 6.14

     Insurance; Casualty and Condemnation

35

     Section 6.15

     Certain Notifications

36

     Section 6.16

     Tax Matters

36

     Section 6.17

     Acquisition of Business; Right of First Refusal

37

     Section 6.18

     Sports Book; Race Book

38

     Section 6.19

     Transfer of Certain Domain Names

38

 

 

 

ARTICLE VII

CONDITIONS TO CLOSING

39

 

 

 

     Section 7.1

     Conditions to the Parties' Obligation to Effect the Closing

39

     Section 7.2

     Additional Conditions to Obligations of Buyer

39

     Section 7.3

     Additional Conditions to Obligations of Seller

40

 

 

 

ARTICLE VIII

TERMINATION AND AMENDMENT

41

 

 

 

     Section 8.1

     Termination

41

     Section 8.2

     Effect of Termination

42

 

 

 

ARTICLE IX

SURVIVAL; INDEMNIFICATION

43

 

 

 

     Section 9.1

     Survival of Representations, Warranties, Covenants and Agreements

43

     Section 9.2

     Indemnification

43

     Section 9.3

     Procedure for Claims between Parties

45

     Section 9.4

     Defense of Third Party Claims

46

     Section 9.5

     Resolution of Conflicts and Claims

47

     Section 9.6

     Limitations on Indemnity

48

     Section 9.7

     Payment of Damages

49

     Section 9.8

     Exclusive Remedy

49

     Section 9.9

     Treatment of Indemnification Payments

49

     Section 9.10

     Timeliness of Notices

49

 

 

 

ARTICLE X

TITLE TO REAL PROPERTY

49

 

 

 

     Section 10.1

     Title Commitment and UCC-11 Search

49

     Section 10.2

     Defects

50

     Section 10.3

     Failure to Cure Title Defects

50

     Section 10.4

     Survey

51

 

 

 

ARTICLE XI

MISCELLANEOUS

51

 

 

 

     Section 11.1

     Definitions

51

     Section 11.2

     Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury

61

     Section 11.3

     Notices

62

     Section 11.4

     Interpretation

63

     Section 11.5

     Headings

63

     Section 11.6

     Entire Agreement; No Third Party Beneficiaries

63

     Section 11.7

     Severability

64

     Section 11.8

     Assignment

64

     Section 11.9

     Parties of Interest

64

     Section 11.10

     Counterparts

64

     Section 11.11

     Mutual Drafting

64

     Section 11.12

     Amendment

65

     Section 11.13

     Extension; Waiver

65

     Section 11.14

     Time of Essence

65






EXHIBITS*

Exhibit 1.3(f)

License Agreement

Exhibit 1.3(g)

Transition Services Agreement

Exhibit 2.10(a)

General Bill of Sale and Assignment

Exhibit 2.10(b)

Assignment and Assumption Agreement (Assumed Contracts)

Exhibit 2.10(c)

Assignment and Assumption Agreement (Assumed Liabilities)

Exhibit 2.10(d)

Assignment and Assumption Agreement (Reservations and Promotions)

Exhibit 2.10(e)

Confirmation of Transfer of Guest Items

Exhibit 2.10(f)

Assumption of Post-Closing Progressive Gaming Liabilities

Exhibit 2.10(g)

Confirmation of Transfer of Guest Baggage

Exhibit 2.10(h)

Bill of Sale and Assignment (Vehicles)

Exhibit 2.10(i)

Assignment and Assumption Agreement (FCC Licenses)

Exhibit 2.10(k)

Assignment of Trademarks

Exhibit 3.2

Escrow Agreement

Exhibit 6.10(d)(1)

Stock Purchase Agreement

Exhibit 6.10(d)(2)

Note

Exhibit 10.1(A)

Title Commitment

Exhibit 10.1(B)

UCC Search

Exhibit 10.4

2003 Survey

* Exhibits, schedules and similar attachments to this Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Any omitted exhibit, schedule or similar attachment will be furnished supplementally to the SEC upon request.






UNIT PURCHASE AGREEMENT

THIS UNIT PURCHASE AGREEMENT (this " Agreement ") is made and entered into as of July 25, 2006, by and among BOYD GAMING CORPORATION, a Nevada corporation (" Seller Parent "), COAST HOTELS AND CASINOS, INC., a Nevada corporation and indirect, wholly owned Subsidiary of Seller Parent (" Seller "), Silverado South Strip, LLC, a Nevada limited liability company and wholly owned Subsidiary of Seller (" LLC "), and Michael J. Gaughan, an individual (" Buyer "). Collectively, Seller Parent, Seller, LLC and Buyer are referred to in this Agreement as the "parties." Capitalized terms used herein are defined in Section 11.1 .

WHEREAS, Seller owns and operates the South Coast Hotel & Casino in Las Vegas, Nevada (the " Business ");

WHEREAS, Seller owns all of the issued and outstanding membership units of LLC (the " LLC Units ");

WHEREAS, immediately prior to the Closing, and as a condition precedent thereto, Seller will transfer to LLC all of Seller's rights, title and interest in the Assets and LLC will assume the Assumed Liabilities as set forth herein; and

WHEREAS, this Agreement sets forth the terms and conditions pursuant to which Buyer will purchase from Seller all of the outstanding LLC Units at the Closing (the " Sale ").

NOW, THEREFORE, the parties hereto, in consideration of the premises and of the mutual representations, warranties and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, agree as follows:

ARTICLE I

PURCHASE AND SALE OF UNITS

Section 1.1    Purchase and Sale of Units . Upon the terms and subject to the satisfaction or waiver, if permissible, of all the conditions set forth herein, at the Closing, Seller will sell, transfer and convey to Buyer, and Buyer will purchase from Seller, all of the outstanding LLC Units for the consideration specified in Section 3.1 .

Section 1.2    Closing . Unless this Agreement is earlier terminated pursuant to Article VIII hereof, the closing of the purchase and sale of the LLC Units shall take place on the third (3 rd ) Business Day following satisfaction or waiver of the conditions set forth in Article VII hereof (other than those conditions to be satisfied or waived at the Closing), at 9:00 a.m. (Pacific Time), at the offices of Morrison & Foerster LLP, 19900 MacArthur Blvd., Irvine, California 92612, unless another time or place shall be agreed to by the parties (the " Closing Date "); provided, however , that Seller may postpone the Closing Date as set forth in Section 10.2 . For the purposes of this Agreement, the effective time of the closing of the purchase and sale of the LLC Units (the " Closing ") shall be deemed to occur at 12:01 a.m. (Pacific Time) on the Closing Date.

Section 1.3    Deliveries by Seller and LLC . At the Closing, Seller will deliver, or cause LLC to deliver, in either case unless previously delivered, to Buyer the following:

a.         membership certificates, if applicable, representing the LLC Units, accompanied by unit transfer powers duly executed in blank, and otherwise in form reasonably acceptable to Buyer for transfer on the books of LLC;

b.        copies of the Articles of Incorporation, Bylaws, Articles of Organization, operating agreement or other comparable organizational or governing documents of each of Seller, Seller Parent and LLC, certified as of a date within fifteen (15) days prior to the Closing Date by the Secretary of State of the State of Nevada;

c.         the officer's certificates referred to in Section 7.2(a) and Section 7.2(b) ;

d.        resignations effective as of the Closing Date from each and all of the officers and managers of LLC;

e.         copies of each of the documents to be delivered pursuant to Section 2.10 ;

f.          an executed original of the license agreement in the form attached as Exhibit 1.3(f) (the " License Agreement ");

g.        an executed original of the Transition Services Agreement in the form attached as Exhibit 1.3(g) (the " Transition Services Agreement "), pursuant to which Seller may, subject to the following proviso, provide certain transitional services to LLC with respect to the Business following the Closing for the limited period of time set forth therein; provided that Buyer shall have specified at least ten (10) days prior to the Closing any payroll administration or advertising services to be provided thereunder, or the parties thereto shall have otherwise mutually agreed on other services to be provided thereunder; and

h.        all other previously undelivered documents, instruments or writings required to be delivered by Seller, Seller Parent or LLC to Buyer at or prior to the Closing pursuant to this Agreement or otherwise required in connection herewith.

Section 1.4    Deliveries by Buyer . At the Closing, Buyer shall deliver, or cause to be delivered, to Seller (unless previously delivered) the following:

a.         an executed original of the License Agreement;

b.        an executed original of the Transition Services Agreement, subject to the proviso contained in Section 1.3(g) ;

c.         the Purchase Price, including the Note;

d.        the officer's certificates referred to in Section 7.3(a) and Section 7.3(b) ;

e.         a duly executed resignation, in form and substance satisfactory to Seller, from each Transferred Employee that holds any position as an officer and/or director of Seller, Seller Parent or any of their respective Subsidiaries;

f.          written instructions to Seller Parent to apply the principal amount of the Note to the Purchase Price; and

g.        all other previously undelivered documents, instruments or writings required to be delivered by Buyer to Seller at or prior to the Closing pursuant to this Agreement or otherwise required in connection herewith.

ARTICLE II

CERTAIN CLOSING TRANSACTIONS

Section 2.1    Transfer of Assets . Upon the terms and subject to the conditions set forth in this Agreement, immediately prior to the Closing, Seller shall, and Seller Parent shall cause Seller to, convey, assign, transfer and deliver to LLC (the " Transfer "), and LLC shall acquire from Seller, all of Seller's right, title and interest in and to all rights and assets used or held for use in connection with the Business, including but not limited to the rights and assets set forth below, whether now existing or hereafter acquired, but excluding the Excluded Assets (each an " Asset " and collectively, the " Assets "):

a.         the Property;

b.        the Assumed Contracts;

c.         the Acquired Personal Property;

d.        the Accounts Receivable;

e.         all cash, cash equivalents, bank deposits or similar cash items of the Business as of the Closing (whether or not reflected on the financial statements of Seller as of the Closing Date), including but not limited to chips and tokens of other casinos;

f.          the Transferred Intellectual Property, including the Transferred Customer Database;

g.        the Vehicles;

h.        copies of all books and records related exclusively to the Assets, the Business or the Assumed Liabilities (including without limitation, all architectural, structural, service manuals, engineering and mechanical plans, electrical, soil, environmental, and similar reports, studies and audits), all plans and specifications for the Hotel/Casino (including all working drawings), and all human resources and other employee-related files and records relating to the Transferred Employees, in each case except to the extent prohibited by Law; and

i.          any rights, claims, rebates, discounts and credits (including all indemnities, warranties and similar rights), performance and other bonds, security and other deposits, advance payments, and prepaid rents in favor of Seller or any of its Affiliates or any of their respective Representatives to the extent exclusively relating to the Assets, the Business or any Assumed Liabilities; and

j.          the assets set forth on Schedule 2.1(j) (the " Designated Personal Property ").

Section 2.2    Excluded Assets . Notwithstanding anything to the contrary contained in this Agreement, from and after the Closing, Seller or its Affiliates shall retain all of its right, title and interest in and to the following assets (the " Excluded Assets "), which Excluded Assets shall not be transferred to LLC pursuant to the Transfer:

a.         the Excluded Contracts;

b.        any rights, claims and credits (including all indemnities, warranties and similar rights) in favor of Seller or any of its Affiliates or any of their respective Representatives to the extent relating to any other Excluded Asset, any Excluded Liability or any matter to the extent Seller and Seller Parent indemnify any Buyer Indemnified Party pursuant to this Agreement;

c.         any refund or credit of Taxes of Seller or attributable to the Assets for the Pre-Transfer Tax Period or otherwise constituting Excluded Liabilities;

d.        all human resources and other employee-related files and records, other than such files and records related to the Transferred Employees;

e.         the Excluded Personal Property;

f.          the Excluded Intellectual Property; and

g.        any assets set forth on Section 2.2(g) of the Seller Disclosure Letter.

Section 2.3    Retention of Assets . Notwithstanding anything to the contrary contained in this Agreement, Seller may retain, at its expense, one archival copy of all Assumed Contracts and other documents or materials conveyed hereunder (including, without limitation, the Transferred Customer Database) and all historical records of customers (which Seller will retain the right to use, including in connection with its marketing and loyalty programs), in each case which (a) are used in connection with Seller's or its Affiliates' businesses or (b) Seller in good faith determines it is reasonably likely to need in connection with the defense (or any counterclaim, cross-claim or similar claim in connection therewith) of any suit, claim, action, proceeding or investigation against or by Seller or any of its Affiliates pending or threatened as of the Closing Date.

Section 2.4    Assignability and Consents .

a.         Notwithstanding anything to the contrary contained in this Agreement, if the sale, conveyance, assignment or transfer or attempted sale, conveyance, assignment or transfer to LLC of any Asset is (i) prohibited by any applicable Law or (ii) would require any authorizations, approvals, consents or waivers from a third party and such authorizations, approvals, consents or waivers shall not have been obtained prior to the Closing Date (each, a " Non-Assignable Asset "), then, in either case, the Transfer shall proceed, but the Transfer shall not constitute the conveyance, assignment, transfer or delivery of such Non-Assignable Asset, and this Agreement shall not constitute a conveyance, assignment, transfer or delivery of such Non-Assignable Asset unless and until such authorization, approval, consent or waiver is obtained. After the Closing Date, Seller and Seller Parent shall use commercially reasonable efforts to obtain any such authorizations, approvals, consents or waivers related to the Non-Assignable Assets, and Seller and Seller Parent shall use commercially reasonable efforts to arrange for LLC to receive the interest of Seller or its Affiliates in the benefits under such Non- Assignable Assets under a mutually agreeable arrangement with Buyer until such time as such third party consent, approval or waiver shall have been obtained, and Seller and Seller Parent shall cooperate with LLC in any such mutually agreeable arrangement, and, in such case, LLC shall be responsible for the performance under and any payments required to be made pursuant to any Non- Assignable Asset to the extent mutually agreed to by Seller and LLC. Seller shall, and shall cause its Affiliates to, promptly pay over to LLC the gross amount of all payments received by it or them in respect of all Non-Assignable Assets with respect to any obligations performed by LLC after the Closing pursuant to this Section 2.4 . Notwithstanding the foregoing, this Section 2.4 shall not apply to any authorizations, approvals, consents or waivers that are conditions to consummating the transactions under this Agreement pursuant to Article VII .

b.        Once authorization, approval or waiver of or consent for the sale, conveyance, assignment or transfer of any such Non-Assignable Asset is obtained, Seller shall, or shall cause its Affiliates to, convey, assign, transfer and deliver such Non-Assignable Asset to LLC at no additional cost to Buyer or LLC. Notwithstanding anything to the contrary contained in this Agreement, LLC shall not assume any Liabilities under a Non-Assignable Asset until it has been assigned to LLC; provided, however , that, until such assignment, LLC shall be liable to Seller for performing its obligations under any mutually agreeable arrangements respecting any Non-Assignable Asset to the extent set forth in Section 2.4(a) .

c.         Buyer understands and agrees that it is solely Buyer's responsibility to obtain any and all licenses, permits and operating agreements necessary to conduct business at the Property and otherwise operate the Business from and after the Closing Date, including, without limitation, replacement software license agreements for the software which will replace the Excluded Software and other license agreements covering other Excluded Intellectual Property.

d.        Seller, Seller Parent and Buyer each agree that it will not, and Seller and Seller Parent will cause LLC not to, enter into any Contract from the date hereof through the Closing that constitutes a Non-Assignable Asset, provided that, notwithstanding the foregoing, Buyer, in his sole discretion, may enter, in his own name or in the name of LLC or one of his Affiliates, into any Contract with respect to the Business or LLC that will become effective only if the Closing occurs and is solely related to the post-Closing operations of the Business and does not create any obligation thereunder for Seller Parent, Seller or any of their Affiliates (excluding LLC after the Closing), and shall be and remain fully liable for all obligations under any such Contract; and provided further , that entry into any such Contract shall in no event be deemed to result in a breach of any representation, warranty or agreement of Seller or Seller Parent hereunder.

Section 2.5    Removal of Excluded Assets and Designated Personal Property .

a.         All items located at the Property that constitute Excluded Assets shall be removed within thirty (30) days after the Closing Date by Seller or its Representatives, upon reasonable notice, with Seller making or causing to be made any repairs to the Assets necessitated by such removal in a manner reasonably satisfactory to Buyer, but without any obligation on the part of Seller to replace any item so removed; provided that: (a) there shall be no material interference with Buyer's operation of the Business after the Closing, and (b) the costs of removal and any repair necessitated by such removal shall be borne solely by Seller. Buyer shall provide, upon reasonable notice, the removing party with reasonable access at reasonable times to the Property for any such removal or repair. Seller recognizes that Buyer will be replacing Excluded Software and that Buyer desires that its replacement software will be operational as of the Closing. Seller agrees to cooperate reasonably with Buyer in effecting the transition from Excluded Software to replacement software and to use reasonable efforts to minimize disruption to the operations of the Business, including providing Buyer and its Representatives, upon reasonable notice, access to the Property at reasonable times and on reasonable notice; provided that: (x) there shall be no material interference with Seller's operation of the Business before the Closing; (y) the costs of removal and any repair necessitated by such removal shall be borne solely by Buyer; and (z) Seller shall not be required to reveal proprietary information to Buyer in the course of such removal. Seller will not de-install third party Excluded Software that is now installed on personal computers at the Property and Buyer agrees that Buyer will either obtain new licenses for such Excluded Software or cease to use such Excluded Software following the Closing.

b.        All items that constitute Designated Personal Property and all personal effects of Buyer shall be removed from Seller's or its Affiliates' facilities, as applicable, within thirty (30) days after the Closing Date by Buyer, upon reasonable notice, with Buyer making or causing to be made any repairs necessitated by such removal in a manner reasonably satisfactory to Seller, but without any obligation on the part of Buyer to replace any item so removed; provided that: (a) in connection with such removal and repair, there shall be no material interference with the operation of the facility at which the applicable Designated Personal Property or personal effect is located, and (b) the costs of removal and any repair necessitated by such removal shall be borne solely by Buyer. Seller shall provide, and shall cause its applicable Affiliates to provide, upon reasonable notice, Buyer with reasonable access at reasonable times to the applicable facilities for any such removal or repair.

Section 2.6    Assumption of Liabilities .

a.         Upon the terms and subject to the conditions set forth in this Agreement, as of the Closing Date, Seller shall assign to LLC and LLC shall assume the following Liabilities (the " Assumed Liabilities ") without any proration or adjustment to the Purchase Price:

                                                         i.             all Liabilities relating to any of the Assets accruing, arising out of, or relating to events or occurrences happening from and after the Closing Date, including, but not limited to, all obligations and burdens accruing, arising out of, or relating to any Assumed Contracts from and after the Closing Date;

                                                        ii.             all Liabilities of Seller for replacement of, or refund for, damaged, defective or returned goods from and after the Closing Date;

                                                      iii.             all Liabilities of Seller with respect to reservations relating to the Property made prior to the Closing Date by Seller in the Ordinary Course of Business for dates on or after the Closing Date, including, without limitation, room, facilities, services, entertainment, equestrian, banquet and food service reservations;

                                                      iv.             except as expressly provided in this Agreement, all Liabilities for Taxes arising out of or relating to the ownership of the Assets from and after the Closing Date;

                                                       v.             all construction costs and payables of the Business other than those that represent Budgeted Construction Costs;

                                                      vi.             all Liabilities for Accounts Payable of the Business (excluding payables representing Budgeted Construction Costs) outstanding as of the Closing Date;

                                                    vii.             all Liabilities arising out of or related to the employment of the Transferred Employees from and after the Closing; and

                                                   viii.             to the extent not otherwise covered by clauses (i) through (vii), all Liabilities reflected in the Working Capital and Cash Statement.

b.        Except for the Assumed Liabilities, LLC, from and after the Closing, shall not assume and shall not be liable or responsible for, and Seller, from and after the Closing, shall retain, any Liabilities of the Business, Seller, Seller Parent or any of their Affiliates, including, without limitation, all of the following Liabilities (" Excluded Liabilities "):

                                                         i.             all Liabilities relating to any of the Assets accruing, arising out of, or relating to events or occurrences happening prior to the Closing Date, including, but not limited to, all obligations and burdens accruing from, arising out of, or relating to any Assumed Contracts prior to the Closing Date;

                                                        ii.             any Liability of Seller or any of its Affiliates arising out of or relating to the employment of the Reserved Employees from and after the Closing or the Reserved Employees and Transferred Employees prior to the Closing, including without limitation any bonuses earned under Seller Parent's annual incentive plan by Transferred Employees for any period prior to the Closing (treating those Transferred Employees not set forth on Section 6.4(a) of the Buyer Disclosure Letter, as supplemented, as if employed by Seller as of December 31, 2006);

                                                      iii.             except as expressly provided in this Agreement, any Liability for Taxes imposed upon Seller or its Affiliates, or attributable to, arising out of, relating to the ownership of, or imposed upon the Assets relating to any period ending on or prior to the Closing Date;

                                                      iv.             any Liability of Seller or any of its Affiliates that relates to any Excluded Asset; and

                                                       v.             any Budgeted Construction Costs, whether arising before or after the Closing.

Section 2.7    Delivery of Deed and Title Policy . Seller shall deliver or cause to be delivered to LLC the executed and recorded original deed for the Land and an original of the Title Policy as soon as reasonably practicable following the Closing.

Section 2.8    Termination of Certain Agreements . Effective immediately prior to the Closing, Seller and/or LLC will cause the Contracts set forth on Section 2.8 of the Seller Disclosure Letter to be terminated and LLC and the LLC Units to be released from any liability, restriction or required performance thereunder. Evidence of such termination and release, in form and substance reasonably satisfactory to Buyer, shall be furnished by Seller or LLC, as applicable, at the Closing.

Section 2.9    Construction Costs . Seller shall be responsible for the payment of all Budgeted Construction Costs and such costs shall be an Excluded Liability hereunder. Buyer shall be responsible for the payment of all other costs incurred at any time under construction and similar Contracts related to the Business, other than capital expenditures permitted under Section 6.1 . For the purposes of this Agreement, " Budgeted Construction Costs " means those construction costs of the Business, up to an aggregate amount of Five Hundred Ninety Million Nine Hundred Sixty-Seven Thousand One Hundred Seventy-Eight Dollars ($590,967,178), associated with the acquisition, design, planning, approval, permitting and construction of the Property and infrastructure improvements in connection therewith as shown in the schedule attached as Section 2.9 of the Seller Disclosure Letter. At least three (3) Business Days prior to the Closing, Buyer and Seller shall mutually agree upon the aggregate dollar amount of construction obligations for which Seller shall remain liable as of the Closing under this Agreement.

Section 2.10    Transfer Deliveries at Closing . The following documents and deliverables, will be executed and delivered at the Closing by LLC and Seller in connection with the Transfer, as indicated:

a.         Bill of Sale for Personal Property . A Bill of Sale and Assignment in the form attached as Exhibit 2.10(a) executed by Seller conveying to LLC all of Seller's right, title and interest in and to the Acquired Personal Property.

b.        Assumed Contracts . Counterparts of the assignment and assumption agreements in the form attached as Exhibit 2.10(b) to transfer the Assumed Contracts to LLC executed by Seller and LLC (and LLC agrees to execute and deliver such other assumption agreements or other documents reasonably required by any third party to effectuate the assumption of the Liabilities under the Assumed Contracts).

c.         Assignment and Assumption Agreement . An Assignment and Assumption Agreement in the form attached as Exhibit 2.10(c) executed by Seller and LLC relating to the Assumed Liabilities.

d.        Reservations, Promotional Liabilities and Frequent Player Awards . Counterparts of a reservations and promotions assignment and assumption agreement in the form attached as Exhibit 2.10(d) executed by Seller and LLC.

e.         Transfer of Guest Safe Deposit Items . A Transfer of Guest Items executed by LLC in the form attached as Exhibit 2.10(e) confirming the transfer of guest safe or safety deposit box contents.

f.          Assumption of Post-Closing Progressive Gaming Liabilities . An assumption of post-closing progressive gaming liabilities executed by LLC in the form attached as Exhibit 2.10(f) .

g.        Transfer of Guest Baggage . A confirmation by LLC and Seller of the transfer of guest baggage entrusted to Seller in the form attached as Exhibit 2.10(g) .

h.        Vehicle Titles . Certificates of title executed by Seller, endorsed for transfer to LLC, for all Vehicles along with a Bill of Sale therefor in the form attached as Exhibit 2.10(h) .

i.          FCC Licenses . As to each Federal Communications Commission license applicable to the Property for which an approval or consent is required and has been issued prior to the Closing, an assignment and assumption of such licenses in the form attached as Exhibit 2.10(i) .

j.          Transferred Customer Database . A copy delivered by Seller (in electronic form) of all of the Transferred Customer Database, which shall be transferred to LLC in the same format that existed in the Customer Database as of July 1, 2006.

k.         Assignment of Trademarks . A trademark assignment executed by Seller with respect to the "Michael's restaurant" mark in the form attached hereto as Exhibit 2.10(k) , and Seller shall cooperate with LLC in the recordation of such assignment with the U.S. Patent and Trademark Office and any state entity with which trademarks must be filed.

Section 2.11    Proration of Property Taxes . All real and personal property Taxes, ad valorem Taxes and any other Taxes and assessments that are customarily prorated as of the Closing Date (collectively " Property Taxes ") shall be allocated and prorated between Seller and LLC as of 12:01 (a.m.) Pacific Time on the Closing Date on the basis of the fiscal year for which they are assessed. In connection therewith, Buyer shall reimburse Seller for any prepayment of Property Taxes attributable to the Post-Transfer Tax Period. This proration of Property Taxes shall be subject to adjustment after the Closing Date when the final tax bill for the year of the Closing becomes available. Seller or LLC, as applicable, shall pay promptly to the other party any amounts due as a result of such adjustments. Any Property Tax refunds or rebates relating to any Pre-Transfer Tax Period shall be the property of Seller, and Buyer shall pay promptly to Seller any such amounts (or portions thereof) that it receives after the Closing. Any Property Tax refunds or rebates relating to any Post-Transfer Tax Period shall be the property of Buyer, and Seller shall pay promptly to Buyer any such amounts (or portions thereof) that it receives.

ARTICLE III

PURCHASE PRICE

Section 3.1    Purchase Price . The Purchase Price for the Sale (the " Purchase Price ") shall be an amount equal to the sum of (a) the Net Offering Proceeds plus (b) the principal amount of the Note, plus (c) the Cash Makeup Amount, if any; provided that the Purchase Price shall not be less than Five Hundred Million Dollars ($500,000,000) (the " Minimum Proceeds "); and provided , further , that the Purchase Price shall be subject to the adjustment set forth in Section 3.3 . At the Closing, (x) Buyer and Seller Parent shall direct the Escrow Agent to deliver or cause to be delivered to Seller both the Net Offering Proceeds and the Cash Makeup Amount, if any, by electronic transfer of immediately available funds to an account designated by Seller, (y) Buyer and Seller Parent shall direct the Escrow Agent to deliver or cause to be delivered to Seller the Note for cancellation by Seller Parent, and (z) Buyer shall deliver written instructions to Seller Parent to apply the principal amount of the Note to the Purchase Price.

Section 3.2    Escrow. At or prior to the consummation of the Offering, Seller, Seller Parent and Buyer shall enter into an Escrow Agreement with Wells Fargo Bank, N.A. or another Person mutually acceptable to Buyer and Seller (the " Escrow Agent ") in substantially the form attached hereto as Exhibit 3.2 (the " Escrow Agreement "). Upon the consummation of the Offering in accordance with the provisions of Section 6.10 , Buyer shall deposit the Net Offering Proceeds, the Cash Makeup Amount, if any (collectively, with the Net Offering Proceeds, the " Escrow Amount ") into escrow pursuant to the terms of the Escrow Agreement. The Note shall be deposited as set forth in Section 6.10(d) into escrow pursuant to the terms of the Escrow Agreement.

Section 3.3    Working Capital and Cash Adjustment .

a.         As promptly as practicable, but in no event later than thirty (30) days following the Closing Date, Seller shall cause the following to be prepared and delivered to Buyer (collectively, the " Working Capital and Cash Statement "): (i) a statement of each of the Working Capital and the Cash as of the Closing Date, each calculated on a basis consistent with the accounting methods used in the preparation of the financial statements of the Business for the quarter ended June 30, 2006 (the " Q2 Financials "), and the preparation in accordance with generally accepted accounting principles in the United States (" GAAP ") of Seller Parent's most recent audited annual financial statements; and (ii) a statement based on such Working Capital and Cash Statement which sets forth in reasonable detail the calculation of each of the Working Capital and the Cash as of the Closing Date. Except as set forth below, the Working Capital and Cash Statement shall be deemed to be and shall be final, binding and conclusive on the parties hereto upon the earliest to occur of the following (such date, the " Final Resolution Date "): (w) Buyer's delivery of a written notice to Seller of its approval of the Working Capital and Cash Statement; (x) the failure of Buyer to notify Seller in writing of a dispute with the Working Capital and Cash Statement within thirty (30) days after the delivery of the Working Capital and Cash Statement to Buyer; (y) the resolution of all disputes, pursuant to Section 3.3(b) , by Buyer and Seller; and (z) the resolution of all disputes, pursuant to Section 3.3(b) , by the Independent Accounting Firm.

b.        Buyer may dispute any amounts reflected on the Working Capital and Cash Statement by delivery of a written notice thereof to Seller providing reasonable detail regarding the disputed amounts and Buyer's position with respect thereto (a " Working Capital and Cash Statement Dispute Notice "). If Buyer delivers a Working Capital and Cash Statement Dispute Notice to Seller, Buyer and Seller shall attempt in good faith to reconcile such dispute. If Buyer and Seller are unable to reach a resolution on all disputed items within thirty (30) days after the delivery of the Working Capital and Cash Statement Dispute Notice to Seller, Buyer and Seller shall as soon as practicable thereafter (and in any event within five (5) Business Days) submit their respective determinations and calculations and the items remaining in dispute for resolution to Ernst & Young LLP or such other independent accounting firm of national reputation as mutually agreed by Buyer and Seller (the " Independent Accounting Firm "). The parties hereto shall cause the Independent Accounting Firm to submit a report to Buyer and Seller, with a determination solely regarding the remaining disputed items (based solely on the principles of calculation specified in this Agreement with regard to such disputed items), within thirty (30) days after submission of the matter to the Independent Accounting Firm, and such report shall be final, binding and conclusive on the parties hereto. The fees, costs and expenses of the Independent Accounting Firm shall be paid by Buyer and Seller in the same proportion that the aggregate amount of such remaining disputed items so submitted to the Independent Accounting Firm that is unsuccessfully disputed by each such party as finally determined by the Independent Accounting Firm bears to the total amount of such remaining disputed items.

c.         The Purchase Price shall be increased or decreased, as applicable, on a dollar-for-dollar basis, by (i) the amount by which the Working Capital as of the Closing Date as reflected in the Working Capital and Cash Statement as finally determined pursuant to Section 3.3(b) is over One Hundred Thousand Dollars ($100,000) greater or less than negative Four Million One Hundred Sixty-Nine Thousand Four Hundred and Five Dollars ($(4,169,405)) and (ii) the amount by which the Cash as of the Closing Date as reflected in the Working Capital and Cash Statement as finally determined pursuant to Section 3.3(b) is greater or less than Ten Million Six Hundred Fifty-Four Thousand Seven Hundred Thirty Nine Dollars ($10,654,739). Any such adjustment pursuant to clause (i) above shall be netted against any adjustment pursuant to clause (ii) above, and the resulting net adjustment to the Purchase Price is referred to in this Agreement as a " Working Capital and Cash Adjustment ". If the Purchase Price increases as a result of a Working Capital and Cash Adjustment, Buyer shall pay any additional amount due to Seller, by wire transfer of immediately available funds to an account designated by Seller, within three (3) Business Days of the Final Resolution Date. If the Purchase Price decreases as a result of a Working Capital and Cash Adjustment, Seller shall pay any amount due to Buyer by wire transfer of immediately available funds to an account designated by Buyer, within three (3) Business Days of the Final Resolution Date. The party required to make a payment under this Section 3.3(c) shall also pay interest on such amount required to be paid from and including the Closing Date but excluding the date of payment thereof at the prime lending rate as published on the date of payment in The Wall Street Journal .

d.        For the purposes of this Agreement:

                                                         i.             " Working Capital " means current assets of the Business, excluding Cash, minus current liabilities of the Business as calculated using the accounts and line items, and in the manner, shown in Section 3.3(d) of the Seller Disclosure Letter; provided that Excluded Assets and Excluded Liabilities shall not be included in current assets or current liabilities, respectively, of the Business for the purpose of such calculation; and

                                                        ii.             " Cash " means all cash, cash equivalents, bank deposits or similar cash items of the Business.

Section 3.4    Allocation of Purchase Price . The parties intend the transactions contemplated by this Agreement to constitute a sale of assets for federal income and applicable state tax purposes and for LLC to constitute a disregarded entity for federal income and applicable state tax purposes. None of the parties hereto shall make any tax election or take a position in any Tax Return which is contrary to the intent expressed in the foregoing sentence without the written consent of each of the other parties hereto (which consent shall not be unreasonably withheld or delayed). As soon as reasonably practicable after the Final Resolution Date, Seller shall provide to Buyer for Buyer's review and approval (which approval shall not be unreasonably withheld or delayed) a proposed allocation of the Purchase Price, as adjusted pursuant to Section 3.3 , among the various classes of Assets (as such classes are defined for the purposes of Section 1060 of the Code). All allocations made pursuant to this Section 3.4 shall be made in accordance with the requirements of Section 1060 of the Code. None of the parties shall take a position on any Tax Return (including but not limited to any IRS Form 8594), before any Governmental Entity or in any Legal Proceeding that is in any manner inconsistent with such allocation without the written consent of each of the other parties to this Agreement or unless specifically required pursuant to a binding determination by an applicable Governmental Entity. The parties hereto shall promptly advise each other of the existence of any Tax audit, controversy or litigation related to any allocation hereunder. Notwithstanding anything in this Agreement to the contrary, any dispute arising under this Section 3.4 shall be resolved in the same manner as disputes are resolved pursuant to Section 3.3(b) .

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
SELLER AND SELLER PARENT

Seller and Seller Parent represent and warrant to Buyer that the statements contained in this Article IV (a) are true and correct as of the date hereof and (b) will be true and correct as of the Closing, in each case except as set forth herein and in the disclosure letter delivered by Seller and Seller Parent to Buyer concurrently with the execution and delivery of this Agreement (the " Seller Disclosure Letter "). The Seller Disclosure Letter is arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article IV .

Section 4.1    Organization of Seller, Seller Parent and LLC . Seller, Seller Parent and LLC are duly organized, validly existing and in good standing under the laws of the jurisdictions of their formation and have all requisite corporate or limited liability company power, as applicable, and authority to own, lease and operate their properties and to carry on their business as now being conducted and as proposed to be conducted prior to the Closing. Seller, Seller Parent and LLC are each duly qualified or licensed to do business and are in good standing in each jurisdiction in which the property owned, leased or operated by them or the nature of the business conducted by them makes such qualification, licensing or good standing necessary, except where the failure to be so qualified, licensed or in good standing would not have a Seller Material Adverse Effect. LLC does not have any Subsidiaries. Seller has at all relevant times treated LLC as a disregarded entity for federal and state income tax purposes and has not made an election to treat LLC as an association taxable as a corporation pursuant to Treasury Regulations Section 301.7701-3 or any similar provisions under state law.

Section 4.2    Authority; No Conflict; Required Filings and Consents .

a.         LLC, Seller and Seller Parent have all requisite limited liability company or corporate power, as applicable, and authority to enter into this Agreement, to perform their obligations hereunder and the agreements contemplated hereby and to consummate the transactions to which they are a party that are contemplated by this Agreement and the agreements contemplated hereby. The execution and delivery of this Agreement by LLC, Seller and Seller Parent and the consummation by LLC, Seller and Seller Parent of the transactions to which they are a party that are contemplated by this Agreement have been duly authorized by all necessary limited liability company and corporate action on the part of LLC, Seller and Seller Parent. This Agreement has been duly executed and delivered by LLC, Seller and Seller Parent and, assuming this Agreement constitutes the valid and binding obligation of Buyer, constitutes the valid and binding obligation of LLC, Seller and Seller Parent, enforceable against LLC, Seller and Seller Parent in accordance with its terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect affecting creditors' rights generally and (ii) general principles of equity.

b.        The execution and delivery of this Agreement by LLC, Seller and Seller Parent does not, and the consummation by LLC, Seller and Seller Parent of the transactions to which they are a party that are contemplated by this Agreement will not, (i) conflict with, or result in any violation or breach of, any provision of the articles of incorporation, operating agreement, bylaws or other organizational documents of LLC, Seller or Seller Parent, (ii) subject to receipt of the consents set forth in Section 4.2(b) of the Seller Disclosure Letter, result in any violation or breach of, or constitute (with or without notice or lapse of time, or both) a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any material benefit) under, or require a consent or waiver under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, Contract (including any Assumed Contract) or obligation to which LLC, Seller or Seller Parent is a party or by which they or any of the Assets may be bound, or (iii) subject to the governmental filings and other matters referred to in Section 4.2(c) , conflict with or violate any permit, authorization, registration, notice, certificate, exemption, concession, franchise, license, judgment, or Law applicable to Seller, Seller Parent, LLC or the Assets, except in the case of clauses (ii) and (iii) for any such breaches, conflicts, violations, defaults, terminations, cancellations, accelerations, losses or failures to obtain any such consent or waiver which (x) would not, individually or in the aggregate, be reasonably likely to have a Seller Material Adverse Effect, or (y) would not materially impair or materially delay the Closing.

c.         No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency, regulatory body, commission, quasi-governmental authority gaming authority or other governmental authority or instrumentality (" Governmental Entity ") is required by or with respect to LLC, Seller or Seller Parent in connection with the execution and delivery of this Agreement by LLC, Seller and Seller Parent or the consummation by LLC, Seller and Seller Parent of the transactions to which they are a party that are contemplated hereby, except for (i) the filing of the pre-merger notification report under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended (" HSR Act "), (ii) any approvals and filing of notices required under applicable Gaming Laws, (iii) such consents, approvals, orders, authorizations, permits, filings, declarations or registrations related to, or arising out of, compliance with (A) statutes, rules or regulations regulating the consumption, sale or serving of alcoholic beverages or (B) statutes, rules or regulations of Clark County, Nevada, (iv) such other filings, consents, approvals, orders, authorizations, permits, registrations and declarations as may be required under the Laws of any jurisdiction in which Seller Parent conducts any business or owns any assets, the failure of which to make or obtain would not, individually or in the aggregate, be reasonably likely to have a Seller Material Adverse Effect, (v) filings with the Commission in connection with the Offering and the other transactions contemplated hereby (the " SEC Filings ") and (vi) any consents, approvals, orders, authorizations, registrations, permits, declaration or filings required by Buyer or any of his Affiliates or any Persons who will be Transferred Employees (including, without limitation, under applicable Gaming Laws).

Section 4.3    Property .

a.         To the knowledge of Seller and Seller Parent, there are no material Contracts with any Governmental Entity affecting the use or ownership of the Property.

b.        To the knowledge of Seller, there are no Contracts, commitments, letters of intent or other obligations outstanding for the sale, exchange, material encumbrance, lease or transfer of the Property, or any portion of it, other than Contracts and obligations entered into after the date of this Agreement in compliance with Section 6.1 .

Section 4.4    Title to Assets . To the knowledge of Seller, Seller prior to the Transfer, and LLC at the Closing, has, or will have, sufficiently good and valid title to, or an adequate leasehold interest in, the Assets free and clear of all Liens and Encumbrances except for Permitted Liens and Permitted Encumbrances.

Section 4.5    Contracts .

a.         To the knowledge of Seller and Seller Parent, Section 4.5(a) of the Seller Disclosure Letter (as supplemented or modified by Seller, subject to the reasonable approval of Buyer, no later than ten (10) days following the date hereof) lists all of the Contracts that are material to the Business as presently conducted (collectively, the " Material Contracts ").

b.        No party to any Material Contract has asserted in writing to Seller Parent or, to the Knowledge of Seller Parent, to Seller that Seller, Seller Parent or LLC is in default in any material respect of any Material Contract that is included in the Assets, and to the knowledge of Seller and Seller Parent, there exists no default or event of default or event, occurrence, condition or act with respect to Seller, Seller Parent or LLC or, with respect to the other contracting party, which, with the giving of notice, the lapse of time or the happening of any other event or conditions, would become a material default or material event of default under any Material Contract.

c.         To the knowledge of the Seller and Seller Parent, each Material Contract is in full force and effect and is a legal, valid and binding obligation of Seller or Seller Parent, as the case may be, and each other party thereto, enforceable against each party in accordance with its terms, except (i) as rights to indemnity thereunder may be limited by applicable Law or the public policies embodied therein, (ii) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the enforcement of creditors' rights generally and (iii) as the remedy of specific performance and other forms of injunctive relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

Section 4.6    Employee Benefits . Except as set forth in Section 4.6 of the Seller Disclosure Letter, to the knowledge of Seller and Seller Parent, there are no (a) "employee welfare benefit plans," within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder (" ERISA "); (b) "employee pension benefit plans," within the meaning of Section 3(2) of ERISA; and (c) material bonus, stock option, stock purchase, restricted stock, incentive, fringe benefit, profit-sharing, pension or retirement, deferred compensation, medical, life insurance, disability, accident, salary continuation, severance, accrued leave, vacation, sick pay, sick leave, supplemental retirement and unemployment benefit plans, programs, arrangements, commitments and/or practices (whether or not insured) in which Property Employees participate (all of the foregoing plans, programs, arrangements, commitments, practices, contracts and agreements referred to in clauses (a), (b) and (c) above are collectively referred to as the " Employee Benefit Plans "). Neither Seller Parent (with respect to employees other than employees of Seller), nor, to the knowledge of Seller and Seller Parent, neither LLC, Seller, Seller Parent (with respect to employees of Seller), or any other person or entity that, together with Seller or Seller Parent, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code, has incurred any material Liability under, arising out of or by operation of Title IV of ERISA, other than Liability for premiums to the Pension Benefit Guaranty Corporation arising in the Ordinary Course of Business, including any material Liability in connection with (i) the termination or reorganization of any employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any "multiemployer plan" (within the meaning of Section 3(37) of ERISA), in each case, that remains unsatisfied, and no fact or event exists that would reasonably be expected to give rise to any such Liability.

Section 4.7    Brokers . None of Seller, Seller Parent or LLC, nor any of their Representatives, has employed any broker, financial advisor or finder or incurred any Liability for any brokerage fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement, except that Seller Parent has retained Deutsche Bank Securities Inc. as financial advisor.

Section 4.8    Units . The authorized capital of LLC consists solely of one hundred (100) LLC Units, all of which are issued and outstanding and are owned of record by Seller. All of the issued and outstanding LLC Units have been duly authorized and are validly issued, fully paid and nonassessable, are not subject to any preemptive rights and have not been issued in violation of any applicable Laws, operating agreement or the terms of any agreement to which LLC, Seller or Seller Parent is a party or is bound. There are no LLC Units or other equity interest or securities of LLC reserved for issuance or any outstanding subscriptions, options, warrants, rights, "phantom" stock rights, convertible or exchangeable securities, stock appreciation rights or other agreements or commitments (other than this Agreement) granting to any Person any interest in or right to acquire at any time, or upon the happening of any stated event, any LLC Units or other equity interest or securities of LLC, or any interest in, exchangeable for or convertible into LLC Units or other equity interest or securities of LLC or restricting Seller's rights to transfer any of the LLC Units. Upon the Closing, Buyer shall own all outstanding LLC Units free and clear of all Liens and Encumbrances.

Section 4.9    Intellectual Property .

a.         Registered Intellectual Property . To the knowledge of Seller and Seller Parent, Section 4.9(a) of the Seller Disclosure Letter sets forth a true and complete list of all domain names, registered trademarks or service marks and applications to register any trademarks or service marks, and registered copyrights and applications for registration of copyrights, in each case that constitute Transferred Intellectual Property (the " Transferred Registered IP "). To the knowledge of Seller and Seller Parent, no Transferred Registered IP is now involved in any opposition or cancellation proceeding and, to the knowledge of Seller and Seller Parent, no such proceeding is or has been threatened in writing with respect thereto. To the knowledge of Seller and Seller Parent, all Transferred Registered IP is subsisting, valid and enforceable, and no abandonment, cancellation, or forfeiture of any of the Transferred Registered IP is pending or threatened in writing. Neither Seller Parent, nor any of its Affiliates other than Seller has actually received any written notice or claim directly from a claimant challenging the validity or enforceability of any Transferred Registered IP that remains pending or unresolved as of the date hereof. To the knowledge of Seller and Seller Parent, Seller has not received any written notice or claim challenging the validity or enforceability of any Transferred Registered IP that remains pending or unresolved as of the date hereof.

b.        Ownership of Intellectual Property . To the knowledge of Seller Parent and Seller, Seller, as of the date hereof, owns exclusively, free and clear of all Liens (except for any Permitted Liens), all Transferred Intellectual Property. Except as set forth on Section 4.9(b) of the Seller Disclosure Letter, as of the Closing, to the knowledge of Seller and Seller Parent, LLC will own exclusively, free and clear of all Liens (except for any Permitted Liens), the Transferred Intellectual Property. Neither Seller Parent nor any of its Affiliates other than Seller has actually received any written notice or claim directly from a claimant challenging Seller's or its respective Affiliate's ownership of any Transferred Intellectual Property, in each case that remains pending or unresolved as of the date hereof. To the knowledge of Seller and Seller Parent, Seller has not received any written notice or claim challenging Seller's or its respective Affiliate's ownership of any Transferred Intellectual Property, in each case that remains pending or unresolved as of the date hereof.

c.         No Transfer of Ownership or Exclusive Rights; No Pending Loss of Rights . Neither Seller Parent nor, to the knowledge of Seller and Seller Parent, Seller, has transferred ownership of, or granted any exclusive license with respect to, or, in the case of Seller Parent, caused Seller to transfer ownership of, or grant any exclusive license with respect to, any Transferred Intellectual Property other than any transfer to LLC contemplated hereby. To the knowledge of Seller and Seller Parent, no loss or early expiration of any Transferred Intellectual Property is pending or threatened in writing.

d.        Infringement . Except as set forth in Section 4.9(d) of the Seller Disclosure Letter, (i) to the knowledge of Seller and Seller Parent, the Business, including the operation of the Hotel/Casino, including the use of any material Intellectual Property by Seller in connection therewith, and the use and display of the "MICHAEL'S restaurant" trademark in connection with the Michael's restaurant located at the Barbary Coast Hotel and Casino in Las Vegas, Nevada (" Michael's Restaurant ") have not infringed upon, misappropriated, or constituted the unauthorized use of, any Intellectual Property of any third party, (ii) the Seller Parent has not received any actual written notice or claim directly from a claimant asserting that any such infringement, misappropriation, or unauthorized use is or may be occurring or has or may have occurred that remains pending or unresolved; and (iii) to the knowledge of Seller Parent and Seller, Seller has not received any written notice or claim asserting that any such infringement, misappropriation, or unauthorized use is or may be occurring or has or may have occurred that remains pending or unresolved. Except as set forth in Section 4.9(d) of the Seller Disclosure Letter, to the knowledge of Seller and Seller Parent, no third party is misappropriating, infringing, or violating in a material manner any material Intellectual Property that is used exclusively in the operation of the Hotel/Casino or the "MICHAEL'S restaurant" trademark that is used in connection with Michael's Restaurant. To the knowledge of Seller and Seller Parent, neither any Intellectual Property used exclusively in the operation of the Hotel/Casino, nor the "MICHAEL'S restaurant" trademark that is used in connection with Michael's Restaurant, is subject to any outstanding order, judgment, or decree restricting the use thereof by the Seller or its Affiliates.

Section 4.10    Fairness Opinion . Seller Parent has received an opinion letter from Deutsche Bank Securities Inc. to the effect that the consideration to be received by Seller and Seller Parent in connection with the transactions contemplated by this Agreement is fair to Seller and Seller Parent, from a financial point of view.

Section 4.11    Legal Proceedings . To the knowledge of Seller and Seller Parent, there is no Legal Proceeding with respect to the Business or Property pending and no such Legal Proceeding is threatened against Seller, Seller Parent or any of their Affiliates, before any court, arbitrator, mediator or other Governmental Entity that if adversely determined would be reasonably likely to result in a Seller Material Adverse Effect. To the Knowledge of Seller and Seller Parent, Seller and Seller Parent are not with respect to the Business subject to any outstanding judgment, injunction or other order or ruling of, or settlement issued or approved by, any court or other Governmental Entity. Except as set forth in Section 4.11 of the Seller Disclosure Letter, to the knowledge of Seller and Seller Parent, no Governmental Entity has at any time challenged the legal right of the Seller, Seller Parent or any of their Affiliates to own or operate any of the Assets, or conduct the Business, which challenge remains outstanding as of the date hereof.

Section 4.12    Offering Materials . The Registration Statement (including any prospectus or free writing prospectus constituting a part thereof), when filed by Seller Parent with the Commission in connection with the Offering, will not contain an untrue statement of any material fact or fail to state any material fact required to be contained therein or necessary to make the statements contained therein not misleading (excluding in each case any information provided by Buyer in writing for inclusion therein).

Section 4.13    Receipt of Required Lender Consents . Seller Parent has received all consents and waivers with respect to the transactions contemplated by this Agreement required by the terms of that certain Credit Agreement, dated as of May 20, 2004, entered into among Seller Parent, Bank of America, N.A. and certain other financial institutions, as amended through the date hereof (the " Credit Agreement ").

Section 4.14    Disclaimer of other Representations and Warranties . Except as expressly set for in this Article IV , Seller, Seller Parent and LLC make no representations or warranties, express or implied, at law or in equity, in respect of any of their assets (including, without limitation, the Assets), liabilities or operations, including, without limitation, with respect to non-infringement, merchantability or fitness for any particular purpose, and any such other representations or warranties are hereby expressly disclaimed. Buyer hereby acknowledges and agrees that, except to the extent specifically set forth in this Article IV , Buyer is purchasing the Assets on an "as-is, where-is" basis. Without limiting the generality of the foregoing, Seller, Seller Parent and LLC make no representations or warranties regarding any assets other than the Assets or any liabilities other than the Assumed Liabilities, and none shall be implied at Law or in equity.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller and Seller Parent that the statements contained in this Article V (a) are true and correct as of the date hereof and (b) will be true and correct as of the Closing, in each case except as set forth herein and in the disclosure letter delivered by Buyer to Seller and Seller Parent concurrently with the execution and delivery of this Agreement (the " Buyer Disclosure Letter "). The Buyer Disclosure Letter is arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article V .

Section 5.1    Authority; No Conflict; Required Filings and Consents .

a.         Buyer has legal capacity to enter into this Agreement, to perform his obligations hereunder and under the agreements contemplated hereby and to consummate the transactions to which he is a party that are contemplated by this Agreement. This Agreement has been duly executed and delivered by Buyer and, assuming this Agreement constitutes the valid and binding obligation of Seller, Seller Parent and LLC, constitutes the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect affecting creditors' rights generally and (ii) general principles of equity.

b.        The execution and delivery of this Agreement by Buyer does not, and the consummation by Buyer of the transactions to which he is a party that are contemplated by this Agreement will not, (i) subject to receipt of the consents set forth in Section 5.1(b) of the Buyer Disclosure Letter, result in any violation or breach of, or constitute (with or without notice or lapse of time, or both) a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any material benefit) under, or require a consent or waiver under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, Contract or obligation to which Buyer is a party or by which he or any of his properties or assets may be bound, or (ii) subject to the governmental filings and other matters referred to in Section 5.1(c) , conflict with or violate any permit, authorization, registration, notice, certificate, exemption, concession, franchise, license, judgment, or Law applicable to Buyer or any of his properties or assets, except in the case of clauses (i) and (ii) for any such breaches, conflicts, violations, defaults, terminations, cancellations, accelerations, losses or failures to obtain any such consent or waiver which (x) would not, individually or in the aggregate, be reasonably likely to have a Buyer Material Adverse Effect or (y) would not materially impair or materially delay the Closing.

c.         No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Buyer in connection with the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the transactions to which he is a party that are contemplated hereby, except for (i) the filing of the pre-merger notification report under the HSR Act, (ii) any approvals and filing of notices required under applicable Gaming Laws, (iii) such consents, approvals, orders, authorizations, permits, filings, declarations or registrations related to, or arising out of, compliance with (A) statutes, rules or regulations regulating the consumption, sale or serving of alcoholic beverages or the renaming or rebranding of the operations at the Property or (B) statutes, rules or regulations of Clark County, Nevada, (iv) such other filings, consents, approvals, orders, authorizations, permits, registrations and declarations as may be required under the Laws of any jurisdiction in which Buyer conducts any business or owns any assets, the failure of which to make or obtain would not, individually or in the aggregate, be reasonably likely to have a Buyer Material Adverse Effect, (v) the SEC Filings, and (vi) any consents, approvals, orders, authorizations, registrations, permits, declarations or filings required by Seller or any of its Subsidiaries, Affiliates or key employees (including, without limitation, under applicable Gaming Laws).

Section 5.2    Brokers . Neither Buyer nor any of his Representatives has employed any broker, financial advisor or finder or incurred any Liability for any brokerage fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement.

Section 5.3    No Knowledge of Inaccuracy . To the knowledge of Buyer, (i) none of the representations and warranties of Seller or Seller Parent in Section 4.2(b)(ii) (with respect to Contracts to which Seller is a party), 4.3 , 4.4 , 4.5 , 4.6 , 4.7 (with respect to Seller and its Representatives), 4.9 or 4.11 (in each case without giving effect to any knowledge qualifiers therein), as qualified by the Seller Disclosure Letter, are materially inaccurate, and (ii) the Seller Disclosure Letter is not materially inaccurate as a result of any misstatement or omission therein.

Section 5.4    Stock Ownership . Buyer owns a total of fourteen million seven hundred ninety thousand and five (14,790,005) shares of common stock outstanding of Seller Parent (such shares plus any additional shares of common stock of Seller Parent acquired by Buyer prior to the consummation of the Offering being referred to in this Agreement as the " Owned Shares "). In addition, Buyer holds options to purchase a total of two hundred sixty-five thousand (265,000) shares of common stock of Seller Parent (the " Options "). Buyer represents and warrants that he has good and marketable title to the Owned Shares and the Options free and clear of all Liens and Encumbrances and has full legal right and power to sell the Owned Shares in the Offering and Share Repurchase contemplated by Section 6.10 .

Section 5.5    Accredited Investor Status . Buyer is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended.

ARTICLE VI

COVENANTS

Section 6.1    Conduct of Business . During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, subject to the limitations set forth below, each of Seller, Seller Parent and Buyer agrees (except to the extent that Buyer and Seller Parent shall otherwise consent in writing, which consent shall not be unreasonably withheld) to, and Seller and Seller Parent shall cause LLC to, carry on the Business in the Ordinary Course of Business, to pay debts and Taxes relating to or affecting the Business when due (subject to good faith disputes over such debts or Taxes), to pay or perform its other obligations relating to or affecting the Business when due, and, as applicable, to use commercially reasonable efforts consistent with past practices and policies to preserve intact its present business organization, keep available the services of its present officers and key employees and preserve its relationships with employees, suppliers, licensors, licensees, contractors, customers, distributors, and others having business dealings with it in each case as is necessary to carry on the Business in the Ordinary Course of Business. In addition, during the period from the date of this Agreement and continuing through the earlier of the termination of this Agreement or the Closing, each of Seller, Seller Parent and, except as set forth in Section 6.1(h) and Section 6.4(k) , Buyer agrees (except to the extent that Buyer and Seller Parent mutually agree) not to cause LLC to engage in any business or incur any indebtedness. Without limiting the generality of the foregoing, except as expressly contemplated by this Agreement or as disclosed on Section 6.1 of the Seller Disclosure Letter or Section 6.1 of the Buyer Disclosure Letter, as applicable, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, without the written consent of each of Buyer and Seller Parent (which consent shall not be unreasonably withheld or delayed), each of Seller, Seller Parent and Buyer shall not, and Seller and Seller Parent shall cause LLC to not:

a.         sell, pledge, lease, license, dispose of, grant, encumber or otherwise authorize the sale, pledge, disposition, grant or Encumbrance of LLC Units or any of the Assets, except for (a) sales of current assets in the Ordinary Course of Business in connection with the operation of the Business, or (b) sales of equipment and other non-current assets in the Ordinary Course of Business in connection with the operation of the Business in an amount not to exceed Fifty Thousand Dollars ($50,000) individually or in the aggregate;

b.        incur any Liabilities that are Assumed Liabilities in excess of Fifty Thousand Dollars ($50,000) individually or in the aggregate, except in the Ordinary Course of Business;

c.         make any capital expenditures or series of related capital expenditures relating to the Business (including, but not limited to, expenditures in connection with facilities improvements or construction, remodeling, refurbishing, and infrastructure improvements designed to facilitate access to the Hotel/Casino) exceeding Fifty Thousand Dollars ($50,000) individually or in the aggregate, except for any such capital expenditures or series of related capital expenditures that represent Budgeted Construction Costs or the Three Million Dollars ($3,000,000) in maintenance capital expenditures reflected in the 2006 capital expenditures budget approved by Seller Parent's Board of Directors at its December 2005 meeting and conveyed to Buyer;

d.        violate, modify, amend or terminate in any material respect any of the Material Contracts or waive, release or assign any material rights or claims therein, except in the Ordinary Course of Business or in connection with the Transfer;

e.         take, or agree to commit to take, any action that would make any representation or warranty of Seller or Seller Parent contained herein inaccurate in any respect at, or as of any time prior to, the Closing so as to cause the conditions to Buyer to consummate the transactions contemplated herein not to be satisfied;

f.          close, shut down, or otherwise eliminate the Hotel/Casino, except for such closures, shutdowns or eliminations which are (i) required by action, order, writ, injunction, judgment or decree or otherwise required by Law, or (ii) due to acts of God or other force majeure events;

g.        subject the LLC Units or any Asset to a Lien or Encumbrance, other than Permitted Liens and Permitted Encumbrances;

h.        enter into any material Contract with another Person that would be an Assumed Contract, except in the Ordinary Course of Business or as otherwise contemplated hereunder if such Contract permits an assignment to LLC in connection with the Transfer; provided that, notwithstanding the foregoing, Buyer, in his sole discretion, may enter, in his own name, or in the name of LLC or one of his Affiliates, into any Contract with respect to the Business or LLC that will become effective only if the Closing occurs and is solely related to the post-Closing operations of the Business and does not create any obligation thereunder for Seller Parent, Seller or any of their Affiliates (excluding LLC after the Closing), and shall be and remain fully liable for all obligations under any such Contract; and provided further , that entry into any such Contract shall in no event be deemed to result in a breach of any representation, warranty or agreement of Seller or Seller Parent hereunder;

i.          fail to maintain the existing insurance coverage of all types relating to the Assets or the Business; provided, however , in the event any such coverage shall be terminated or lapse, Seller or Seller Parent shall, or shall cause LLC to, procure substantially similar substitute insurance coverage for the Assets which is consistent with that procured for other hotel and casino properties owned by Seller and Seller Parent in Las Vegas, Nevada;

j.          make any material changes to advertising or marketing plans of Seller, Seller Parent or LLC with respect to the Business, other than in the Ordinary Course of Business;

k.         terminate any of the Property Employees (other than the Reserved Employees), except in the Ordinary Course of Business;

l.          transfer any of the Property Employees (other than the Reserved Employees) to properties, casinos or hotels owned or operated by Seller or its Affiliates (other than the Property) or transfer any other employees of Seller, Seller Parent or their Affiliates to the Business;

m.       violate any Laws relating to the Business or Assets applicable to Seller, Seller Parent or LLC where such violation is reasonably likely to cause, individually or in the aggregate, a Seller Material Adverse Effect; or

n.        enter into a Contract to do any of the foregoing, or authorize or announce an intention to do any of the foregoing.

Section 6.2    Cooperation; Notice; Cure . Subject to compliance with applicable Law (including, without limitation, antitrust Laws and Gaming Laws), from the date hereof until the Closing, each of Seller, Seller Parent and Buyer shall confer on a regular and frequent basis with one or more Representatives of the other parties to report on the general status of ongoing operations of the Business. Each of Seller, Seller Parent and Buyer shall promptly notify the others in writing of, and will use all commercially reasonable efforts to cure before the Closing Date, any event, transaction or circumstance, as soon as practical after it becomes known to such party, that causes or will cause any covenant or agreement of Seller, Seller Parent or Buyer under this Agreement to be breached in any material respect or that renders or will render untrue in any material respect any representation or warranty of Seller, Seller Parent or Buyer contained in this Agreement. Nothing contained in Section 6.1 hereof shall prevent Seller, Seller Parent or Buyer from giving such notice, using such efforts or taking any action to cure or curing any such event, transaction or circumstance. No notice given, or investigation made, pursuant to this Section 6.2 shall affect or be deemed to modify or limit any of the representations, warranties, covenants or agreements contained in this Agreement or the conditions to the obligations of the parties to consummate the transactions contemplated herein.

Section 6.3    FCC Licenses . Seller, Seller Parent and Buyer agree to use commercially reasonable efforts to cooperate to obtain the requisite approvals necessary to transfer all Federal Communications Commission licenses with frequencies used at the Hotel/Casino to LLC at the Closing or as soon thereafter as possible; provided that, in the event that any such approvals are not obtained prior to the Closing, Seller, Seller Parent, Buyer and LLC agree to cooperate and make all reasonably necessary arrangements to permit LLC to use such frequencies following the Closing until such approvals have been obtained.

Section 6.4    Employee Matters .

a.         Seller shall transfer the employment of the Property Employees, other than the Reserved Employees, to LLC immediately prior to the Closing. Buyer, through LLC, also intends to offer employment from and after the Closing certain other employees of Seller and Seller Parent as set forth on Section 6.4(a) of the Buyer Disclosure Letter (as supplemented by Buyer, with such additional employees to be mutually acceptable to Seller and Buyer, no later than ten (10) days following the date hereof). Seller and Seller Parent shall transfer the employment of such other employees who accept Buyer's offer of employment prior to the Closing, and with respect to whom Buyer provides Seller Parent with notice of such acceptance, to LLC immediately prior to the Closing. The Property Employees (other than the Reserved Employees) and the other employees of Seller and Seller Parent set forth on Section 6.4(a) of the Buyer Disclosure Letter, as supplemented, who accept Buyer's offer of employment prior to the Closing and with respect to whom Buyer provides Seller Parent with notice of such acceptance, are referred to herein as the " Transferred Employees ."

b.        For a period of at least six (6) months following the Closing, Buyer shall provide the non-management Transferred Employees with base compensation that is, on an employee by employee basis, equal to or greater than that provided to such non-management Transferred Employees by Seller immediately prior to the Transfer.

c.         For a period of at least six (6) months following the Closing, Buyer shall, pursuant to plans and arrangements established or maintained by Buyer (the " Buyer Benefit Plans "), provide the Transferred Employees with employee benefits which are comparable in the aggregate to those provided to the Transferred Employees by Seller (or Seller Parent or its Affiliates, as applicable) as of the date hereof pursuant to the employee benefit plans set forth on Section 6.4(c) of the Seller Disclosure Letter. With respect to each Buyer Benefit Plan in which the Transferred Employees participate, for purposes of determining eligibility, vesting and entitlement to benefits, including for severance benefits and vacation entitlement (but not for accrual of pension benefits), service with LLC, Seller and their Affiliates (or predecessor employers to the extent LLC, Seller and their Affiliates provide past service credit) shall be treated as service with Buyer.

d.        Effective upon the Closing, Buyer shall cause the Transferred Employees to be covered by one or more medical benefit plans (" Buyer's Medical Plans "). Buyer shall use commercially reasonable efforts to ensure that Buyer's Medical Plans do not contain any "pre-existing conditions" exclusions or limitations or "actively at work" requirements which would cause any of the Transferred Employees or their dependents to be excluded from Buyer's Medical Plans immediately after the Closing. Buyer shall use commercially reasonable efforts to cause Buyer's Medical Plans to give effect, in determining any deductible and maximum out-of- pocket limitations, to claims incurred and amounts paid by, and amounts reimbursed to, such employees with respect to similar plans maintained by Seller for their benefit immediately prior to the Transfer.

e.         Effective upon the Closing, Buyer shall establish or designate a defined contribution retirement plan which is qualified or eligible for qualification under Section 401(a) of the Code (" Buyer's 401(k) Plan "). Subject to the terms and conditions of any applicable collective bargaining agreement which is currently in effect or which may be in effect at any time in the future, each Transferred Employee who satisfies the eligibility requirements of Buyer's 401(k) Plan shall become eligible to participate in Buyer's 401(k) Plan on the date he or she becomes an employee of Buyer and shall be credited with eligibility service and vesting service for all periods of service with LLC, Seller or any other entity if so credited with such service under the Coast Casinos 401(k) Profit Sharing Plan and Trust (the " Seller's 401(k) Plan "). As soon as practicable after the Closing Date, Seller shall cause the trustees of the Seller's 401(k) Plan to transfer to the trustees or other funding agent of Buyer's 401(k) Plan, the amounts representing the account balances of the Transferred Employees (including the appropriate net investment return thereon and any participant loans made to any Transferred Employees), said amounts to be established as account balances or accrued benefits of the Transferred Employees under Buyer's 401(k) Plan. Each such transfer shall comply with Section 414(l) of the Code and the requirements of ERISA and the regulations promulgated thereunder.

f.          Buyer shall not assume any Employee Benefit Plans of LLC, Seller or Seller Parent, and any Liabilities arising from Seller's employment of the Property Employees and/or Seller Parent's employment of any other Transferred Employees prior to the Closing, including as set forth in Section 2.6(b)(ii) , shall remain the sole obligation of Seller or Seller Parent, as applicable. Any and all Liabilities arising from Buyer or LLC's employment of the Transferred Employees from and after the Closing shall be the sole obligation of Buyer or LLC, as applicable.

g.        No provision of this Agreement shall create any third party beneficiary rights in any Transferred Employee, any beneficiary or dependent thereof, or any collective bargaining Representative thereof, with respect to the compensation, terms and conditions of employment and/or benefits that may be provided to any Transferred Employee by Buyer or under any benefit plan which Buyer may maintain.

h.        For a period of six (6) months after Closing (the " No Solicitation Period "), neither Seller nor any of its Affiliates shall, directly or indirectly, solicit or hire for employment any Transferred Employee unless (i) such Transferred Employee voluntarily resigns from employment with Buyer or its successors or Affiliates after the Closing, without any solicitation, promise or inducement from Seller or any of its Affiliates, (ii) such Transferred Employee initiates discussions regarding such employment without any direct or indirect solicitation by Seller or any of its Affiliates, or (iii) such Transferred Employee's employment is terminated by Buyer or its successors or Affiliates after the Closing. The parties hereby acknowledge and agree that general solicitations by Seller or its Affiliates for employees through media advertisements, employment firms or otherwise shall not constitute a solicitation for purposes hereof.

i.          During the No Solicitation Period, neither Buyer nor any of its Affiliates shall, directly or indirectly, solicit or hire for employment any employee of Seller or its Affiliates unless (i) such employee voluntarily resigns from employment with Seller or its Affiliates after the Closing, without any solicitation, promise or inducement from Buyer or any of its Affiliates, (ii) such employee initiates discussions regarding such employment without any direct or indirect solicitation by Buyer or any of its Affiliates, or (iii) such employee's employment is terminated by Seller or its successors or Affiliates after the Closing. The parties hereby acknowledge and agree that general solicitations by Buyer or its Affiliates for employees through media advertisements, employment firms or otherwise shall not constitute a solicitation for purposes hereof.

j.          With respect to any Transferred Employees, Buyer and Seller agree and acknowledge that for U.S. Federal Insurance Contribution Act and U.S. Federal Unemployment Tax Act purposes, Buyer qualifies as a successor employer with respect to such Transferred Employees. In connection with the foregoing, (i) Buyer and Seller agree to follow the "Alternative Procedures" set forth in Section 5 of Internal Revenue Service Revenue Procedure 2004-53, 2004-34 I.R.B. 320, and (ii) Buyer and Seller understand that Buyer shall assume Buyer's entire obligation to furnish an Internal Revenue Service Form W-2, Wage and Tax Statement, to each Transferred Employee.

k.         Within thirty (30) days following the concurrent closings of the Offering and Share Repurchase described in Section 6.10 , Buyer shall: (i) resign as a director of Seller and Seller Parent; (ii) resign as (and relinquish his authority as) the Chief Executive Officer of Seller and shall be appointed by Seller as chief executive officer of the South Coast Hotel and Casino with chief executive authority over the operations of the Business (and in connection therewith shall continue to receive base salary compensation and benefits through the Closing Date at a rate equal to his base salary compensation and benefits in effect immediately prior to such reassignment); and (iii) resign from all other positions he holds with Seller Parent or any of its Affiliates. Following the changes in responsibility described in the preceding sentence, Buyer agrees that he will not exercise, or attempt to exercise, any management authority over any of the operations of Seller or any of its Affiliates except for the Business, consistent with the provisions of this Agreement; provided , however , that notwithstanding anything to the contrary herein, following such changes in responsibility Buyer may, subject to the provisions of Section 6.1 , enter into Contracts that would be Assumed Contracts for and on behalf of the Business and LLC.

Section 6.5    Access to Information and the Property; Confidentiality .

a.         Upon reasonable notice and subject to applicable Law, including without limitation, antitrust Laws and Gaming Laws, Seller and Seller Parent shall, and shall cause LLC to, afford Buyer's Representatives reasonable access, during normal business hours during the period from the date hereof through the Closing, to the Property and to all its personnel and books and records related to the Business and, during such period, Seller and Seller Parent shall, and shall cause LLC to, furnish promptly to Buyer such information concerning the Business, the operation of the Hotel/Casino and the Property Employees (other than the Reserved Employees), as Buyer may reasonably request. As soon as reasonably practicable after each such request, Seller and Seller Parent shall deliver to Buyer such further information regarding Seller's calculation of Working Capital and Cash as of June 30, 2006 as Buyer shall reasonably request.

b.        Each of Seller Parent and Seller, on the one hand, and Buyer, on the other hand, and their respective Representatives and employees, shall (and Seller Parent and Seller shall cause LLC to) keep strictly confidential and shall not disclose or use, except as required by Law, for any purpose other than this Agreement and the transactions contemplated hereby, any and all confidential and proprietary information (" Confidential Information ") to the extent such Confidential Information is disclosed by any of the parties to any other party (an " Informed Party ") or learned by the Informed Party from the premises, properties, personnel, books and records or Contracts to which it is given access. Each party shall limit disclosure of Confidential Information to its Representatives, lenders and potential financing sources, financial advisors and employees on a need to know basis. The term "Confidential Information" does not include generalized know-how with respect to the gaming business or methods of operation (i) of the Business, Property or Assets, or, with respect to Buyer, which he has had access to, or knowledge of, as a result of his position as Chief Executive Officer of Seller and chief executive officer of the South Coast Hotel and Casino, as applicable, or (ii) that are common in the industry or generally known to the public or employees of Persons engaged in restaurant, hotel, gambling, casino or gaming operations or information which is or becomes generally available to the public other than as a result of a disclosure by the Informed Party or its Representatives. Each of the parties hereto shall ensure that its Representatives and employees comply with this Section 6.5 . This Section 6.5 shall survive Closing; provided , however , that Confidential Information relating to the Business and LLC shall be deemed Confidential Information of Buyer and LLC as of Closing.

c.         Buyer confirms that he shall hold any Confidential Information regarding Seller, its Affiliates and their respective businesses that was or is acquired by Buyer during the course of his service as a director and officer of Seller Parent or any of its Affiliates in strict confidence in accordance with Seller Parent's and Seller's standard proprietary information and insider trading policies. Notwithstanding anything in this Section 6.5 to the contrary, Buyer and Seller agree that in the event any Confidential Information relating to an Excluded Asset is obtained, revealed or otherwise made known to Buyer in effecting (i) the transition from Excluded Software to replacement software pursuant to Section 2.5 , specifically, or (ii) the removal of the Excluded Assets, generally, Buyer shall not reveal, disclose, employ or otherwise use any such Confidential Information, except as required by applicable Law.

d.        Notwithstanding the foregoing, nothing in this Agreement shall preclude Buyer and his Affiliates, including without limitation LLC after the Closing, from using any Confidential Information regarding the Business, the Property or the Hotel/Casino that Buyer has had access to, or knowledge of, as a result of his position as Chief Executive Officer of Seller and the South Coast Hotel and Casino. No information or knowledge obtained in any investigation pursuant to this Section 6.5 shall affect or be deemed to modify or limit any of the representations, warranties, covenants or agreements contained in this Agreement or the conditions to the obligations of the parties to consummate the transactions contemplated herein.

e.         Following the Closing, upon reasonable notice, each party hereto shall (and shall cause its Subsidiaries, and its and their respective Representatives, to) provide the other parties hereto and their Affiliates and Representatives with reasonable access and duplicating rights, during normal business hours and upon reasonable notice, to all of its personnel, properties, Contracts, books and records included in or related to LLC or the Business, other than the Excluded Assets, and shall cooperate with the other parties hereto as reasonably necessary in connection with any Tax, audit or similar inquiry, the preparation of financial statements relating to LLC or the Business, or to pursue any suit, claim, action, proceeding or investigation reasonably related to claims arising or accruing prior to the Closing, including, without limitation, any suit, claim, action, proceeding or investigation related to the Excluded Assets or the Excluded Liabilities; provided that the cooperating party shall not be required to incur any costs (other than immaterial overhead costs) in connection therewith. Notwithstanding the foregoing, none of the parties shall be required to provide any information which (i) it reasonably believes it may not provide to the requesting party by reason of applicable Law or by a confidentiality agreement with a third party if, in the case of a confidentiality agreement, such party has used reasonable efforts to obtain the consent of such third party to such disclosure, or (ii) constitutes information protected by the attorney/client and/or attorney work product privilege. If any material is withheld by any party pursuant to the immediately preceding sentence, such party shall, to the extent practicable and permitted by applicable Law and any Contract to which such party is a party or under which the assets of such party are subject, inform the requesting party as to the general nature of the material which is being withheld.

Section 6.6    Governmental Approvals .

a.         The parties hereto shall cooperate with each other and use commercially reasonable efforts to (i) as promptly as practicable, take, or cause to be taken, all appropriate action, and do or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement, (ii) obtain from any Governmental Entities any consents, licenses, permits, orders, waivers, variances, exemptions, approvals, licenses, authorizations or orders required (A) to be obtained or made by Seller, Seller Parent, LLC, Buyer or any of their respective Affiliates or Representatives and (B) to avoid any action or proceeding by any Governmental Entity (including, without limitation, those in connection with the HSR Act and antitrust and competition Laws of any other applicable jurisdiction), in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions governed herein, and (iii) make all necessary filings, and thereafter make any other required submissions with respect to the transactions contemplated by this Agreement, as required under (A) the HSR Act and antitrust and competition Laws of any other applicable jurisdiction, (B) applicable Gaming Laws and (C) any other applicable Law (collectively, the " Governmental Approvals "), and to comply with the terms and conditions of all such Governmental Approvals. The parties hereto and their respective Representatives and Affiliates shall file, as soon as reasonably practicable after the date hereof, all initial applications and documents required of such respective parties in connection with obtaining the Governmental Approvals, excluding Governmental Approvals required by applicable Gaming Laws and the HSR Act, applicable to such respective parties and shall act diligently and promptly to pursue such Governmental Approvals. The parties hereto and their respective Representatives and Affiliates shall file within thirty (30) days after the date hereof, all initial applications and documents required of such respective parties in connection with obtaining the Governmental Approvals required by the HSR Act and Gaming Laws applicable to such respective parties and shall act diligently and promptly to pursue such Governmental Approvals. Th


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