Exhibit 10.2

 

$200,000,000

 

PINNACLE ENTERTAINMENT, INC.

 

8 1/4% Senior Subordinated Notes due 2012

 

PURCHASE AGREEMENT

 

February 27, 2004

 

LEHMAN BROTHERS INC.,

BEAR, STEARNS & CO. INC.

DEUTSCHE BANK SECURITIES INC.

SG COWEN SECURITIES CORPORATION

UBS SECURITIES LLC

HIBERNIA SOUTHCOAST CAPITAL, INC.

c/o Lehman Brothers, Inc.

745 Seventh Avenue

New York, New York 10019

 

Dear Sirs:

 

PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Company”), proposes,
upon the terms and considerations set forth herein, to issue and sell to you, as
the initial purchasers (the “Initial Purchasers”), $200,000,000 in aggregate
principal amount of its 8 1/4% Senior Subordinated Notes due 2012 (the “Series A
Notes”) (the “Offering”). The Series A Notes (i) will have terms and provisions
which are summarized in the Preliminary Offering Memorandum (as defined herein)
and the Offering Memorandum (as defined herein) and (ii) are to be issued
pursuant to an Indenture (the “Indenture”) to be dated as of the Closing Date
(as defined herein) to be entered into among the Company, the Subsidiary
Guarantors (as defined herein) and The Bank of New York, as trustee (the
“Trustee”). The Company’s obligations under the Series A Notes, including the
due and punctual payment of interest on the Series A Notes, will be
unconditionally guaranteed (the “Series A Subsidiary Guarantees”) by the
subsidiaries of the Company listed on Schedule II hereto that have signed this
Agreement (each a “Subsidiary Guarantor” and, collectively, the “Subsidiary
Guarantors”). As used herein, the term Series A Notes shall include the Series A
Subsidiary Guarantees thereof by the Subsidiary Guarantors, unless the context
otherwise requires. This is to confirm the agreement concerning the purchase of
the Series A Notes from the Company by the Initial Purchasers.

 

1. Preliminary Offering Memorandum and Offering Memorandum. The Series A Notes
will be offered and sold to the Initial Purchasers without registration under
the Securities Act of 1933, as amended (the “Securities Act”), in reliance on an
exemption pursuant to Section 4(2) under the Securities Act. The Company and the
Subsidiary Guarantors have prepared a preliminary offering memorandum, dated
February 23, 2004 (the “Preliminary Offering Memorandum”), and will prepare an
offering memorandum, to be dated on or prior to March 10,

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2004 (the “Offering Memorandum”), setting forth information regarding the
Company, the Subsidiary Guarantors, the Series A Notes and the Series B Notes
(as defined herein). Any reference herein to the Preliminary Offering Memorandum
or the Offering Memorandum shall be deemed to refer to and include the documents
incorporated by reference therein. The Company and the Subsidiary Guarantors
hereby confirm that they have authorized the use of the Preliminary Offering
Memorandum and the Offering Memorandum in connection with the Offering and
resale of the Series A Notes by the Initial Purchasers.

 

It is understood and acknowledged that upon original issuance thereof, and until
such time as the same is no longer required under the applicable requirements of
the Securities Act, the Series A Notes (and all securities issued in exchange
therefor, in substitution thereof) shall bear the following legend:

 

“THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY
NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE
MAY BE OFFERED, RESOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED,
ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (IV) TO AN
INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (V) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) OR (VI) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES, (I)
THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES

 

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LAW OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.”

 

You have advised the Company that you will make offers (the “Exempt Resales”) of
the Series A Notes purchased by you hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to (i) persons (each, a
“144A Purchaser”) whom you reasonably believe to be “qualified institutional
buyers” as defined in Rule 144A under the Securities Act (“QIBs”), (ii) a
limited number of other “accredited investors,” as defined in Rule 501(a)(1),
(2), (3), (5), (6) or (7) under the Securities Act, that make certain
representations and agreements to the Company (each, an “Accredited Investor”)
and (iii) outside the United States to certain persons you reasonably believe to
be eligible to purchase such Notes in offshore transactions in reliance on
Regulation S under the Securities Act, such persons specified in clauses (i)
through (iii) being referred to herein as the (“Eligible Purchasers”). As used
herein, the terms “United States” and “U.S. Persons” have the meaning given them
in Regulation S under the Securities Act. The Initial Purchasers will offer the
Series A Notes to Eligible Purchasers initially at a price equal to 99.282% of
the principal amount thereof. Such price may be changed at any time without
notice.

 

Holders (including subsequent transferees) of the Series A Notes will have the
registration rights set forth in the registration rights agreement (the
“Registration Rights Agreement”), to be dated the Closing Date, for so long as
such Series A Notes constitute “Transfer Restricted Securities” (as defined in
the Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Company and the Subsidiary Guarantors will agree to file with the
Securities and Exchange Commission (the “Commission”) under the circumstances
set forth therein, (i) a registration statement under the Securities Act (the
“Exchange Offer Registration Statement”) relating to (A) the Company’s 8 1/4%
Series B Senior Subordinated Notes due 2012 (the “Series B Notes” and, together
with the Series A Notes, the “Notes”) and the guarantees of the Subsidiary
Guarantors to be endorsed on the Series B Notes (the “Series B Subsidiary
Guarantees” and, together with the Series A Subsidiary Guarantees, the
“Subsidiary Guarantees”) to be offered in exchange for the Series A Notes and
the Series A Subsidiary Guarantees (the “Exchange Offer”) and (ii) under certain
circumstances a shelf registration statement pursuant to Rule 415 under the
Securities Act (the “Shelf Registration Statement” and, together with the
Exchange Offer Registration Statement, the “Registration Statements”) relating
to the resale by certain holders of Series A Notes, and to use their
commercially reasonable efforts to cause such Registration Statements to be
declared and remain effective and usable for the periods specified in the
Preliminary Offering Memorandum and the Registration Rights Agreement and to
consummate the Exchange Offer.

 

2. Representations, Warranties and Agreements of the Company and the Subsidiary
Guarantors. The Company and each of the Subsidiary Guarantors represents,
warrants and agrees that:

 

(a) The Company has been duly organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware. Each of the Company’s
subsidiaries set forth on Schedule III hereto (each a “Subsidiary” and
collectively, the

 

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“Subsidiaries”) has been duly organized and validly exists as a corporation,
partnership or limited liability company in good standing under the laws of its
jurisdiction of organization. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation,
partnership or limited liability company in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which (individually and in
the aggregate) could not reasonably be expected to have a material adverse
effect on (i) the business, condition (financial or otherwise), results of
operations, stockholders’ equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole; (ii) the long-term debt or capital stock of the
Company and its Subsidiaries, taken as a whole or (iii) the Offering
(collectively, a “Material Adverse Effect”). Each of the Company and the
Subsidiaries has all requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses
(including, but not limited to, gaming licenses, certificates and orders),
filings and permits (collectively, the “Consents”) of, with and from all
judicial, regulatory, self-regulatory and other legal or governmental agencies
and bodies and all third parties, foreign and domestic, to own, lease and
operate its properties and conduct its business as it is now being conducted or
(other than with respect to City of St. Louis and St. Louis County development
proposals) proposed to be conducted and as disclosed in the Preliminary Offering
Memorandum, and each such Consent is valid and in full force and effect, and
neither the Company nor any Subsidiary has received notice of any investigation
or proceedings which results in the revocation of any such Consent, except where
the failure to have such Consents could not reasonably be expected to have,
singly or in the aggregate, a Material Adverse Effect. Each of the Company and
the Subsidiaries is in compliance with all applicable laws, securities laws
(including the Sarbanes-Oxley Act), rules, regulations, ordinances, directives,
judgments, decrees and orders, foreign and domestic, except where failure to be
in compliance could not reasonably be expected to have a Material Adverse
Effect. No Consent contains a materially burdensome restriction not adequately
disclosed in the Preliminary Offering Memorandum.

 

(b) Subsequent to the dates as of which information is given in the Preliminary
Offering Memorandum, except as set forth in the Preliminary Offering Memorandum,
(i) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except of dividends paid to the Company or other
Subsidiaries, any of its Subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its Subsidiaries or any call
of capital, (ii) there has been no Material Adverse Effect or any development
that could reasonably be expected to result in a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of business, and
(iii) there has not been any transaction material to the Company and its
Subsidiaries, taken as a whole, entered into or any such transaction that is
probable of being entered into by the Company or the Subsidiaries, other than
transactions in the ordinary course of business and changes and transactions
described in or contemplated by the Preliminary Offering Memorandum. Since the
date of the latest balance sheet presented in the Preliminary Offering
Memorandum, neither the Company nor any Subsidiary has incurred or undertaken
any material liabilities or obligations, whether direct or indirect, liquidated
or contingent, matured or unmatured, or entered into any transactions which are
material to the Company and the Subsidiaries taken as a whole, except for
liabilities, obligations and transactions which are disclosed in the Preliminary
Offering Memorandum.

 

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(c) The outstanding shares of common stock (par value $0.10 per share) of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable, and no preemptive rights of stockholders exist with respect to
any of the outstanding shares of common stock of the Company.

 

(d) The authorized, issued, and outstanding capital stock of the Company is as
set forth in the Preliminary Offering Memorandum in the column headed “Actual”
under the caption “Capitalization,” and after giving effect to the Offering and
the other transactions contemplated by this Agreement and the Preliminary
Offering Memorandum, would be as set forth in the column headed “As Further
Adjusted” under the caption “Capitalization.”

 

(e) The Subsidiaries are the only subsidiaries of the Company within the meaning
of Rule 405 under the Securities Act. Except for the Subsidiaries, the Company
holds no material ownership or other interest, nominal or beneficial, direct or
indirect, in any corporation, partnership, joint venture or other business
entity. All of the issued shares of capital stock of or other ownership
interests in each Subsidiary (except for CASINO PARKING INC.) have been duly and
validly authorized and issued and are fully paid and non-assessable and are
owned (except for CASINO PARKING INC.) directly or indirectly by the Company
free and clear of all liens, encumbrances, equities or claims, and no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital stock or
ownership interests in the Subsidiaries are outstanding, except for liens,
encumbrances or claims created or arising in connection with the Company’s new
bank credit facility (the “Bank Credit Facility”) described in the Preliminary
Offering Memorandum under the caption “Description of Other Indebtedness.”

 

(f) Neither the Company nor any Subsidiary is or, after giving effect to the
Offering of the Notes contemplated hereunder and the application of the net
proceeds from such sale as described in the Preliminary Offering Memorandum,
will be an “investment company” within the meaning of such term under the
Investment Company Act of 1940, as amended (the “1940 Act”) and the rules and
regulations of the Commission thereunder.

 

(g) Neither the Company nor any Subsidiary (i) is in violation of its
certificate or articles of incorporation or organization, by-laws, certificate
of formation, limited liability company or operating agreement, partnership
agreement or other organizational documents, as applicable (ii) is in default
under, and no event has occurred which, with notice or lapse of time or both,
would constitute a default under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject or (iii) is in
violation in any respect of any law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or
governmental agency or body, foreign or domestic, except (in the case clauses
(ii) and (iii) above) violations or defaults that could not (individually or in
the aggregate) reasonably be expected to have a Material Adverse Effect and
except (in the case of clause (ii) above) for any lien, charge or encumbrance
disclosed in the Preliminary Offering Memorandum.

 

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(h) The Preliminary Offering Memorandum with respect to the Series A Notes has
been prepared by the Company and the Subsidiary Guarantors for use by the
Initial Purchasers in connection with the Exempt Resales. The Offering
Memorandum with respect to the Series A Notes will be prepared by the Company
and the Subsidiary Guarantors for use by the Initial Purchasers in connection
with Exempt Resales on or prior to March 10, 2004, and such Offering Memorandum
will incorporate by reference (and when delivered to Eligible Purchasers on
March 11, 2004 will include a copy of) either (i) the Company’s Form 10-K for
the fiscal year ended December 31, 2003 or (ii) a Form 8-K, in either case, that
contains the (1) consolidated financial statements for the Company and its
consolidated Subsidiaries (covering the fiscal years ended December 31, 2001,
December 31, 2002 and December 31, 2003) as audited by Deloitte & Touche LLP,
(the “Audited Financials”) and the unqualified independent auditor’s report of
Deloitte & Touche LLP with respect thereto and (2) the Company’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations for the
fiscal year ended December 31, 2003. No order or decree preventing the use of
the Preliminary Offering Memorandum, or any order asserting that the
transactions contemplated by this Agreement are subject to the registration
requirements of the Securities Act, has been issued and no proceeding for that
purpose has commenced or is pending or, to the knowledge of the Company or any
of the Subsidiary Guarantors, is contemplated.

 

(i) The Preliminary Offering Memorandum, as of its date, did not, and as of the
date hereof, does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Offering Memorandum, as of its date and as of the Closing
Date, will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any amendments or supplements to either the Preliminary Offering
Memorandum or the Offering Memorandum, as of the date of such amendment or
supplement, when read together with the Preliminary Offering Memorandum or the
Offering Memorandum, as applicable, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. However, this representation and warranty
does not apply to statements contained in or omissions from the Preliminary
Offering Memorandum or the Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly for use
therein, it being expressly understood that the only information so furnished by
the Initial Purchasers to the Company is that set forth in Section 9(e) hereof.

 

(j) Assuming that (i) your representations and warranties in Section 3 are true,
(ii) the representations of the Accredited Investors set forth in the
certificates of such Accredited Investors in the form set forth in Annex A to
the Offering Memorandum are true, and (iii) each of the Eligible Purchasers is a
QIB, an Accredited Investor or a person who acquires the Series A Notes in an
“offshore transaction” and is not a “U.S. Person” (within the meaning of
Regulation S under the Securities Act), the purchase and resale of the Series A
Notes pursuant hereto (including pursuant to the Exempt Resales) is exempt from
the registration requirements of the Securities Act. No form of general
solicitation or general advertising was used by the Company or any of its
representatives (other than the Initial Purchasers, as to whom the

 

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Company makes no representation) in connection with the offer and sale of the
Series A Notes, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period immediately prior to the date hereof.

 

(k) There are no contracts or other documents which are required to be described
in the Preliminary Offering Memorandum by the Securities Act or by the rules and
regulations of the Commission thereunder which have not been described in the
Preliminary Offering Memorandum.

 

(l) The Company is not required to deliver the information specified in Rule
144A(d)(4) in connection with the Exempt Resales and the Notes and the
Subsidiary Guarantees satisfy the requirements of Rule 144A(d)(3).

 

(m) The Company and each of the Subsidiary Guarantors have full corporate,
partnership or limited liability company right, power and authority to enter
into this Purchase Agreement (this “Agreement”), to perform their respective
obligations hereunder and to consummate the transactions contemplated by this
Agreement and the Preliminary Offering Memorandum. This Agreement and the
transactions contemplated by this Agreement and the Preliminary Offering
Memorandum have been duly and validly authorized by the Company and each of the
Subsidiary Guarantors. This Agreement has been duly and validly executed and
delivered by the Company and the Subsidiary Guarantors and (assuming the due
execution and delivery thereof by the Initial Purchasers) constitutes the legal,
valid and binding obligation of the Company and the Subsidiary Guarantors,
enforceable against the Company and the Subsidiary Guarantors in accordance with
its terms, subject to the qualification that the enforceability of the Company’s
and the Subsidiary Guarantors’ obligations hereunder may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors’ rights generally, except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as may be limited by state or federal laws or policies relating to
the non-enforceability of the indemnification provisions contained herein.

 

(n) The Company and each of the Subsidiary Guarantors have full corporate,
partnership or limited liability company right, power and authority to enter
into the Registration Rights Agreement and to perform their respective
obligations thereunder. The Registration Rights Agreement will be, prior to the
Closing Date, duly and validly authorized by the Company and each of the
Subsidiary Guarantors and, when executed by the Company and the Subsidiary
Guarantors in accordance with the terms thereof, will be validly executed and
delivered and (assuming the due execution and delivery thereof by the Initial
Purchasers) will constitute the legal, valid and binding obligation of the
Company and the Subsidiary Guarantors, enforceable against the Company and the
Subsidiary Guarantors in accordance with its terms, subject to the qualification
that the enforceability of the Company’s and the Subsidiary Guarantors’
obligations thereunder may be limited by bankruptcy, fraudulent transfer,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of
whether such enforceability is

 

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considered in a proceeding in equity or at law) and except as may be limited by
state or federal laws or policies relating to the non-enforceability of the
indemnification provisions contained therein. On the Closing Date, the
Registration Rights Agreement will conform in all material respects to the
description thereof in the Preliminary Offering Memorandum and the Offering
Memorandum.

 

(o) The Company and each of the Subsidiary Guarantors have full corporate,
partnership or limited liability company right, power and authority to execute
and deliver the Indenture and to perform their respective obligations
thereunder. The Indenture will be, prior to the Closing Date, duly and validly
authorized by the Company and each of the Subsidiary Guarantors and, when
executed by the Company and the Subsidiary Guarantors in accordance with the
terms thereof, will be validly executed and delivered and (assuming the due
authorization, execution and delivery thereof by the Trustee) will constitute
the legal, valid and binding obligation of the Company and the Subsidiary
Guarantors, enforceable against the Company and the Subsidiary Guarantors in
accordance with its terms, subject to the qualification that the enforceability
of the Company’s and the Subsidiary Guarantors’ obligations thereunder may be
limited by bankruptcy, fraudulent transfer, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors’ rights generally
and by general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law). On the Closing Date, the
Indenture will conform in all material respects to the description thereof in
the Preliminary Offering Memorandum and the Offering Memorandum. No
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission thereunder (the “TIA”)
is required in connection with the offer and sale of the Series A Notes
contemplated hereby or in connection with the Exempt Resales. On the Closing
Date, the Indenture will conform in all material respects to the requirements of
the TIA and the rules and regulations of the Commission thereunder applicable to
an indenture which is required to be qualified thereunder.

 

(p) The Company has full corporate right, power and authority to offer and sell
the Series A Notes. The Series A Notes will be, prior to the Closing Date, duly
and validly authorized by the Company, and upon their execution and delivery and
(assuming due authorization, execution and delivery by the Trustee) upon
delivery to the Initial Purchasers against payment therefor in accordance with
the terms hereof and upon the due execution, authentication and delivery of the
Series A Notes in accordance with the Indenture, will have been validly issued
and delivered, and will constitute the legal, valid and binding obligations of
the Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, subject to the qualification that the
enforceability of the Company’s obligations thereunder may be limited by
bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law). On the Closing Date, the Series A Notes will
conform as to legal matters to the description thereof contained in the
Preliminary Offering Memorandum and the Offering Memorandum, which summary
description is accurate in all material respects.

 

(q) The Subsidiary Guarantors have full corporate, partnership or limited
liability company right, power and authority to offer and sell the unconditional
guarantee of the Company’s obligations under the Series A Notes, including the
due and punctual payment of

 

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interest on the Series A Notes pursuant to the Series A Subsidiary Guarantees.
The Series A Subsidiary Guarantees to be endorsed on the Series A Notes will be,
prior to the Closing Date, duly and validly authorized by each of the Subsidiary
Guarantors, and upon their execution and delivery and upon the due execution,
authentication and delivery of the Series A Notes in accordance with the
Indenture and the issuance of the Series A Notes and the sale to the Initial
Purchasers contemplated by this Agreement, will have been validly issued and
delivered, and will constitute the legal, valid and binding obligations of each
of the Subsidiary Guarantors entitled to the benefits of the Indenture,
enforceable against each Subsidiary Guarantor in accordance with their terms,
subject to the qualification that the enforceability of the Subsidiary
Guarantors’ obligations thereunder may be limited by bankruptcy, fraudulent
transfer, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). On the Closing Date, the Series A Subsidiary Guarantees to be
endorsed on the Series A Notes will conform as to legal matters to the
description thereof contained in the Preliminary Offering Memorandum and the
Offering Memorandum, which summary description is accurate in all material
respects.

 

(r) The Series B Notes will be, prior to the Closing Date, duly and validly
authorized by the Company and, if and when duly and validly issued and
authenticated in accordance with the terms of the Indenture and delivered in
accordance with the Exchange Offer provided for in the Registration Rights
Agreement, will constitute the legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, subject to the qualification that the
enforceability of the Company’s obligations thereunder may be limited by
bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law). When the Series B Notes are issued, the
Series B Notes will conform as to legal matters to the description thereof
contained in the Preliminary Offering Memorandum and the Offering Memorandum,
which summary description is accurate in all material respects.

 

(s) The Subsidiary Guarantors have the full corporate, partnership or limited
liability company right, power and authority to offer and sell the unconditional
guarantee of the Company’s obligations under the Series B Notes, including the
due and punctual payment of interest on the Series B Notes pursuant to the
Series B Subsidiary Guarantees. The Series B Subsidiary Guarantees to be
endorsed on the Series B Notes will be, prior to the Closing Date, duly and
validly authorized by the Subsidiary Guarantors and, if and when duly executed
and delivered by the Subsidiary Guarantors in accordance with the terms of the
Indenture and upon the due execution and authentication of the Series B Notes in
accordance with the Indenture and the issuance and delivery of the Series B
Notes in the Exchange Offer contemplated by the Registration Rights Agreement,
will constitute the legal, valid and binding obligations of the Subsidiary
Guarantors, enforceable against the Subsidiary Guarantors in accordance with
their terms, subject to the qualification that the enforceability of the
Subsidiary Guarantors’ obligations thereunder may be limited by bankruptcy,
fraudulent transfer, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors’ rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). When the Series B Subsidiary Guarantees to be
endorsed on the

 

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Series B Notes are issued, the Series B Subsidiary Guarantees will conform as to
legal matters to the description thereof contained in the Preliminary Offering
Memorandum and the Offering Memorandum, which summary description is accurate in
all material respects.

 

(t) When the Series A Notes and Series A Subsidiary Guarantees are issued and
delivered pursuant to this Agreement, such Series A Notes and Series A
Subsidiary Guarantees will not be of the same class (within the meaning of Rule
144A under the Securities Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) or that are quoted in a
United States automated inter-dealer quotation system.

 

(u) The Company has not prior to the date hereof made any offer or sale of any
securities which could be properly “integrated” with the offer and sale of the
Notes. Except as described in the Preliminary Offering Memorandum, the Company
has not sold or issued any shares of common stock or debt securities during the
six-month period preceding the date of the Preliminary Offering Memorandum,
including any sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act, other than shares issued pursuant to plans, qualified stock
options plans or other employee compensation plans or pursuant to outstanding
options, rights or warrants.

 

(v) Neither the Company nor any of its affiliates, nor any person acting on its
or their behalf (i) has, within the six-month period prior to the date hereof,
offered or sold in the United States or to any U.S. person (as such terms are
defined in Regulation S under the Securities Act) the Notes or any security of
the same class or series as the Notes or (ii) has offered or will offer or sell
the Notes with respect to any securities sold in reliance on Rule 903 of
Regulation S, by means of any directed selling efforts within the meaning of
Rule 902(c) of Regulation S. The Company and its affiliates and any person
acting on its or their behalf have complied and will comply with the offering
restrictions requirements of Regulation S. The Company has not entered, and will
not enter, into any contractual arrangement with respect to the distribution of
the Notes except for this Agreement.

 

(w) The execution, delivery, and performance of this Agreement, the Registration
Rights Agreement, the Indenture, the Notes and the Subsidiary Guarantees and
consummation of the transactions contemplated by this Agreement and the
Preliminary Offering Memorandum, including the issuance of the Notes and the
Subsidiary Guarantees and the use of proceeds therefrom in the manner set forth
under the caption “Use of Proceeds” in the Preliminary Offering Memorandum, do
not and will not (i) except as set forth in clause (y) of the second sentence
hereof, require consent under or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement, instrument, franchise, license or
permit to which the Company or any Subsidiary is a party or by which the Company
or any Subsidiary or their respective properties, operations or assets may be
bound or (ii) violate any provision of the certificate or articles of
incorporation or organization, by-laws, certificate of formation, limited
liability company or operating agreement, partnership agreement or other
organizational documents of the Company or any Subsidiary, or (iii) except as
set forth in

 

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clauses (w) and (z) of the second sentence hereof, violate any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, domestic or foreign,
except (in the case of clauses (i) and (iii) above) as could not reasonably be
expected to have a Material Adverse Effect. No Consent of, with or from any
judicial, regulatory or other legal or governmental agency or body or any third
party, foreign or domestic, is required for the execution, delivery and
performance of this Agreement or consummation of the transactions contemplated
by this Agreement or the Preliminary Offering Memorandum, including the
issuance, sale and delivery of the Notes and the Subsidiary Guarantees to be
issued, sold and delivered hereunder, except (w) approvals (including “shelf”
approvals and waivers) by or from the applicable gaming authorities in the
States of Indiana, Louisiana, Nevada and Mississippi, each of which, other than
the final Consent from the Indiana Gaming Commission, or the staff of such
commission, has been obtained, and with respect to the final Consent to be
obtained from the Indiana Gaming Commission, or the staff of such commission,
such final Consent will be obtained prior to the Closing Date, (x) all
applicable reports and filings required by Nevada Gaming Commission Regulation
8.130 and the equivalent provision of the Mississippi Gaming Control Act with
respect to the transactions contemplated by this Agreement and the Indenture,
none of which are required to be filed prior to the Closing Date, (y) the
written consent from Lehman Brothers Commercial Paper Inc., as the
administrative agent (the “Administrative Agent”) under the Company’s Bank
Credit Facility, (the “Bank Consent”) and (z) such Consents (A) as may be
required under state securities or blue sky laws in connection with the purchase
and distribution of the Notes and the Subsidiary Guarantees by the Initial
Purchasers, each of which has been obtained and is in full force and effect, and
(B) as may be required under the Securities Act and for the qualification of the
Indenture under the TIA, with respect to the performance of the Company’s and
the Subsidiary Guarantors’ agreements and obligations set forth in the
Registration Rights Agreement.

 

(x) The consolidated financial statements of the Company and its consolidated
Subsidiaries, together with related notes and schedules as set forth or
incorporated by reference in the Preliminary Offering Memorandum, present fairly
in all material respects the financial position as of the dates indicated and
the results of operations and cash flows for the periods specified of the
Company and its consolidated Subsidiaries. Except as otherwise stated in the
Preliminary Offering Memorandum, such financial statements and related schedules
have been prepared in accordance with generally accepted accounting principles
as applied in the United States, consistently applied throughout the periods
involved, except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made, and the supporting
schedules included in the Preliminary Offering Memorandum present fairly in all
material respects the information required to be stated therein. The other
financial and statistical information of the Company included or incorporated by
reference in the Preliminary Offering Memorandum present fairly in all material
respects the information included therein and have been prepared on a basis
consistent with that of the financial statements that are included or
incorporated by reference in the Preliminary Offering Memorandum and the books
and records of the respective entities presented therein.

 

(y) There are no pro forma or as adjusted financial statements which are
required to be included in the Preliminary Offering Memorandum in accordance
with Regulation S-X which have not been included as so required. The as adjusted
financial information included in the Preliminary Offering Memorandum has been
properly compiled and prepared in accordance with the applicable requirements of
the Securities Act, the Exchange Act and the rules and

 

11

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regulations of the Commission thereunder and includes all adjustments necessary
to present fairly in accordance with generally accepted accounting principles
the as adjusted financial position of the respective entity or entities
presented therein at the respective dates indicated and their cash flows and the
results of operations for the respective periods specified.

 

(z) The assumptions used in preparing the as adjusted financial information
included in the Preliminary Offering Memorandum provide a reasonable and good
faith basis for presenting the significant effects directly attributable to the
transactions or events described therein; the related adjustments made in the
preparation of such as adjusted financial information give appropriate effect to
those assumptions; and such as adjusted financial information reflects the
proper application of those adjustments to the corresponding historical
financial statement amounts.

 

(aa) Deloitte and Touche LLP, who have certified and audited certain of the
financial statements (i) contained in the Preliminary Offering Memorandum and
filed with the Commission as part of, or incorporated by reference in, the
Preliminary Offering Memorandum and (ii) whose report appears in the Preliminary
Offering Memorandum, are independent public accountants as required by the
Securities Act and the rules and regulations thereunder.

 

(bb) The Company and its Subsidiaries make and keep accurate books and records
and maintain a system of internal accounting controls and other controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accounting for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

 

(cc) Each of the Company and the Subsidiaries has accurately prepared in all
material respects and timely filed all federal, state, local, foreign and other
tax returns that are required to be filed by it and has paid or made provision
for the payment of all taxes, assessments, governmental or other similar
charges, including, without limitation, all sales and use taxes, all gaming
taxes and all other taxes which the Company or any Subsidiary is obligated to
withhold from amounts owing to employees, creditors and third parties, that are
shown on such returns, except, in each case, (i) those taxes that are not
reasonably likely to result in a Material Adverse Effect, (ii) those taxes,
assessments or other charges that are being contested in good faith, if such
taxes, assessments or other charges are adequately reserved for or (iii) as
described in the Preliminary Offering Memorandum. Except as so described in the
Preliminary Offering Memorandum, no deficiency assessment with respect to a
proposed adjustment of the Company’s or any Subsidiary’ federal, state, local or
foreign taxes is pending or, to the Company’s knowledge, threatened, except that
could not reasonably be likely to result in a Material Adverse Effect. The
accruals and reserves on the books and records of the Company and the
Subsidiaries in respect of tax liabilities for any taxable period not finally
determined are adequate to meet any assessments and related liabilities for any
such period and, since December 31, 2002, the Company and the Subsidiaries have
not incurred any liability for taxes other than in the ordinary course of its
business, except that could not reasonably be likely to result in a

 

12

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Material Adverse Effect. There is no tax lien (other than the lien for taxes not
yet due and liens for taxes being contested in good faith), whether imposed by
any federal, state or other taxing authority, outstanding against the assets,
properties or business of the Company or any Subsidiary, and the Company does
not know of any actual or proposed additional material tax assessments, except
as described in the Preliminary Offering Memorandum.

 

(dd) The statistical and market-related data and estimates included in the
Preliminary Offering Memorandum are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and accurate, and
such data agree with the sources from which they are derived.

 

(ee) The Company is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act and files reports with the Commission on the EDGAR System.
The Company’s common stock is registered pursuant to Section 12(b) of the
Exchange Act and the outstanding shares of the Company’s common stock are listed
on the New York Stock Exchange (the “NYSE”) and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
its common stock under the Exchange Act or de-listing the common stock from the
NYSE, nor has the Company received any notification that the Commission or the
NYSE is contemplating terminating such registration or listing.

 

(ff) Neither the Company nor, to the Company’s knowledge, any of its affiliates
(within the meaning of Rule 144 under the Securities Act) has taken, nor will
the Company or, to the Company’s knowledge, any of such affiliates take,
directly or indirectly, any action which constitutes or is designed to cause or
result in, or which might reasonably be expected to constitute, cause or result
in, the stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Notes.

 

(gg) There are no contracts, agreements or understandings between the Company or
any of its affiliates and any person (other than the Registration Rights
Agreement) granting such person the right to require the Company or any of its
affiliates to file a registration statement under the Securities Act with
respect to any securities of the Company or any of its affiliates owned or to be
owned by such person or to require the Company or any of its affiliates to
include such securities with the Notes and the Subsidiary Guarantees registered
pursuant to the Registration Rights Agreement or with any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act.

 

(hh) Neither the Company nor any of its Subsidiaries has sustained, since the
date of the latest audited financial statements included or incorporated by
reference in the Preliminary Offering Memorandum, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, other than as set forth or contemplated in
the Preliminary Offering Memorandum; and, since such date, there has not been
any change in the capital stock or long-term debt of the Company or any of its
Subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders’ equity or results of operations of
the Company and its Subsidiaries, other than as set forth or contemplated in the
Preliminary Offering Memorandum.

 

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(ii) Based on the knowledge of the chief executive officer and chief financial
officer of the Company, (i) the Annual Report on Form 10-K for the year ended
December 31, 2002 and the Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2003, June 30, 2003 and September 30, 2003 (each a “Report”, and
together, the “Reports”), fully comply with the requirements of Section 13(a) or
15(d) of the Exchange Act; and (ii) the information contained in each Report
fairly presents, in all material respects, the financial condition and results
of operations of the Company and its consolidated Subsidiaries as of the date of
filing with the Commission.

 

(jj) The documents incorporated or deemed to be incorporated by reference in the
Preliminary Offering Memorandum, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder, and, when read together with the other
information in, or incorporated in, the Preliminary Offering Memorandum, at the
date of the Preliminary Offering Memorandum and at the Closing Date, do not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

 

(kk) The Company and the Subsidiaries have good and marketable title to all real
property and to all personal property described in the Preliminary Offering
Memorandum as being owned by them, in each case free and clear of all Liens,
encumbrances and defects except (i) such as are described in the Preliminary
Offering Memorandum, (ii) such as arise in connection with the Bank Credit
Facility, (iii) such as do not (individually or in the aggregate) interfere with
the use made or proposed to be made of such property by the Company and the
Subsidiaries or (iv) such as are not (individually or in the aggregate)
reasonably likely to have a Material Adverse Effect; and any real property and
buildings held under lease or sublease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as (i) do not interfere with, the use made and proposed to be made of such
property and buildings by the Company and the Subsidiaries or (ii) are not
(individually or in the aggregate) reasonably likely to have a Material Adverse
Effect. Neither the Company nor any Subsidiary has received any written notice
of any claim adverse to its ownership of any real or personal property or of any
claim against the continued possession of any real property, whether owned or
held under lease or sublease by the Company or any Subsidiary, except as would
not reasonably likely to have a Material Adverse Effect.

 

(ll) The Company and the Subsidiaries each own or possess the right to use all
patents, patent rights, patent applications, trademarks, trade names, service
marks, service names, trademark registrations, service mark registrations,
copyrights, license rights, know-how (including trade secrets and other
unpatented and unpatentable proprietary or confidential information, systems or
procedures) and other intellectual property rights (“Intellectual Property”)
described in the Preliminary Offering Memorandum as necessary for the conduct of
their business as currently being conducted, except as could not reasonably be
expected to result in a Material Adverse Effect.

 

(mm) The Company and each of its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company reasonably
considers adequate for the conduct of their respective businesses and the value
of their respective

 

14

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properties and as is reasonably customary for companies engaged in similar
businesses in similar industries. Neither the Company nor any Subsidiary has
received any notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in force on
the date hereof and will be outstanding and duly in force on the Closing Date.

 

(nn) Except as described in the Preliminary Offering Memorandum, there is no
judicial, regulatory or other legal or governmental proceeding or other
litigation pending to which the Company or any Subsidiary is a party or of which
any property, operations or assets of the Company or any Subsidiary is the
subject which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect; to the best of the Company’s knowledge, no such
proceeding or litigation is threatened or contemplated; and the defense of all
such proceedings and litigation against or involving the Company or any
Subsidiary could not reasonably be expected to have a Material Adverse Effect.

 

(oo) No relationship, direct or indirect, exists between or among any of the
Company, a Subsidiary or any affiliate of the Company, on the one hand, and any
director, officer, stockholder, customer or supplier of the Company, a
Subsidiary or any affiliate of the Company, on the other hand, which is required
by the Securities Act, the Exchange Act or the rules and regulations of the
Commission thereunder to be described in the Preliminary Offering Memorandum
which is not so described as required. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company, a Subsidiary or any
affiliate of the Company to or for the benefit of any of the officers or
directors of the Company, a Subsidiary or any affiliate of the Company or any of
their respective family members which are required to be disclosed in the
Preliminary Offering Memorandum and which are not disclosed therein.

 

(pp) There are no outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments for sale or liens related to or entitling
any person to purchase or otherwise to acquire any shares of the capital stock
of, or other ownership interest in, the Company or any wholly owned subsidiary
thereof or with respect to any capital stock or other ownership interest that
the Company or any of its Subsidiaries owns in a less than wholly owned
subsidiary, except (i) as otherwise disclosed in the Preliminary Offering
Memorandum, (ii) such as are not material to the business, prospects, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole or (iii) liens arising in connection with the Bank Credit Facility.

 

(qq) The chief executive officer and chief financial officer of the Company are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) of the rules and regulations of the
Commission under the Exchange Act) for the Company and have (i) designed such
disclosure controls and procedures, or caused such disclosures and procedures to
be designed under their supervision, to ensure that material information
relating to the Company and its Subsidiaries is made known to the chief
executive officer and chief financial officer by others within the Company and
its Subsidiaries, (ii) evaluated the effectiveness of the of the Company’s
disclosure controls and procedures as of the end of the period (the “Evaluation
Date”) covered by such Report, and (iii) presented in each Report their
conclusions about the effectiveness of the disclosure controls and procedures
based

 

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on their evaluation as of the Evaluation Date. The chief executive officer and
chief financial officer of the Company have disclosed, based upon their most
recent evaluation of the internal controls over financial reporting, to the
Company’s auditors and the Audit Committee of the Company’s Board of Directors
(i) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record, process, summarize
and report financial information, and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company’s internal controls over financial reporting. The chief executive
officer and chief financial officer have indicated in each Report any changes in
the Company’s internal controls over financial reporting that occurred during
the Company’s most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s internal controls over
financial reporting.

 

(rr) Except as disclosed in the Preliminary Offering Memorandum, there are no
contracts, agreements or understandings between the Company (or any Subsidiary)
and any person that would give rise to a valid claim against the Company, any
Subsidiary or any Initial Purchaser for a brokerage commission, finder’s fee or
other like payment in connection with the transactions contemplated by this
Agreement or the Preliminary Offering Memorandum.

 

(ss) Neither the Company nor any of its Subsidiaries intends, or intends to
permit any of its respective Subsidiaries, to incur debts beyond its ability to
pay such debts as they mature, taking into account the timing and the amounts of
cash to be received by the Company or any of its Subsidiaries and the timing and
the amounts of cash to be payable on or in respect of the Company’s indebtedness
or the indebtedness of each Subsidiary.

 

(tt) No labor disturbance by the employees of the Company or any Subsidiary
exists or, to the Company’s knowledge, is imminent and the Company is not aware
of any existing or imminent labor disturbances by the employees of any of its or
any Subsidiary’s principal suppliers, manufacturers’, customers or contractors,
which, in either case (individually or in the aggregate), could reasonably be
expected to result in a Material Adverse Effect.

 

(uu) No “prohibited transaction” (as defined in either Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (“ERISA”) or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time (the
“Code”)), “accumulated funding deficiency” (as defined in Section 302 of ERISA)
or other event of the kind described in Section 4043(b) of ERISA (other than
events with respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee benefit plan
for which the Company or any Subsidiary would have any liability which could
(individually or in the aggregate) reasonably be expected to result in a
Material Adverse Effect; each employee benefit plan for which the Company or any
Subsidiary would have any liability is in compliance in all material respects
with applicable law, including (without limitation) ERISA and the Code; the
Company has not incurred and does not expect to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from any “pension
plan” (as defined in Section 3(2) of ERISA); and each plan for which the Company
would have any liability that is intended to be qualified under Section 401(a)
of the Code has received a favorable determination from the Internal Revenue
Service that it is so qualified and nothing has occurred, whether by action or
by failure to act, which would reasonably be expected to cause the loss of such
qualification.

 

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(vv) Neither the Company, any Subsidiary nor, to the Company’s knowledge, any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its Subsidiaries or any beneficial owner of 10%
or more of the capital stock of the Company has at any time during the last five
years (i) used corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, (ii) violated or
is in violation of any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment, or (iv) made any payment to any federal or state
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States of any jurisdiction thereof.

 

(ww) There has been no storage, generation, transportation, handling, treatment,
disposal, discharge, emission or other release of any kind of toxic or other
wastes or other hazardous substances by, due to, or caused by the Company or any
Subsidiary (or, to the Company’s or any Subsidiary’s knowledge, any other entity
for whose acts or omissions the Company or any Subsidiary is or may be liable)
upon any property now or previously owned or leased by the Company or any
Subsidiary, or upon any other property, which would be a violation of or give
rise to any liability under any applicable law, rule, regulation, order,
judgment, decree or permit (“Environmental Law”), except for violations and
liabilities which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. There has been no disposal
discharge, emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company or any Subsidiary has
knowledge, except as could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. The Company has not agreed to
assume, undertake or provide indemnification for any liability of any other
person under any Environmental Law, including any obligation for cleanup or
remedial action, except as could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

 

(xx) No relationship, direct or indirect, required to be described under Item
404 of Regulation S-K, exists between or among the Company on the one hand, and
the directors, officers or stockholders of the Company on the other hand, which
is not described in the Preliminary Offering Memorandum.

 

(yy) No Restricted Subsidiary (as defined in the Indenture) of the Company is
currently prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such Restricted Subsidiary’s
capital stock, from repaying to the Company any loan or advances to such
Restricted Subsidiary from the Company or from transferring any of such
Restricted Subsidiary’s property or assets to the Company or any other
Restricted Subsidiary of the Company, except as described in or contemplated by
the Preliminary Offering Memorandum.

 

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(zz) Immediately after each of the Subsidiary Guarantors has entered into the
Subsidiary Guarantee to which it is a party, (i) the fair value of the assets of
such Subsidiary Guarantor will exceed the debts and liabilities, subordinated,
contingent or otherwise, of such Subsidiary Guarantor, (ii) the present fair
saleable value of the property of such Subsidiary Guarantor will be greater than
the amount that will be required to pay the probable liabilities of such
Subsidiary Guarantor on its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities, subordinated,
contingent or otherwise, become absolute and matured, (iii) such Subsidiary
Guarantor will be able to pay its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured, and (iv) such Subsidiary Guarantor will not have an unreasonably small
capital with which to conduct the business in which it is engaged as such
business is conducted and is proposed to be conducted following the Closing
Date.

 

(aaa) None of the transactions contemplated by this Agreement (including without
limitation, the use of the proceeds from the sale of the Notes), will violate or
result in a violation of Section 7 of the Exchange Act, or any regulation
promulgated thereunder, including, without limitation, Regulations T, U, and X
of the Board of Governors of the Federal Reserve System.

 

(bbb) Without limiting any of the foregoing representations and warranties by
the Company and the Subsidiary Guarantors set forth above, any representation
and warranty by the Company and the Subsidiary Guarantors with respect to the
contents of, or that is limited by reference to, the Preliminary Offering
Memorandum will be true and correct with respect to the Offering Memorandum as
of its date and as of the Closing Date, substituting the words “Preliminary
Offering Memorandum” for “Offering Memorandum,” mutates mutanda.

 

(ccc) Any certificate required hereunder signed by or on behalf of the Company
or any Subsidiary Guarantor and delivered to an Initial Purchaser or to counsel
for the Initial Purchasers shall be deemed to be a representation and warranty
by the Company or such Subsidiary Guarantor to each Initial Purchaser as to the
matters covered thereby (and is subject to the limitations therein, if any).

 

The Company and the Subsidiary Guarantors acknowledge that the Initial
Purchasers and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Sections 8(c) and 8(d) hereof, counsel to the Company and
counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations and warranties and the Company and the Subsidiary
Guarantors hereby consent to such reliance.

 

3. Initial Purchasers’ Representations. Each of the Initial Purchasers,
severally and not jointly, represent and warrant to the Company and the
Subsidiary Guarantors, and agrees that:

 

(a) Such Initial Purchaser is a QIB with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the merits
and risks of an investment in the Series A Notes.

 

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(b) Such Initial Purchaser (i) is purchasing the Series A Notes pursuant to a
private sale exempt from registration under the Securities Act; (ii) is not
acquiring the Series A Notes with a view to any distribution thereof or with any
present intention of offering or selling any of the Series A Notes in a
transaction that would violate the Securities Act or the securities laws of any
State of the United States or any other applicable jurisdiction; and (iii) will
be reoffering and reselling the Series A Notes only to (A) QIBs in reliance on
the exemption from the registration requirements of the Securities Act provided
by Rule 144A, (B) to a limited number of Accredited Investors that execute and
deliver a letter containing certain representations and agreements in the form
attached as Annex A to the Offering Memorandum and (C) in offshore transactions
meeting the requirements of Regulation S.

 

(c) Such Initial Purchaser will offer the Series A Notes for sale upon the terms
and conditions set forth in this Agreement and in the Offering Memorandum after
this Agreement is entered into and as in the judgment of such Initial Purchaser
is advisable and will not offer or sell the Series A Notes by means of, nor have
they offered or sold the Series A Notes by means of, or otherwise engaged in a
public offering within the meaning of Section 4(2) of the Securities Act or any
form of general solicitation or general advertising (within the meaning of
Regulation D; including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Series A Notes.

 

(d) Such Initial Purchaser and its affiliates or any person acting on its or
their behalf have not engaged or will not engage in any directed selling efforts
within the meaning of Regulation S with respect to the Series A Notes.

 

(e) The Series A Notes offered and sold by such Initial Purchaser pursuant
hereto in reliance on Regulation S have been and will be offered and sold only
in offshore transactions (as defined in Rule 902 under the Securities Act).

 

(f) The sale of the Series A Notes offered and sold by such Initial Purchasers
pursuant hereto in reliance on Regulation S is not part of a plan or scheme to
evade the registration provisions of the Securities Act.

 

(g) Such Initial Purchaser agrees that the Series A Notes have not been
registered under the Securities Act and that neither it nor its affiliates has
offered or sold and will not offer or sell the Series A Notes in the United
States or to, or for the benefit or account of, a U.S. Person (other than a
distributor) (a) as part of its distribution at any time and (b) otherwise until
40 days after the later of the commencement of the offering of the Series A
Notes pursuant hereto and the Closing Date (the “distribution compliance
period”), other than in accordance with Regulation S or another exemption from
the registration requirements of the Securities Act. The Initial Purchaser
agrees that, during such 40-day distribution compliance period, it will not
cause any advertisement with respect to the Series A Notes (including any
“tombstone” advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Series A Notes, except such advertisements as permitted, and include the
statements required, by Regulation S. Such Initial Purchaser also agrees that,
at or prior to confirmation of a sale of Series A Notes offered and sold
pursuant to

 

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Regulation S, it will have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration in respect of the Series A Notes
from it during the restricted period a confirmation or notice substantially to
the following effect:

 

“The Series A Notes covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered, sold, assigned, transferred, pledged, encumbered or otherwise
transferred within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the Offering and the
Closing Date, except in either case (A) in accordance with Regulation S under
the Securities Act, (B) to a “Qualified Institutional Buyer” (as defined in Rule
144A (“Rule 144A”) under the Securities Act) in a transaction meeting the
requirements of Rule 144A or (C) to an institutional “accredited investor” (as
defined in Rule 501(a)(1), (2), (3), (5), (6) or (7) of Regulation D under the
Securities Act) in a transaction that is exempt from the registration
requirements of the Securities Act, and in connection with any subsequent sale
by you of the Series A Notes covered hereby in reliance on Regulation S during
the period referred to above to any distributor, dealer or person receiving a
selling concession, fee or other remuneration, you must deliver a notice to
substantially the foregoing effect. Terms used above have the meanings assigned
to them in Regulation S.”

 

Such Initial Purchaser acknowledges that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections 8(c) and
8(d) hereof, counsel to the Company and counsel to the Initial Purchasers, will
rely upon the accuracy and truth of the foregoing representations, warranties
and agreements and such Initial Purchaser hereby consents to such reliance.

 

4. Purchase and Sale. On the basis of the representations, warranties and
covenants contained in this Agreement, and subject to the terms and conditions
set forth herein, the Company agrees to issue and sell to the Initial
Purchasers, and each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company, the principal amounts of Series A Notes set forth
opposite the name of such Initial Purchaser set forth on Schedule I attached
hereto at a purchase price equal to 97.407% of the principal amount thereof (the
“Purchase Price”).

 

5. Delivery and Payment.

 

(a) Delivery to the Initial Purchasers of, and payment by the Initial Purchasers
of the Purchase Price for, the Series A Notes shall be made (the “Closing”) at
9:30 a.m., New York City time, on March 15, 2004 or such later date as the
Initial Purchasers shall designate, which date and time may be postponed by
agreement between the Initial Purchasers and the Company in writing (the
“Closing Date”) at the offices of Irell & Manella LLP, 1800 Avenue of the Stars,
Suite 900, Los Angeles, California 90067, or such other time or place as you and
the Company shall designate.

 

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(b) The Series A Notes will be delivered to the Initial Purchasers against
payment by or on behalf of the Initial Purchasers of the purchase price therefor
by wire transfer in immediately available funds, by instructing The Depositary
Trust Company (“DTC”) to credit the Series A Notes to the account of the Initial
Purchasers or its designees at DTC. The Series A Notes will be evidenced by a
single global security in definitive form (the “Global Note”) and/or by
additional definitive securities, and will be registered, in the case of the
Global Note, in the name of Cede & Co. as nominee of DTC, and in the other
cases, in such names and in such denominations as the Initial Purchasers shall
request prior to 12:00 p.m., New York City time, on the second business day
preceding the Closing Date. The Series A Notes to be delivered to the Initial
Purchasers shall be made available to the Initial Purchasers in New York City
for inspection and packaging not later than 9:30 p.m., New York City time, on
the business day next preceding the Closing Date.

 

6. Agreements of the Company and the Subsidiary Guarantors. The Company and the
Subsidiary Guarantors jointly and severally agree with each Initial Purchaser as
follows:

 

(a) The Company and the Subsidiary Guarantors will furnish to the Initial
Purchasers, without charge, as of the date of the Offering Memorandum, such
number of copies of the Offering Memorandum as may then be amended or
supplemented as they may reasonably request.

 

(b) The Company and the Subsidiary Guarantors will furnish to the Initial
Purchasers, without charge, as of the date of the Offering Memorandum, such
number of copies of the Form 8-K or Form 10-K filed with the Commission on or
before the date of the Offering Memorandum containing the consolidated audited
financial statements of the Company and its consolidated Subsidiaries (covering
the fiscal years ended December 31, 2001, December 31, 2002 and December 31,
2003) and the Company’s Management’s Discussion and Analysis of Financial
Condition and Results of Operation of the Company for the fiscal year ended
December 31, 2003, as they may reasonably request.

 

(c) The Company and the Subsidiary Guarantors will not make any amendment or
supplement to the Preliminary Offering Memorandum or to the Offering Memorandum
of which the Initial Purchasers shall not previously have been advised or to
which they shall reasonably object after being so advised.

 

(d) Prior to the execution and delivery of this Agreement, the Company and the
Subsidiary Guarantors shall have delivered or will deliver to the Initial
Purchasers, without charge, in such quantities as the Initial Purchasers shall
have requested or may hereafter reasonably request, copies of the Preliminary
Offering Memorandum. The Company and each of the Subsidiary Guarantors consent
to the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Series A Notes are offered by the Initial Purchasers
and by dealers, prior to the date of the Offering Memorandum, of each
Preliminary Offering Memorandum so furnished by the Company and the Subsidiary
Guarantors. The Company and each of the Subsidiary Guarantors consents to the
use of the Offering Memorandum in

 

21

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accordance with the securities or Blue Sky laws of the jurisdictions in which
the Series A Notes are offered by the Initial Purchasers and by all dealers to
whom Series A Notes may be sold, in connection with the offering and sale of the
Series A Notes.

 

(e) If, at any time prior to completion of the distribution of the Series A
Notes by the Initial Purchasers to Eligible Purchasers, any event shall occur
that in the judgment of the Company, any of the Subsidiary Guarantors or in the
reasonable opinion of counsel for the Initial Purchasers should be set forth in
the Offering Memorandum in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Offering Memorandum in order to comply with
any law, the Company and the Subsidiary Guarantors will forthwith prepare an
appropriate supplement or amendment thereto or such document, and will
expeditiously furnish to the Initial Purchasers and dealers a reasonable number
of copies thereof.

 

(f) The Company and each of the Subsidiary Guarantors will cooperate with the
Initial Purchasers and with their counsel in connection with the qualification
of the Series A Notes for offering and sale by the Initial Purchasers and by
dealers under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
qualification; provided, that in no event shall the Company or any of the
Subsidiary Guarantors be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Series A Notes, in any jurisdiction where it is not now so subject.

 

(g) For a period of 90 days from the date of the Offering Memorandum, the
Company and each of the Subsidiary Guarantors agree not to, directly or
indirectly, sell, offer to sell, contract to sell, grant any option to purchase,
issue any instrument convertible into or exchangeable for, or otherwise transfer
or dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition in the future of), any debt
securities of the Company or any of the Subsidiary Guarantors with terms
substantially similar (including having equal rank) to the Notes (other than the
Notes), except (i) for the Series B Notes in connection with the Exchange Offer
or (ii) with the prior consent of Lehman Brothers Inc. and Bear, Stearns & Co.
Inc.

 

(h) So long as any of the Notes are outstanding, the Company and the Subsidiary
Guarantors will furnish without charge to the Initial Purchasers (which
obligation is satisfied by the filing of the required documents on the
Commissions EDGAR database system), as they may reasonably request, (i) as soon
as available, a copy of each report or other publicly available information that
the Company and/or the Subsidiary Guarantors mail or otherwise make available to
their security holders generally or filed with any stock exchange or regulatory
body and (ii) all reports, financial statements and proxy or information
statements filed by either the Company or any of the Subsidiary Guarantors or
any successor of either of them with the Commission or any national securities
exchange and such other publicly available information concerning the Company
and/or any of the Subsidiary Guarantors or any successor of any of them or any
of their respective subsidiaries, including, without limitation, press releases.

 

22

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(i) If this Agreement shall terminate or shall be terminated after execution and
delivery pursuant to any provisions hereof (other than in connection with the
conditions set forth in clauses (ii), (iii), (iv) and (v) of Section 8(j)) or if
this Agreement shall be terminated by the Initial Purchasers because of any
failure or refusal on the part of the Company or any of the Subsidiary
Guarantors to comply with the terms or fulfill any of the conditions of this
Agreement, the Company and the Subsidiary Guarantors agree to reimburse the
Initial Purchasers for all out-of-pocket expenses (including reasonable fees and
expenses of its counsel) reasonably incurred by it in connection herewith, but
without any further obligation on the part of the Company or any of the
Subsidiary Guarantors for loss of profits or otherwise.

 

(j) The Company and the Subsidiary Guarantors will apply the net proceeds from
the sale of the Series A Notes to be sold by it hereunder substantially in
accordance with the description set forth in the Preliminary Offering Memorandum
under the caption “Use of Proceeds.”

 

(k) The Company shall not invest, or otherwise use the proceeds received by the
Company from its sale of the Notes in such a manner as would require the Company
or any of the Subsidiaries to register as an investment company under the 1940
Act.

 

(l) In connection with the Offering, until Lehman Brothers Inc. and Bear,
Stearns & Co. Inc. have notified the Company and the other Initial Purchasers of
the completion of resales of the Notes by the Initial Purchasers, none of the
Company, the Subsidiary Guarantors nor any of their respective affiliates has
taken, nor will any of them take, directly or indirectly, any action designed to
or that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Notes to facilitate the sale or resale of the
Notes. Except as permitted by the Securities Act, the Company and the Subsidiary
Guarantors will not distribute any offering material in connection with the
Exempt Resales.

 

(m) The Company and the Subsidiary Guarantors will use their best efforts to
permit the Notes to be designated Private Offerings, Resales and Trading through
Automated Linkages market (“The PORTAL Market”) securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in The PORTAL Market and to permit the Notes
to be eligible for clearance and settlement through DTC.

 

(n) From and after the Closing Date, so long as any of the Notes are outstanding
and are “restricted securities” within the meaning of the Rule 144(a)(3) under
the Securities Act or, if earlier, until two years after the Closing Date, and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, the Company and the Subsidiary Guarantors will furnish to
holders of the Notes and prospective purchasers of Notes designated by such
holders, upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act to permit compliance with Rule 144A in connection with resale of
the Notes.

 

(o) The Company and the Subsidiary Guarantors have complied and will comply with
all provisions of Florida Statutes Section 517.075 relating to issuers doing
business with Cuba.

 

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(p) The Company and the Subsidiary Guarantors agree not to sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) that would be integrated with the sale of the
Series A Notes in a manner that would require the registration under the
Securities Act of the sale to the Initial Purchasers or the Eligible Purchasers
of the Series A Notes.

 

(q) The Company and the Subsidiary Guarantors agree to comply with all the terms
and conditions of the Registration Rights Agreement and all agreements set forth
in the representation letters of the Company and the Subsidiary Guarantors to
DTC relating to the approval of the Notes by DTC for “book entry” transfer.

 

(r) The Company and the Subsidiary Guarantors agree to cause the Exchange Offer,
if available, to be made in the appropriate form, as contemplated by the
Registration Rights Agreement, to permit registration of the Series B Notes to
be offered in exchange for the Series A Notes, and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.

 

(s) The Company and the Subsidiary Guarantors agree that prior to any
registration of the Notes pursuant to the Registration Rights Agreement, or at
such earlier time as may be required, the Indenture shall be qualified under the
Trust Indenture Act of 1939 (the “TIA”) and any necessary supplemental
indentures will be entered into in connection therewith.

 

(t) The Company will take all reasonable action necessary to enable Standard &
Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”) to
reaffirm their respective credit ratings on the Company’s outstanding senior
subordinated debt, including for this purpose, the issuance of the Notes.

 

(u) The Company and the Subsidiary Guarantors will not voluntarily claim, and
will resist actively all attempts to claim, the benefit of any usury laws
against holders of the Notes.

 

(v) The Company will make all required filings by the Nevada Gaming Commission
with respect to the transactions contemplated by this Agreement and the
Indenture within 30 days of March 31, 2004.

 

(w) The Company will make all required filings by the Mississippi Gaming
Commission with respect to the transactions contemplated by this Agreement and
the Indenture within 30 days of March 31, 2004.

 

(x) The Company will obtain all necessary gaming Consents and approvals that may
be required in connection with the performance of the Company’s and the
Subsidiary Guarantors’ agreements and obligations set forth in the Registration
Rights Agreement and the Exchange Offer.

 

(y) The Company and the Subsidiary Guarantors will do and perform all things
required or necessary to be done and performed under this Agreement by them
prior to the Closing Date, and to satisfy all conditions precedent to the
Initial Purchasers’ obligations hereunder to purchase the Series A Notes.

 

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7. Costs and Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
the Company and the Subsidiary Guarantors agree to pay all costs, expenses, fees
and taxes incident to and in connection with: (i) the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum and the Offering
Memorandum (including, without limitation, financial statements and exhibits)
and any amendment or supplement to the Preliminary Offering Memorandum and
Offering Memorandum (but not, however, legal fees and expenses of the Initial
Purchasers counsel incurred in connection therewith); (ii) the preparation,
printing (including, without limitation, word processing and duplication costs)
and delivery this Agreement, the Indenture, the Registration Rights Agreement,
all Blue Sky Memoranda and all other agreements, memoranda, correspondence and
other related documents printed and delivered in connection with the offering,
purchase, sale and delivery of the Notes and with Exempt Resales (but not,
however, legal fees and expenses of the Initial Purchasers counsel incurred in
connection with any of the foregoing other than fees of such counsel plus
reasonable disbursements incurred in connection with the preparation, printing
and delivery of such Blue Sky Memoranda); (iii) the issuance and delivery by the
Company and the Subsidiary Guarantors of the Notes and the Subsidiary Guarantees
(iv) the qualification of the Notes and the Subsidiary Guarantees for offer and
sale under the securities and Blue Sky laws of the several states (including,
without limitation, the reasonable fees, expenses and disbursements of your
counsel relating to such registration or qualification); (v) furnishing such
copies of the Preliminary Offering Memorandum and the Offering Memorandum, and
all amendments and supplements thereto, and such copies of the Form 8-K or Form
10-K which contain the Company’s Audited Financials and its Management’s
Discussion and Analysis of Financial Condition and Results of Operations for the
fiscal year ended December 31, 2003 as may be reasonably requested for use in
connection with the Exempt Resales, (vi) the preparation of certificates for the
Notes and the Subsidiary Guarantees (including, without limitation, printing and
engraving thereof), (vii) the application for quotation of the Notes in The
PORTAL Market, (viii) approval of the Notes by DTC for “book-entry” transfer,
(ix) rating the Series A Notes and the Series B Notes, (x) the Trustee, any
agent of the Trustee and the counsel for the Trustee in connection with the
Indenture and the Notes, (xi) the performance by the Company and the Subsidiary
Guarantors of their other obligations under this Agreement and (xii) their hotel
and incidental roadshow expenses (other than costs and expenses incurred for the
use of chartered planes during the roadshow, which costs and expenses shall be
paid for by the Initial Purchasers). Notwithstanding the foregoing, the Company
shall not be required to pay for any of the Initial Purchasers costs and
expenses (except as set forth above in this Section 7 or in Section 6(i),
Section 9 or Section 12).

 

8. Conditions of Initial Purchasers’ Obligations. The respective obligations of
the Initial Purchasers hereunder to purchase and pay for the Notes are subject
to (i) the accuracy of the representations and warranties of the Company and the
Subsidiary Guarantors contained herein, as of the date hereof and as of the
Closing Date, (ii) the absence from any certificates, opinions, written
statements or letters furnished to the Initial Purchasers or to the counsel for
the Initial Purchasers pursuant to this Section 8 of any material misstatements
or ommissions, (iii) the performance by the Company and the Subsidiary
Guarantors of their respective obligations hereunder, and (iv) each of the
following additional terms and conditions:

 

(a) The Initial Purchasers shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Preliminary Offering
Memorandum, the Offering Memorandum or any amendment or supplement thereto
contains an untrue statement of a fact which, in the reasonable opinion of
counsel to the Initial Purchasers, is material or omits to state a fact which,
in the reasonable opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, in
light of the circumstances under which such statement is made.

 

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(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Notes, the Subsidiary
Guarantees, the Indenture, the Registration Rights Agreement, the Preliminary
Offering Memorandum and the Offering Memorandum, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the Initial
Purchasers, and the Company and the Subsidiary Guarantors shall have furnished
to such counsel all documents and information that they may reasonably request
to enable them to pass upon such matters.

 

(c) The Initial Purchasers shall have received on the Closing Date an opinion of
counsel, each dated as of the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers and counsel to the Initial Purchasers, of
each of (i) Irell & Manella LLP, counsel for the Company and the Subsidiary
Guarantors, substantially in the form attached as Annex I hereto, (ii) Schreck
Brignone, Nevada counsel for the Company, substantially in the form attached as
Annex II hereto, (iii) Watkins Ludlam Winter & Stennis, P.A., Mississippi
counsel for the Company, substantially in the form attached as Annex III hereto,
(iv) Baker & Daniels, Indiana counsel for the Company, substantially in the form
attached as Annex IV hereto, (v) Adams & Reese LLP, Louisiana counsel for the
Company, substantially in the form attached as Annex V hereto and (vi) Briol &
Associates, PLLC, Minnesota counsel for the Company, substantially in the form
attached as Annex VI hereto.

 

(d) All proceedings taken in connection with the sale of the Notes as herein
contemplated shall be reasonably satisfactory in form and substance to Lehman
Brothers Inc., Bear, Stearns & Co. Inc. and counsel to the Initial Purchasers,
and the Initial Purchasers shall have received from Latham & Watkins LLP,
counsel for the Initial Purchasers, such opinion or opinions, dated as of the
Closing Date, with respect to the issuance and sale of the Series A Notes, the
Offering Memorandum and other related matters as the Initial Purchasers may
reasonably require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.

 

(e) At the time of execution of this Agreement, the Initial Purchasers shall
have received from Deloitte & Touche LLP a letter, in form and substance
reasonably satisfactory to the Initial Purchasers, addressed to the Initial
Purchasers and dated the date hereof (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given or incorporated by reference in the Preliminary Offering
Memorandum, as of a date not more than three days prior to the date

 

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hereof), the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public offerings.

 

(f) Prior to the distribution of the Offering Memorandum, the Initial Purchasers
shall have received from Deloitte & Touche LLP a letter, in form and substance
reasonably satisfactory to the Initial Purchasers, addressed to the Initial
Purchasers and dated as of the date of the Offering Memorandum (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the Offering Memorandum (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given or incorporated by
reference in the Offering Memorandum, as of a date not more than three days
prior to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered
public offerings.

 

(g) With respect to the letters of Deloitte & Touche LLP referred to in the
preceding paragraphs and delivered to the Initial Purchasers concurrently with
the execution of this Agreement and prior to the distribution of the Offering
Memorandum, respectively, (the “initial letters”), the Company shall have
furnished to the Initial Purchasers a letter (the “bring-down letter”) of such
accountants, addressed to the Initial Purchasers and dated the Closing Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letters and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letters.

 

(h) The Company shall have furnished to the Initial Purchasers a certificate,
dated the Closing Date, of (1) its Chairman of the Board, President, Chief
Executive Officer or a Vice President and (2) its Chief Financial Officer
stating, in his capacity as an officer of the Company and not in his individual
capacity, that:

 

(i) The representations, warranties and agreements of the Company and the
Subsidiary Guarantors contained in Section 2 are true and correct as of the
Closing Date.

 

(ii) As of the Closing Date, the Company and the Subsidiary Guarantors have
complied with all their agreements and obligations contained herein and that all
of the conditions set forth in Section 8 to be performed or complied with
thereunder on or prior to the Closing Date have been duly performed and
fulfilled.

 

(iii) Since (i) September 30, 2003, other than as set forth in the Preliminary
Offering Memorandum and (ii) the date of the latest audited financial statements

 

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included or incorporated by reference in the Offering Memorandum, the Company
and its Subsidiaries, taken as a whole, have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
explosion, storm, hurricane, accident or other calamity, whether or not covered
by insurance, at any of the properties owned or leased by the Company or any of
its Subsidiaries or from any labor dispute or any legal or governmental
proceeding.

 

(iv) Subsequent to (i) September 30, 2003, other than as set forth in the
Preliminary Offering Memorandum and (ii) the date as of which information is
given or incorporated by reference in the Offering Memorandum, there has not
been any material adverse change or any development involving a prospective
material adverse change, whether or not arising from transactions in the
ordinary course of business, in or affecting (A) the business, condition
(financial or otherwise), results of operations, stockholders’ equity,
properties or prospects of the Company and the Subsidiaries, taken as a whole;
(B) the long-term debt or capital stock of the Company and its Subsidiaries,
taken as a whole; or (C) the Offering.

 

(v) Based on the knowledge of the chief executive officer and chief financial
officer of the Company, (i) the Annual Report on Form 10-K for the year ended
December 31, 2003 or the Current Report on Form 8-K containing the Company’s
Audited Financials (as defined below) and its Management’s Discussion and
Analysis of Financial Condition and Results of Operations for the fiscal year
ended December 31, 2003 (each a “Filing”, and together, the “Filings”), fully
comply with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(ii) the information contained in each Filing fairly presents, in all material
respects, the financial condition and results of operations of the Company and
its consolidated Subsidiaries as of the date of filing with the Commission.

 

(vi) The chief executive officer and chief financial officer of the Company are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) of the rules and regulations of the
Commission under the Exchange Act) for the Company and have (i) designed such
disclosure controls, or caused such disclosure controls and procedures to be
developed under their supervision, and procedures to ensure that material
information relating to the Company and its Subsidiaries is made known to the
chief executive officer and chief financial officer by others within the Company
and its Subsidiaries, (ii) evaluated the effectiveness of the of the Company’s
disclosure controls and procedures as of the end of the period (the “Filing
Evaluation Date”) covered by such Filing, and (iii) presented in each Filing
their conclusions about the effectiveness of the disclosure controls and
procedures based on their evaluation as of the Filing Evaluation Date. The chief
executive officer and chief financial officer of the Company have disclosed,
based upon their most recent evaluation of the internal controls over financial
reporting, to the Company’s auditors and the Audit Committee of the Company’s
Board of Directors (i) all significant deficiencies or material weaknesses in
the design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report information, and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company’s internal controls over financial reporting. The chief executive
officer and chief financial officer have indicated in each Filing any changes in
the Company’s internal controls over financial reporting that occurred during
the Company’s most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s internal controls over
financials reporting.

 

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(vii) They have carefully examined the Offering Memorandum and, in their opinion
(A) as of their respective dates, the Preliminary Offering Memorandum and the
Offering Memorandum did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which such
statements were made, not misleading, and (B) since the date of the Preliminary
Offering Memorandum and the Offering Memorandum no event has occurred which
should, under applicable securities laws, have been set forth in a supplement or
amendment to the Preliminary Offering Memorandum and the Offering Memorandum.

 

(i) Neither the Company nor any of its Subsidiaries shall have sustained since
(i) September 30, 2003, other than as set forth in the Preliminary Offering
Memorandum and (ii) the date of the latest audited financial statements included
or incorporated by reference in the Offering Memorandum, other than as set forth
in the Offering Memorandum, any loss or interference material to the Company and
its Subsidiaries, take as a whole, with their business from fire, explosion,
flood, storm, hurricane, accident or other calamity, whether or not covered by
insurance, at any of the properties owned or leased by the Company or any of its
Subsidiaries or from any labor dispute or court or governmental action, order or
decree. Since (i) September 30, 2003, other than as set forth in the Preliminary
Offering Memorandum and (ii) the date of the latest audited financial statements
included or incorporated by reference in the Offering Memorandum, other than as
set forth in the Offering Memorandum, there shall not have been any change in
the capital stock or long-term debt of the Company or any of its Subsidiaries or
any change, or any development involving a prospective change, whether or not
arising from transactions in the ordinary course of business, in or affecting
the general affairs, business, management, condition (financial or otherwise),
stockholders’ equity, results of operations, properties or prospects of the
Company and its Subsidiaries, taken as a whole, the effect of which, in any such
case described above, is, in the reasonable judgment of Lehman Brothers Inc. and
Bear, Stearns & Co. Inc., so material and adverse as to make it impracticable or
inadvisable to proceed with the Offering or the delivery of the Notes being
delivered on the Closing Date on the terms and in the manner contemplated in the
Preliminary Offering Memorandum and the Offering Memorandum.

 

(j) Subsequent to the execution and delivery of this Agreement there shall not
have occurred any of the following: (i) any downgrading in the rating of any
debt securities of the Company or any of its Subsidiaries by any “nationally
recognized statistical rating organization” (as defined for purposes of Rule
436(g) under the Securities Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt securities
of the Company or any of its Subsidiaries (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating) or any announcement that the Company or any of its
Subsidiaries has been placed on negative outlook, (ii) trading in securities
generally on the NYSE, The NASDAQ National Market or the American Stock Exchange
or in the over-the-counter market, or trading in any securities of the Company
on any exchange or in the over-the-counter market, shall have been suspended or
been made subject to material limitations, or the settlement of such trading

 

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generally shall have been materially disrupted or minimum or maximum prices for
securities shall have been established on any such exchange or such market by
the Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (iii) a banking moratorium shall have been
declared by any Federal or state authorities or if any material disruption in
commercial banking or securities settlement or clearance services shall have
occurred, (iv) the United States shall have become engaged in hostilities, there
shall have been any outbreak or escalation in hostilities involving the United
States or there shall have been a declaration of a national emergency or war by
the United States, or (v) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such), including, without limitation, as a result of terrorist activities after
the date hereof, or there shall have occurred any other calamity or crisis, as
to make it, in the judgment of the Lehman Brothers Inc. and Bear, Stearns & Co.
Inc., impracticable or inadvisable to proceed with the offering or delivery of
the Series A Notes being delivered on the Closing Date on the terms and in the
manner contemplated in the Preliminary Offering Memorandum or the Offering
Memorandum or which, in the judgment of Lehman Brothers Inc. and Bear, Stearns &
Co. Inc. would materially and adversely affect the financial markets or the
markets for the Series A Notes and other debt securities.

 

(k) On or prior to the Closing Date, the Company and the Subsidiary Guarantors
shall have obtained all necessary Consents, including all governmental consents
and approvals, required to consummate the Offering and sale of the Notes and the
Subsidiary Guarantees and for the execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Indenture, the Notes, the
Subsidiary Guarantees and the consummation of the transactions contemplated by
this Agreement, including without limitation, all consents or approvals
(including “shelf” approvals and waivers) required by the Nevada Gaming
Commission, the Nevada Gaming Control Board, the Indiana Gaming Commission, the
Mississippi Gaming Commission and the Louisiana Gaming Commission (or, if
applicable, their respective staff), and the Initial Purchasers shall have
received evidence to their satisfaction of the compliance by the Company with
this condition, other than as may be required under the Securities Act and for
the qualification of the Indenture under the TIA, with respect to the
performance of the Company’s and the Subsidiary Guarantors’ agreements and
obligations set forth in the Registration Rights Agreement, and other than
gaming approvals that may be required after the Closing Date in connection with
the Exchange Offer.

 

(l) The Company shall have caused to be submitted the necessary documents and
legal opinions to the Indiana Gaming Commission as required by the Waiver
Letter, dated February 20, 2004, issued by the Indiana Gaming Commission to
Indiana counsel for the Company, and the Indiana Gaming Commission or its staff
shall have (i) reviewed and approved the final documents requested by the
Indiana Gaming Commission or its staff related to the Offering and (ii) provided
(A) a letter indicating that the Indiana Gaming Commission or its staff have
reviewed and approved such final documents to be executed and delivered in
connection with the Offering or (B) oral confirmation that it will issue such
letter within 10 business days of the consummation of the Offering.

 

(m) On or prior to the Closing Date, the Company shall have received the Bank
Consent from the Administrative Agent under the Bank Credit Facility.

 

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(n) The Company and the Subsidiary Guarantors shall have executed and delivered
the Indenture.

 

(o) The Company and the Subsidiary Guarantors shall have executed and delivered
the Registration Rights Agreement.

 

(p) The Series A Notes shall have been approved by the NASD for trading and duly
listed on The PORTAL Market.

 

(q) On or prior to the Closing Date, DTC shall have accepted the Notes for
clearance.

 

(r) The Company shall have furnished to the Initial Purchasers and counsel to
the Initial Purchasers with such other certificates, opinions or other documents
as they may have reasonably requested and as are customary in the transactions
contemplated by this Agreement.

 

(s) Each of the Initial Purchasers, on or prior to 4:30 pm (New York City time)
on March 10, 2004, shall have received copies of (i) the Audited Financials and
the unqualified independent auditor’s report of Deloitte & Touche LLP with
respect thereto and (ii) the Company’s Management’s Discussion and Analysis of
Financial Condition and Results of Operations for the fiscal year ended December
31, 2003, in each case, that the Company will include in its Form 10-K for the
fiscal year ended December 31, 2003.

 

(t) The Audited Financials in respect of the fiscal year ended December 31,
2003, taken as a whole, shall, in the reasonable judgment of Lehman Brothers
Inc. and Bear, Stearns & Co. Inc., not reflect any materially adverse change
from (i) the Company’s draft year ended December 31, 2003 balance sheet and
income statement for the fiscal year ended December 31, 2003 previously provided
to the Initial Purchasers prior to the date hereof and (ii) the year end
earnings results contained in the Preliminary Offering Memorandum under the
caption “Summary—Recent Developments—2003 Earning Results,” and Lehman Brothers
Inc. and Bear, Stearns & Co. Inc. shall be reasonably satisfied with the form
and content of the (1) Audited Financials, (2) the Company’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations in
respect of the fiscal year ended December 31, 2003 and (3) the Form 10-K or Form
8-K pursuant to which the foregoing are filed with the Commission, as
applicable, and that are incorporated by reference into the Offering Memorandum.

 

(u) The Company (i) shall have filed its Audited Financials and its Management’s
Discussion and Analysis of Financial Condition and Results of Operations as
required by Item 303 of Regulation S-K of the Securities Act for the year ended
December 31, 2003 with the Commission on either Form 8-K or Form 10-K on or
prior to 4:30 pm (New York City time) on or prior to March 10, 2004, (ii) shall
have prepared the Offering Memorandum for use by the Initial Purchasers in
connection with Exempt Resales on or prior to March 10, 2004 and (iii) shall
provide that the Offering Memorandum to be used by the Initial Purchasers in
connection with such Exempt Resales will have incorporated by reference (and
when delivered to Eligible Purchasers on March 11, 2004 will include a copy of)
either (i) the Company’s Form 10-K for the fiscal year ended December 31, 2003
or (ii) a Form 8-K, in either case, that contains (1) the Audited Financials and
the unqualified independent auditor’s report of Deloitte & Touche

 

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LLP with respect thereto and (2) the Company’s Management’s Discussion and
Analysis of Financial Condition and Results of Operations for the fiscal year
ended December 31, 2003. To the extent that such Audited Financials are filed on
Form 8-K, the Chief Executive Office and the Chief Financial Officer of the
Company shall file the certifications required by Rule 15d-14 of the Exchange
Act therewith.

 

All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Initial Purchasers. The Initial Purchasers may in their sole discretion
waive compliance with any conditions to the obligations of the Initial
Purchasers hereunder.

 

9. Indemnification and Contribution.

 

(a) The Company and each Subsidiary Guarantor, jointly and severally, shall
indemnify and hold harmless each Initial Purchaser, its directors, officers and
employees and each person, if any, who controls any Initial Purchaser within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Series A Notes), to which the Initial Purchaser,
director, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement thereto
or (B) in any blue sky application or other document prepared or executed by the
Company (or based upon any written information furnished by the Company)
specifically for the purpose of qualifying any or all of the Series A Notes
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a “Blue Sky
Application”), (ii) the omission or alleged omission to state in any Preliminary
Offering Memorandum or the Offering Memorandum, or in any amendment or
supplement thereto, or in any Marketing Materials or Blue Sky Application any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Initial Purchaser in connection with, or relating in any
manner to, the Series A Notes or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company and the Subsidiary Guarantors shall not be liable
under this clause (iii) to the extent that it is determined in a final judgment
by a court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Initial Purchaser through its gross negligence or
willful misconduct), and shall reimburse each Initial Purchaser and each such
director, officer, employee or controlling person promptly upon demand for any
legal or other expenses reasonably incurred by the Initial Purchaser, that
director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and the Subsidiary Guarantors will not be liable in any such
case to the extent but only to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or

 

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alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company and the Subsidiary Guarantors by or on
behalf of the Initial Purchasers expressly for use therein; provided, further,
that the parties agree that such information provided by or on behalf of the
Initial Purchasers consists solely of the information described in Section 9(e)
hereof. The foregoing indemnity agreement is in addition to any liability which
the Company or the Subsidiary Guarantors may otherwise have to any Initial
Purchaser or to any director, officer, employee or controlling person of such
Initial Purchaser.

 

(b) Each Initial Purchaser, severally and not jointly, shall indemnify and hold
harmless the Company and each Subsidiary Guarantor, its officers and employees,
each of its directors, and each person, if any, who controls the Company within
the meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such Initial Purchaser furnished to the Company by or on behalf of that Initial
Purchaser specifically for inclusion therein, which information is limited to
the information set forth in Section 9(e) of this Agreement, and shall reimburse
the Company and any such director, officer or controlling person for any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Initial Purchaser may otherwise have to the Company or
any such director, officer, employee or controlling person.

 

(c) Promptly after receipt by an indemnified party under this Section 9 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 9 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 9. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by

 

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the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the Initial Purchaser
shall have the right to employ counsel to represent jointly the Initial
Purchaser and those Initial Purchasers and their respective directors, officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Initial Purchasers
against the Company or the Subsidiary Guarantors under this Section 9 if, in the
reasonable judgment of the Initial Purchasers, it is advisable for the Initial
Purchasers and those directors, officers, employees and controlling persons to
be jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Company or the Subsidiary
Guarantors. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.

 

(d) If the indemnification provided for in this Section 9 shall for any reason
be unavailable to or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company
and the Subsidiary Guarantors on the one hand and the Initial Purchasers on the
other from the offering of the Series A Notes or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Subsidiary Guarantors,
on the one hand and the Initial Purchasers on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Subsidiary
Guarantors, on the one hand and the Initial Purchasers on the other with respect
to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Series A Notes purchased under this Agreement
(before deducting expenses) received by the Company and the Subsidiary
Guarantors, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Series A Notes purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the Series A Notes under this Agreement. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Subsidiary Guarantors or the Initial
Purchasers, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of

 

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the preceding two sentences, the net proceeds deemed to be received by the
Company shall be deemed to be also for the benefit of the Subsidiary Guarantors
and information supplied by the Company shall also be deemed to have been
supplied by the Subsidiary Guarantors. The Company, the Subsidiary Guarantors
and the Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 9(d) were to be determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 9(d) shall be
deemed to include, for purposes of this Section 9(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9(d), no Initial Purchasers shall be required to
contribute any amount in excess of the amount by which the total price at which
the Series A Notes purchased by them and distributed to the Eligible Purchasers
exceeds the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute
as provided in this Section 9(d) are several in proportion to their respective
underwriting obligations and not joint.

 

(e) The Initial Purchasers severally confirm and the Company acknowledges that
the statements with respect to the offering of the Series A Notes by the Initial
Purchasers to be set forth in the fifth, sixth, eighth and tenth paragraphs,
under the caption “Plan of Distribution” in the Offering Memorandum will be
correct and will constitute the only information concerning the Initial
Purchasers furnished in writing to the Company by or on behalf of the Initial
Purchasers specifically for inclusion in the Offering Memorandum; provided, that
the Company will, if requested by the Initial Purchasers, include the
information relating to the resale of the Notes to Accredited Investors in the
“Plan of Distribution” section in the Offering Memorandum that is specifically
submitted by the Initial Purchasers to the Company for inclusion therein.

 

10. Defaulting Initial Purchasers. If, on the Closing Date, any Initial
Purchaser defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Initial Purchasers shall be obligated to purchase
the Series A Notes which the defaulting Initial Purchaser agreed but failed to
purchase on the Closing Date in the respective proportions which the aggregate
principal amount of Series A Notes set opposite the name of each remaining
non-defaulting Initial Purchaser in Schedule I hereto bears to the total
aggregate principal amount of Series A Notes set opposite the names of all the
remaining non-defaulting Initial Purchasers in Schedule I hereto; provided,
however, that the remaining non-defaulting Initial Purchasers shall not be
obligated to purchase any of the Series A Notes on the Closing Date if the total
aggregate principal amount of Series A Notes which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase on such date
exceeds 10% of the total aggregate principal amount of Series A Notes to be
purchased on the Closing Date, and any remaining non-defaulting Initial
Purchasers shall not be obligated to purchase more than 110% of the total
aggregate principal amount of Series A Notes which it agreed to purchase on the
Closing Date pursuant to the terms of Section 4. If the foregoing maximums are
exceeded, the

 

35

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remaining non-defaulting Initial Purchasers, or those other initial purchasers
satisfactory to the Initial Purchasers who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, the aggregate principal amount of Series A Notes to be purchased on
the Closing Date. If the remaining Initial Purchasers or other initial
purchasers satisfactory to the Initial Purchasers do not elect to purchase the
aggregate principal amount of Series A Notes which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase on the Closing
Date, this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser or the Company or the Subsidiary Guarantors,
except that the Company will continue to be liable for the payment of expenses
to the extent set forth in Sections 7 and 12.

 

Nothing contained herein shall relieve a defaulting Initial Purchaser of any
liability it may have to the Company for damages caused by its default. If other
Initial Purchasers are obligated or agree to purchase the aggregate principal
amount of Series A Notes of a defaulting or withdrawing Initial Purchaser, the
Company may postpone the Closing Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Offering Memorandum
or in any other document or arrangement.

 

11. Termination. The obligations of the Initial Purchasers hereunder may be
terminated by the Initial Purchasers by notice given to and received by the
Company prior to delivery of and payment for the Series A Notes if, prior to
that time, any of the events described in Sections 8(j), shall have occurred or
if the Initial Purchasers shall decline to purchase the Series A Notes for any
reason permitted under this Agreement.

 

12. Reimbursement of Initial Purchasers’ Expenses. If the Company shall fail to
tender the Series A Notes for delivery to the Initial Purchasers (i) by reason
of any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed or (ii) because any other condition to the
obligations of the Initial Purchasers hereunder required to be fulfilled by the
Company is not performed or fulfilled (other than the conditions set forth in
clauses (ii), (iii), (iv) and (v) of Section 8(j)) are not performed or
fulfilled), the Company will reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Initial Purchasers in connection with this Agreement and the proposed
purchase of the Series A Notes, and upon demand the Company shall pay the full
amount thereof to the Initial Purchasers. If this Agreement is terminated
pursuant to Section 10 by reason of the default of one or more Initial
Purchasers, the Company shall not be obligated to reimburse any defaulting
Initial Purchaser on account of those expenses.

 

13. Notices, etc. All statements, requests, notices and agreements hereunder
shall be in writing, and:

 

(a) if to the Initial Purchasers, shall be delivered or sent by mail, telex or
facsimile transmission to Lehman Brothers Inc., 745 Seventh Avenue, New York,
New York 10019, Attention: General Counsel—Litigation Department (Fax:
212-526-2648), with a copy to, in the case of any notice pursuant to Section
9(c), to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., at the same address, and with a copy to Latham & Watkins LLP,
Attention: Pamela B. Kelly, Esq., (Fax: 213-891-8763); and

 

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(b) if to the Company or to the Subsidiary Guarantors, shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Offering Memorandum, Attention: John A. Godfrey, Esq. (Fax:
702-784-7778), with a copy to Irell & Manella LLP, Attention: Kevin McGeehan,
Esq. (Fax: 310-203-7199);

 

provided, however, that any notice to an Initial Purchaser pursuant to Section
9(c) shall be delivered or sent by mail, telex or facsimile transmission to such
Initial Purchaser at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by Lehman Brothers Inc.

 

14. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchasers, the Company, the
Subsidiary Guarantors and their respective successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the directors or officers of the Initial Purchasers, and any person
or persons, if any, who control any Initial Purchaser within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the Initial
Purchasers contained in Section 9(b) of this Agreement shall be deemed to be for
the benefit of directors of the Company and any person controlling the Company
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 14, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.

 

15. Survival. The respective indemnities, representations, warranties and
agreements of the Company, the Subsidiary Guarantors and the Initial Purchasers
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Series A Notes and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.

 

16. Definition of the Terms “Business Day” and “Subsidiary”. For purposes of
this Agreement, (a) “business day” means any day on which the New York Stock
Exchange, Inc. is open for trading and (b) “subsidiary” has the meaning set
forth in Rule 405 of the Rules and Regulations.

 

17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.

 

Each party irrevocably agrees that any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
(“Related

 

37

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Proceedings”) may be instituted in the federal courts of the United States of
America located in the City of New York or the courts of the State of New York
in each case located in the Borough of Manhattan in the City of New York
(collectively, the “Specified Courts”), and irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a “Related Judgment”), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. The parties further agree that service of any process, summons,
notice or document by mail to such party’s address set forth above shall be
effective service of process for any lawsuit, action or other proceeding brought
in any such court. The parties hereby irrevocably and unconditionally waive any
objection to the laying of venue of any lawsuit, action or other proceeding in
the Specified Courts, and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such lawsuit, action
or other proceeding brought in any such court has been brought in an
inconvenient forum.

 

18. Counterparts. This Agreement may be executed in one or more counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.

 

19. Headings. The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect the meaning or interpretation
of, this Agreement.

 

[Signature Page Follows]

 

38

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If the foregoing correctly sets forth the agreement among the Company, the
Subsidiary Guarantors and the Initial Purchasers, please indicate your
acceptance in the space provided for that purpose below.

 

Very truly yours,

PINNACLE ENTERTAINMENT, INC.

By

 

 

    /s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

    Daniel R. Lee

Title:

 

    CEO

BELTERRA RESORT INDIANA, LLC

BY: PINNACLE ENTERTAINMENT, INC., ITS

SOLE MEMBER AND MANAGING MEMBER

By

 

 

    /s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

    Daniel R. Lee

Title:

 

    CEO

BILOXI CASINO CORP.

By

 

 

    /s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

    Daniel R. Lee

Title:

 

    CEO

BOOMTOWN, LLC

BY: PINNACLE ENTERTAINMENT, INC., ITS SOLE MEMBER

By

 

 

    /s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

    Daniel R. Lee

Title:

 

    CEO

CASINO MAGIC CORP.

By

 

 

    /s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

    Daniel R. Lee

Title:

 

    CEO

 

S-1

--------------------------------------------------------------------------------

CASINO ONE CORPORATION

By

 

/s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

Daniel R. Lee

Title:

 

CEO

CRYSTAL PARK HOTEL AND CASINO

DEVELOPMENT COMPANY, LLC

BY: HP/COMPTON, INC., ITS SOLE MEMBER

AND MANAGER

By

 

/s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

Daniel R. Lee

Title:

 

CEO

HP/COMPTION, INC.

By

 

/s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

Daniel R. Lee

Title:

 

CEO

LOUISIANA—I GAMING, A LOUISIANA

PARTNERSHIP IN COMMENDAM

BY: PINNACLE ENTERTAINMENT, INC. AS THE

SOLE MEMBER OF BOOMTOWN, LLC, ITS

GENERAL PARTNER

By

 

/s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

Daniel R. Lee

Title:

 

CEO

PNK (BOSSIER CITY), Inc.

By

 

/s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

Daniel R. Lee

Title:

 

CEO

PNK (LAKE CHARLES), L.L.C.

BY: PINNACLE ENTERTAINMENT, INC., ITS

SOLE MEMBER AND MANAGER

By

 

/s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

Daniel R. Lee

Title:

 

CEO

 

S-2

--------------------------------------------------------------------------------

PNK (RENO), LLC

BY: PINNACLE ENTERTAINMENT, INC., ITS SOLE MEMBER

By

 

/s/    Daniel R. Lee

--------------------------------------------------------------------------------

Name:

 

Daniel R. Lee

Title:

  CEO

 

S-3

--------------------------------------------------------------------------------

Agreed and Accepted:

LEHMAN BROTHERS INC.

BEAR, STEARNS & CO. INC.

DEUTSCHE BANK SECURITIES INC.

SG COWEN SECURITIES CORPORATION

UBS SECURITIES LLC

HIBERNIA SOUTHCOAST CAPITAL INC.

By

 

LEHMAN BROTHERS INC.

By

 

/s/    Michael Konigsberg

--------------------------------------------------------------------------------

   

Michael Konigsberg

Managing Director

 

 

S-4

--------------------------------------------------------------------------------

SCHEDULE I

 

INITIAL PURCHASERS

 

Name of Initial Purchaser

--------------------------------------------------------------------------------

  

Aggregate Principal
Amount of Notes

to be Purchased

--------------------------------------------------------------------------------

  

Aggregate

Purchase Price

--------------------------------------------------------------------------------

Lehman Brothers Inc.

   $ 76,000,000    $ 74,029,320

Bear, Stearns & Co. Inc.

   $ 76,000,000    $ 74,029,320

Deutsche Bank Securities Inc.

   $ 20,000,000    $ 19,481,400

SG Cowen Securities Corporation

   $ 20,000,000    $ 19,481,400

UBS Securities LLC

   $ 4,000,000    $ 3,896,280

Hibernia Southcoast Capital, Inc.

   $ 4,000,000    $ 3,896,280

Total

   $ 200,000,000    $ 194,814,000     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

SCHEDULE II

 

Subsidiary Guarantors

 

Belterra Resort Indiana, LLC

 

BILOXI CASINO CORP. d/b/a Casino Magic Biloxi

 

Boomtown, LLC (f/k/a Boomtown, Inc.)

 

Casino Magic Corp.

 

CASINO ONE CORPORATION

 

Crystal Park Hotel and Casino Development Company, LLC

 

HP/Compton, Inc.

 

Louisiana – I Gaming, a Louisiana Partnership in Commendam

 

PNK (BOSSIER CITY), Inc. (f/k/a Casino Magic of Louisiana Corp.)

 

PNK (LAKE CHARLES), L.L.C.

 

PNK (Reno), LLC (f/ka/ Boomtown Hotel & Casino, Inc.)

--------------------------------------------------------------------------------

SCHEDULE III

 

Subsidiaries

 

Belterra Resort Indiana, LLC

 

BILOXI CASINO CORP. d/b/a Casino Magic Biloxi

 

Boomtown, LLC (f/k/a Boomtown, Inc.)

 

Casino Magic Buenos Aires, SA

 

Casino Magic Corp.

 

Casino Magic Europe, BV Netherlands

 

Casino Magic Helles, SA (Greece)

 

CASINO MAGIC NEUQUEN SA

 

Casino Magic Support Services SA

 

CASINO ONE CORPORATION

 

CASINO PARKING, INC.

 

Crystal Park Hotel and Casino Development Company, LLC

 

HP/Compton, Inc.

 

Louisiana – I Gaming, a Louisiana Partnership in Commendam

 

OGLE HAUS, LLC

 

PNK (BOSSIER CITY), Inc. (f/k/a Casino Magic of Louisiana Corp.)

 

PNK Development 1, Inc.

 

PNK Development 2, Inc.

 

PNK Development 3, Inc.

 

PNK (LAKE CHARLES), L.L.C.

 

PNK (Reno), LLC (f/k/a Boomtown Hotel & Casino, Inc.)

 

Realty Investment Group, Inc.

 

St. Louis Casino Corp.

--------------------------------------------------------------------------------

ANNEX I

 

Form of Opinion of Company Counsel

 

[Omitted]

--------------------------------------------------------------------------------

ANNEX II

 

Form of Opinion of Schreck Brignone, Nevada counsel for the Company

 

[Omitted]

--------------------------------------------------------------------------------

ANNEX III

 

Form of Opinion of Watkins Ludlam Winter & Stennis, P.A.,

Mississippi counsel for the Company

 

[Omitted]

--------------------------------------------------------------------------------

ANNEX IV

 

Form of Opinion of Baker & Daniels, Indiana counsel for the Company

 

[Omitted]

--------------------------------------------------------------------------------

ANNEX V

 

Form of Opinion of Adams & Reese LLP, Louisiana counsel for the Company

 

[Omitted]

--------------------------------------------------------------------------------

ANNEX VI

 

Form of Opinion of Briol & Associates, PLLC, Minnesota counsel for the Company

 

[Omitted]