Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

BY AND AMONG

 

MGM MIRAGE
AS PARENT

 

MIRAGE RESORTS, INCORPORATED
AS SELLER

 

GNLV, CORP.

 

GNL, CORP.

 

GOLDEN NUGGET EXPERIENCE, LLC

 

POSTER FINANCIAL GROUP, INC.
AS PURCHASER

 

DATED AS OF JUNE 24, 2003

 

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

 

 

ARTICLE II PURCHASE AND SALE OF SHARES; CLOSING

Section 2.1

Purchase and Sale of Shares

Section 2.2

Closing

Section 2.3

Closing Deliveries

Section 2.4

Closing Date Purchase Price

Section 2.5

Post-Closing Adjustment Procedures to the Closing Date Purchase Price

Section 2.6

Post-Closing Adjustment to the Closing Date Purchase Price

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE MGM PARTIES

Section 3.1

Organization and Qualification

Section 3.2

Capitalization

Section 3.3

Authority; No Conflict; Required Filings and Consents

Section 3.4

Financial Information

Section 3.5

No Undisclosed Liabilities

Section 3.6

Absence of Certain Changes or Events

Section 3.7

Taxes

Section 3.8

Real Property

Section 3.9

Tangible Personal Property

Section 3.10

Intellectual Property

Section 3.11

Contracts

Section 3.12

Litigation

Section 3.13

Environmental Matters

Section 3.14

Employee Benefit Plans

Section 3.15

Compliance with Applicable Laws

Section 3.16

Labor Matters

Section 3.17

Compliance with the WARN Act

Section 3.18

Indebtedness

Section 3.19

Insurance

Section 3.20

Internal Controls and Procedures

Section 3.21

Nevada Takeover Statute

Section 3.22

Brokers

Section 3.23

Suppliers

Section 3.24

Bank Accounts

Section 3.25

Solvency; Sufficient Capital

Section 3.26

Sufficiency of Assets and Contracts

Section 3.27

Receivables

Section 3.28

Investment Intent

 

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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER

Section 4.1

Organization of Purchaser; No Business Operations

Section 4.2

Capitalization

Section 4.3

Authority; No Conflict; Required Filings and Consents

Section 4.4

Brokers

Section 4.5

Financing

Section 4.6

Licensing

Section 4.7

Litigation

Section 4.8

Investment Intent

 

 

ARTICLE V COVENANTS

Section 5.1

Conduct of Business of the MGM Acquired Entities

Section 5.2

Cooperation; Notice; Cure

Section 5.3

Access to Information

Section 5.4

No Acquisition Negotiation

Section 5.5

Confidentiality of Information

Section 5.6

Intercompany Account Settlement

Section 5.7

Governmental Approvals

Section 5.8

Consents

Section 5.9

Performance

Section 5.10

Publicity

Section 5.11

Stockholder Litigation

Section 5.12

Amendment of Indemnification Contracts

Section 5.13

Transfer of Slot Machine Ownership

Section 5.14

Intellectual Property – Pre-Closing

Section 5.15

Intellectual Property – Post-Closing

Section 5.16

Employees

Section 5.17

Transitional Services

Section 5.18

Termination of Affiliate Contracts

Section 5.19

Phase I Environmental Audit

Section 5.20

Termination Fee

Section 5.21

Capital Expenditures

Section 5.22

Releases

Section 5.23

Distribution

Section 5.24

Non-Solicitation of Unique Customers

Section 5.25

No Solicitation

Section 5.26

Transfer of Certain Assets Owned by Seller

Section 5.27

Leased Real Property

Section 5.28

Further Actions

 

 

ARTICLE VI CONDITIONS TO CLOSING

Section 6.1

Conditions of the Parties’ Obligations to Effect the Closing

Section 6.2

Additional Conditions to Obligation of the MGM Parties to Effect the Closing

Section 6.3

Additional Conditions to Obligation of Purchaser to Effect the Closing

 

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ARTICLE VII INDEMNIFICATION; REMEDIES

Section 7.1

Survival; Right to Indemnification Not Affected by Knowledge

Section 7.2

Indemnification

Section 7.3

Indemnification Procedures

Section 7.4

Threshold for Materiality

 

 

ARTICLE VIII TAX MATTERS

Section 8.1

Tax Indemnification

Section 8.2

Preparation and Filing of Tax Returns and Payment of Taxes.

Section 8.3

Accounting and Tax Records

Section 8.4

Tax Audits

Section 8.5

Transfer Taxes

Section 8.6

Section 338(h)(10) Election

Section 8.7

Tax Sharing Contracts

Section 8.8

Payments

Section 8.9

Conflicts; Survival

Section 8.10

Tax Treatment

Section 8.11

Refunds and Tax Benefits

 

 

ARTICLE IX TERMINATION

Section 9.1

Termination

Section 9.2

Effect of Termination

 

 

ARTICLE X MISCELLANEOUS

Section 10.1

Expenses

Section 10.2

Notices

Section 10.3

Interpretation

Section 10.4

Governing Law

Section 10.5

Consent to Jurisdiction and Venue

Section 10.6

Time of the Essence

Section 10.7

Assignment

Section 10.8

Amendment

Section 10.9

Extension; Waiver

Section 10.10

No Third Party Beneficiaries

Section 10.11

Entire Agreement

Section 10.12

Severability

Section 10.13

Counterparts

Section 10.14

Limitation of Liability

 

 

Schedule IA

 

Schedule 2.1

 

Schedule 5.1

 

Schedule 5.13

 

Schedule 5.17

 

Schedule 5.25

 

 

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STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of June 24, 2003, is
by and among MGM MIRAGE, a Delaware corporation (“Parent”), Mirage Resorts,
Incorporated, a Nevada corporation (“Seller”), GNLV, CORP., a Nevada corporation
(“GNLV”), GNL, CORP., a Nevada corporation (“GNL”), Golden Nugget Experience,
LLC, a Nevada limited liability company (“GNELLC”) and Poster Financial Group,
Inc., a Nevada corporation (“Purchaser”).

 

WHEREAS, Seller owns of record and beneficially (a) 25,000 shares (the “GNLV
Shares”) of common stock, par value $1.00 per share, of GNLV which are all of
the issued and outstanding shares of capital stock of GNLV and (b) 100 shares
(the “GNL Shares” and together with the GNLV Shares, the “Shares”) of common
stock, no par value per share, of GNL which are all of the issued and
outstanding shares of capital stock of GNL;

 

WHEREAS, GNLV owns of record and beneficially (a) 100 shares (the “BRRI Shares”)
of common stock, no par value per share, of Beau Rivage Resorts, Inc., a
Mississippi corporation (“BRRI”), (b) 1,000 shares (the “GNMC Shares”) of common
stock, no par value per share, of Golden Nugget Manufacturing Corp., a Nevada
corporation (“GNMC”), and (c) a 100% interest (the “GNELLC Interest”) in GNELLC,
which, in turn, owns of record and beneficially a 17.65% voting interest and a
50% non-voting interest (collectively the “FSELLC Interest”) in The Fremont
Street Experience Limited Liability Company, a Nevada limited liability company
(“FSELLC”);

 

WHEREAS, GNL does not own, directly or indirectly, of record or beneficially any
capital stock or equity interests in another Person;

 

WHEREAS, prior to or at the Closing and in connection with the transactions
described in this Agreement, GNLV shall distribute (the “Distribution”) all of
the BRRI Shares and the GNMC Shares to Seller; and

 

WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the Shares
for the consideration and on the terms set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, obligations and agreements set forth
below, the Parties agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

“Acquisition Proposal” shall have the meaning ascribed in Section 5.4.

 

“Actual Working Capital” shall mean the Working Capital of the MGM Acquired
Entities as of the Closing Date set forth in the Final Statement.

 

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“Additional Capital Contribution” means the amount of equity investment in
Purchaser required (if any) under the terms of the Additional Capital
Contribution Letter.

 

“Additional Capital Contribution Letter” means the letter agreement, dated
June 24, 2003, by and among Parent, Seller and Timothy Poster.

 

“Adjusted Working Capital” shall have the meaning ascribed in Section 2.4.

 

“Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.  For
purposes of this definition, “control” (including the terms “controlled by” and
“under common control with”) with respect to the relationship between or among
two or more Persons, means the possession, directly or indirectly or as a
trustee or executor, of the power to direct or cause the direction of the
management and policies of a Person whether through the ownership of voting
securities, as trustee or executor, by Contract or otherwise, including the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the management and
policies of such Person.

 

“Affiliate Contracts” shall have the meaning ascribed in Section 3.11(c).

 

“Agreement” shall have the meaning ascribed in the preamble.

 

“Allocation Statement” shall have the meaning ascribed in Section 8.6(b).

 

“Amendment of Indemnification Contracts” shall have the meaning ascribed in
Section 5.12.

 

“Artwork” shall have the meaning ascribed in Section 5.26.

 

“Artwork Transfer” shall have the meaning ascribed in Section 5.26.

 

“Base Price” shall have the meaning ascribed in Section 2.4.

 

“Board of Arbitration” shall have the meaning ascribed in Section 7.3(c).

 

“BRRI” shall have the meaning ascribed in the preamble.

 

“BRRI Shares” shall have the meaning ascribed in the preamble.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which banks are required or authorized by Law to be closed in the State of
Nevada.

 

“Cash on Hand” means all of the cash (and coin) in GNLV’s and GNL’s gaming
devices, cages and change banks (after giving effect to the contra accounts for
gaming chips and tokens purchased), coin vaults, safes, cash drawers and cash
registers at the

 

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premises of GNLV and GNL, including the owned restaurants, the owned hotels and
the owned retail outlets.

 

“City” means, in the case of GNLV, the City of Las Vegas, Nevada and, in the
case of GNL, the City of Laughlin, Nevada, and in each case, any Governmental
Entity thereof.

 

“Claim Notice” means written notification pursuant to Section 7.3(a) of a Third
Party Claim as to which indemnity under Section 7.2 is sought by an Indemnified
Party, enclosing a copy of all papers served, if any, and specifying the nature
of and basis for such Third Party Claim and for the Indemnified Party’s claim
against the Indemnifying Party under Section 7.2, together with the amount or,
if not then reasonably determinable, the estimated amount, determined in good
faith, of the Loss arising from such Third Party Claim.

 

“Cleanup” means all actions required to (a) cleanup, remove, treat or remediate
Hazardous Materials in the indoor or outdoor environment in accordance with
Environmental Laws, (b) perform pre-remedial studies and investigations and
post-remedial monitoring and care or (c) respond to any requests by a
Governmental Entity for information or documents relating to cleanup, removal,
treatment or remediation or potential cleanup, removal, treatment or remediation
of Hazardous Materials in the indoor or outdoor environment.

 

“Closing” shall have the meaning ascribed in Section 2.2.

 

“Closing Date” shall have the meaning ascribed in Section 2.2.

 

“Closing Date Purchase Price” shall have the meaning ascribed in Section 2.4.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
including the rules and regulations promulgated thereunder.

 

“Commercially Reasonable Efforts” means the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances.

 

“Commitment Letter” means the Commitment Letter, dated June 24, 2003, by and
among Lehman Commercial Paper Inc., Lehman Brothers Inc., Purchaser and PB
Gaming.

 

“Confidentiality Agreement” means the Confidentiality Agreement, dated as of
April 28, 2003, by and between Timothy Poster and Parent, as amended from time
to time.

 

“Consumable Items” means all food stuffs and nonalcoholic beverages that are
located at the Real Property.

 

“Contract” means any agreement, undertaking, obligation or understanding,
whether written or oral, or subject to conditions, including any commitment,
letter of

 

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intent, mortgage, indenture, note, loan, guarantee, lease, sublease, license,
contract, deed of trust, option agreement, right of first refusal, security
agreement, development agreement, operating agreement, management agreement,
service agreement, partnership agreement, joint venture agreement, limited
liability agreement, put/call arrangement, purchase, sale, merger or other
agreement, together with any amendments or modifications thereto and
restatements thereof; provided that Contracts do not include Leases respecting
Leased Real Property or Tenant Leases.

 

“Copyrights” means all copyrights, including moral rights and rights of
attribution and integrity, copyrights in Software (if any) and in the content
contained on any Web site, Lists (other than Lists of Unique Customers) and
registrations and applications for any of the foregoing, and rights to sue for
past Infringement thereof.

 

“Disclosure Schedule” shall have the meaning ascribed in Article III.

 

“Dispute Notice” shall have the meaning ascribed in Section 2.5(a).

 

“Dispute Period” means the period ending thirty days following receipt by an
Indemnifying Party of either a Claim Notice or an Indemnity Notice.

 

“Distribution” shall have the meaning ascribed in the preamble.

 

“Domain Names” shall have the meaning set forth in 15 U.S.C. § 1127.

 

“Elections” shall have the meaning ascribed in Section 8.6(a).

 

“Encumbrance” means any security interest, pledge, mortgage, option, lien
(including environmental and Tax liens), assessment, lease, charge, encumbrance,
adverse claim, preferential arrangement, condition, equitable interest, right of
first refusal or restriction of any kind, including any restriction on the use,
voting, transfer, receipt of income or other exercise of any attributes of
ownership.

 

“Environmental Claim” means any claim, action, cause of action or notice by any
Person or investigation by a Governmental Entity, alleging Liability (including
potential Liability for investigatory costs, Cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on, or resulting from, (a) the presence,
Release or threatened Release of any Hazardous Materials at a location,
currently or formerly owned or operated by the MGM Acquired Entities or at any
third party location at which an MGM Acquired Entity or any other Person whose
Liability for any Environmental Claim any of the MGM Acquired Entities has or
may have retained or assumed either by Contract or by operation of Law sent, or
caused to be sent, Hazardous Materials or (b) any violation, or alleged
violation, of any Environmental Law.

 

“Environmental Laws” means all federal, state and local Laws relating to
pollution or protection of human health or the environment, including Laws
relating to Releases or threatened Releases of Hazardous Materials, the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous

 

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Materials and all Laws with regard to recordkeeping, notification, disclosure
and reporting requirements respecting Hazardous Materials.

 

“Equity Commitment” means an investment by PB Gaming in the common stock of
Purchaser in an amount no less than $50,000,000.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, including the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” shall have the meaning ascribed in Section 3.14(a).

 

“Estimated Working Capital Statement” shall have the meaning ascribed in Section
2.4.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, including the rules and regulations promulgated thereunder.

 

“FF&E” means all furniture, fixtures and equipment owned or leased by any of the
MGM Acquired Entities or otherwise used in connection with their respective
businesses, including floor coverings, pictures, furniture located within the
Real Property, all Operating Equipment and all other equipment used in the
operation of the casinos, kitchens, dining rooms and bars, cleaning equipment,
office equipment, machinery, vehicles, computers and other data processing
hardware, special lighting and other equipment of a like nature, with such
additions and deletions as may occur in the Ordinary Course of Business.

 

“Final Purchase Price” shall have the meaning ascribed in Section 2.1.

 

“Final Statement” shall have the meaning ascribed in Section 2.5(a) and Section
2.5(b).

 

“Financing” means the financing contemplated by the Commitment Letter that is
equal to the excess of (a) the sum of the Closing Date Purchase Price plus
reasonable and customary out-of-pocket costs and expenses in connection with the
transactions contemplated by this Agreement minus (b) the Equity Commitment
minus (c) the Seller Financing minus (d) the Poster Financing minus (e) the
Additional Capital Contribution.

 

“FIRPTA” shall mean Foreign Investment Real Property Tax Act, as amended from
time to time, including the rules and regulations promulgated thereunder.

 

“Foreign Corrupt Practices Act” shall mean the Foreign Corrupt Practices Act of
1977, as amended, from time to time, including the rules and regulations
promulgated thereunder.

 

“FSELLC” shall have the meaning ascribed in the preamble.

 

“FSELLC Interest” shall have the meaning ascribed in the preamble.

 

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“FSELLC Loans” shall have the meaning ascribed in Section 3.2(d).

 

“FSELLC Operating Agreement” means the Second Amended and Restated Operating
Agreement of FSELLC, dated as of June 6, 1995, as amended on April 3, 1996.

 

“GAAP” means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout the
periods involved.

 

“Gaming Authorities” means, collectively, (a) the Nevada Gaming Commission, (b)
the Nevada State Gaming Control Board, (c) the New Jersey Casino Control
Commission, (d) the New Jersey Division of Gaming Enforcement, (e) the
Mississippi Gaming Commission, (f) the Michigan Gaming Control Board and (g) any
other Governmental Entity that holds regulatory, licensing or permit authority
over gambling, gaming or casino activities conducted by the MGM Parties or any
of their Affiliates within its jurisdiction.

 

“Gaming Laws” means any federal, state, local or foreign statute, ordinance,
rule or regulation governing or relating to the ownership of GNLV and GNL and
the gambling, gaming or casino activities and operations of the MGM Parties or
any of their Affiliates, in each case as amended, from time to time.

 

“Gaming Licenses” means all licenses, permits, approvals, authorizations,
registrations, findings of suitability, waivers and exemptions, including any
condition or limitation placed thereon, that are necessary for GNL and GNLV to
own and operate their respective gaming facilities and related amenities issued
under the applicable Gaming Laws.

 

“GNELLC” shall have the meaning ascribed in the preamble.

 

“GNELLC Balance Sheet” shall have the meaning ascribed in Section 3.4(c).

 

“GNELLC Interest” shall have the meaning ascribed in the preamble.

 

“GNELLC Operating Agreement” means the Operating Agreement of GNELLC, dated as
of May 26, 2000.

 

“GNL” shall have the meaning ascribed in the preamble.

 

“GNL Balance Sheet” shall have the meaning ascribed in Section 3.4(b).

 

“GNL Common Stock” shall have the meaning ascribed in Section 3.2(b).

 

“GNL Shares” shall have the meaning ascribed in the preamble.

 

“GNLV” shall have the meaning ascribed in the preamble.

 

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“GNLV Balance Sheet” shall have the meaning ascribed in Section 3.4(a).

 

“GNLV Common Stock” shall have the meaning ascribed in Section 3.2(a).

 

“GNLV Shares” shall have the meaning ascribed in the preamble.

 

“GNMC” shall have the meaning ascribed in the preamble.

 

“GNMC Shares” shall have the meaning ascribed in the preamble.

 

“Government Treasury Strips” shall mean those certain Government Treasury Strips
referenced in Section 3.18 of the Disclosure Schedule.

 

“Government Treasury Strips Transfer” shall have the meaning ascribed in Section
5.26.

 

“Governmental Approvals” means all (a) Gaming Licenses, Liquor Licenses and any
other permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, filing, franchise, notice, variance, right, designation, rating,
registration, qualification, authorization or order that is or has been issued,
granted, given or otherwise made available by or under the authority of any
Governmental Entity or pursuant to any Law and (b) rights under any Contract
with any Governmental Entity that relates to or is used in a Person’s business
or operations.

 

“Governmental Entity” means any (a) nation, principality, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature, (b) governmental or quasi-governmental entity of any nature, including
any governmental division, subdivision, department, agency, bureau, branch,
office, commission, council, board, instrumentality, officer, official,
representative, organization, taxing authority or unit and any court or other
tribunal (foreign, federal, state or local), or (c) Person, or body exercising,
or entitled to exercise, any executive, legislative, judicial, administrative,
regulatory, police, military or taxing authority or power of any nature,
including the Gaming Authorities.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination, or award entered by or with any Governmental Entity.

 

“Guaranty” means the Guaranty, dated June 24, 2003, by Timothy Poster and Thomas
Breitling.

 

“Hazardous Materials” means all substances defined or regulated as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, including toxic mold
and friable asbestos.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended from time to time, including the rules and regulation promulgated
thereunder.

 

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“IBNR” shall have the meaning ascribed in Section 3.5.

 

“Improvements” shall have the meaning ascribed in Section 3.8(e).

 

“Indebtedness” means, with respect to a Person without duplication, (a) all
indebtedness for borrowed money, (b) all indebtedness for the deferred purchase
price of property or services (other than property, including inventory, and
services purchased, trade payables, other expense accruals and deferred
compensation items arising in the Ordinary Course of Business), (c) all
obligations evidenced by notes, bonds, debentures or other similar instruments
(other than performance, surety and appeal bonds arising in the Ordinary Course
of Business in respect of which such Person’s liability remains contingent), (d)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired (even though the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations under leases that have been or should be, in accordance with GAAP,
recorded as capital leases, to the extent required to be so recorded, (f) all
reimbursement, payment or similar obligations, contingent or otherwise, under
acceptance, letter of credit or similar facilities, (g) all indebtedness of
others referred to in clauses (a) through (f) above guaranteed directly or
indirectly by a Person, or in effect guaranteed directly or indirectly by a
Person through a Contract (i) to pay or purchase such indebtedness or to advance
or supply funds for the payment or purchase of such indebtedness, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such indebtedness, (iii) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered), or (iv)
otherwise to assure a creditor against loss in respect of such indebtedness and
(h) all indebtedness referred to in clauses (a) through (g) above secured by (or
for which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Encumbrance upon or in property (including
accounts and Contract rights) owned by a Person, even though the Person may not
have assumed or become liable for the payment of such indebtedness, and
including in clauses (a) through (h) above any accrued and unpaid interest
thereon.

 

“Indemnified Party” means a Purchaser Indemnified Party or a Seller Indemnified
Party, as the case may be.

 

“Indemnifying Party” means the Seller Indemnifying Parties or the Purchaser, as
the case may be.

 

“Indemnity Notice” means written notification pursuant to Section 7.3(b) of a
claim for indemnity under Article VII by an Indemnified Party, specifying the
nature of and basis for such claim, together with the amount or, if not then
reasonably determinable, the estimated amount, determined in good faith, of the
Loss arising from such claim.

 

“Independent Accounting Firm” shall have the meaning ascribed in Section 2.5(b).

 

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“Infringement” means an assertion that a given item infringes, misappropriates,
dilutes, unfairly competes with, constitutes unauthorized Use of or otherwise
violates the Intellectual Property rights of any Person.

 

“Intellectual Property” means all Copyrights, Patents, Rights of Publicity,
Trademarks, Domain Names, Trade Secrets and related intangible assets and all
goodwill associated therewith.

 

“Intercompany Account Settlement” shall have the meaning ascribed in Section
5.6.

 

“IP Agreements” means all Contracts, outstanding decrees, orders, judgments,
settlement agreements or stipulations to which any of the MGM Acquired Entities
is a party or otherwise bound (whether oral or written, and whether between or
among the MGM Acquired Entities and an independent Person or inter-corporate)
that contain provisions: (a) granting to any Person any rights in MGM Acquired
Entities Owned Intellectual Property or Used Intellectual Property; (b) granting
to any of the MGM Acquired Entities any rights in Used Intellectual Property;
(c) consenting to another Person’s Use of MGM Acquired Entities Owned
Intellectual Property or Used Intellectual Property; or (d) transferring
ownership of Intellectual Property rights to any of the MGM Acquired Entities.

 

“IP Claim” means any demand, suit, arbitration, opposition, interference,
cancellation or other adversarial proceeding concerning Intellectual Property or
any rights associated therewith.

 

“IP Enforcement Documents” means all Contracts, outstanding decrees, orders,
judgments, settlement agreements or stipulations to which any of the MGM
Acquired Entities is a party or otherwise bound (whether oral or written, and
whether between or among the MGM Acquired Entities and an independent Person or
inter-corporate) that contain provisions: (a) covenanting not to sue any Person
for Infringement of any MGM Acquired Entities Owned Intellectual Property or
Used Intellectual Property; or (b) restricting any of the MGM Acquired Entities’
Use of MGM Acquired Entities Owned Intellectual Property or Used Intellectual
Property.

 

“IRS” shall mean the Internal Revenue Service.

 

“Laws” means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Entity, including all Gaming Laws.

 

“Leased Real Property” shall have the meaning ascribed in Section 3.8(a).

 

“Leases” means all leases, ground leases, subleases or other agreements,
including all amendments, extensions, renewals, guaranties or other agreements
with respect to the Real Property, but excluding any lease or sublease as to
which GNLV or GNL is the lessor or sublessor.

 

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“Liabilities” means all debts, obligations and other liabilities of a Person
(whether absolute, accrued, contingent, fixed or otherwise, or whether due or to
become due), including those arising under any Law, action, investigation,
inquiry or order and those arising under any Contract.

 

“Liquor Assets” means the inventory of alcoholic beverages at the Real Property.

 

“Liquor Licenses” means all those certain “off sale,” “portable bar” and other
alcoholic beverage licenses issued by Governmental Entities to GNLV or GNL
pursuant to which the sale of alcoholic beverages is permitted in the
restaurants, bars, function rooms and guest rooms of the hotels owned by GNLV or
GNL.

 

“Lists” means all casino player, customer and patron lists, information and
databases.

 

“Loss” means any action, cost, damage, Liability, loss, injury, penalty, or
obligation of any kind or nature, including interest, penalties, fines, legal,
accounting, and other professional fees and expenses incurred in the
investigation, collection, prosecution, determination and defense thereof,
amounts paid in settlement, any incidental or consequential damages and any
punitive damages payable to third parties that may be imposed on or otherwise
incurred or suffered and which give rise to a valid claim for indemnification
under Article VII or Article VIII.

 

“Material Adverse Effect” means any circumstance, development, change in, or
effect on the MGM Acquired Entities, taken as a whole, that, individually or in
the aggregate with any other circumstances, developments, changes in, or effects
on, the MGM Acquired Entities, taken as a whole, is, or is reasonably expected
to be, directly or indirectly, materially adverse to (a) the business or the
condition (financial or otherwise), results of operations, operations, assets,
properties, liabilities or prospects of the MGM Acquired Entities, taken as a
whole and (b) the ability of any of the MGM Parties to perform its respective
obligations under this Agreement or to consummate the transactions contemplated
by this Agreement.

 

“Material Contracts” shall have the meaning ascribed in Section 3.11(a).

 

“MGM Acquired Entities” means GNLV, GNL and GNELLC.

 

“MGM Acquired Entities Owned Intellectual Property” means (a) all Intellectual
Property owned, singly or jointly (if any), by the MGM Acquired Entities and (b)
all other Intellectual Property that is to be assigned to the MGM Acquired
Entities as described herein pursuant to Section 3.10 or 5.14.

 

“MGM DCP” shall have the meaning ascribed in Section 5.1(vii).

 

“MGM SERP” shall have the meaning ascribed in Section 5.1(vii).

 

“MGM Parties” means Parent, Seller, GNLV, GNL and GNELLC.

 

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“NLRA” means the National Labor Relations Act of 1947, as amended from time to
time, including the rules and regulations promulgated thereunder.

 

“NLRB” means the National Labor Relations Board established pursuant to the
NLRA.

 

“Notifying Party” shall have the meaning ascribed in Section 5.7(a).

 

“NRS” means the Nevada Revised Statutes, as amended from time to time, including
the rules and regulations promulgated thereunder.

 

“Nuggets” shall have the meaning ascribed in Section 5.26.

 

“Nuggets Transfer” shall have the meaning ascribed in Section 5.26.

 

“Operating Equipment” means all items owned or leased by any of the MGM Acquired
Entities and used in its business, including in the operation or maintenance of
the Real Property, including all specialized casino equipment, such as slot
machines, cards, poker chips, gaming devices, dice, baccarat chips, gaming
tables, pneumatic stools, drop buckets, cans and racks, tokens, token racks,
card shuffler devices and accessories, change sorters, pit stands, counting
equipment, roulette table covers, casino and game table signage, cage and game
tables supplies, and all other gaming equipment relating to its business, and
including food service preparation utensils, chinaware, glassware, silverware
and hollowware, food and beverage service equipment, uniforms and also including
consumable supplies for housekeeping, engineering, accounting and office use,
together with paper supplies and miscellaneous general supply items.

 

“Ordinary Course of Business” means an action taken by a Person if (a) such
action is consistent with the past practices of such Person and is taken in the
normal day-to-day operations of such Person and (b) such action is not required
to be authorized by the board of directors of such Person (or by any Person or
group of Persons exercising similar authority) and is not required to be
specifically authorized by the parent company (if any) of such Person.

 

“Owned Real Property” shall have the meaning ascribed in Section 3.8(a).

 

“Parent” shall have the meaning ascribed in the preamble.

 

“Parties” means Parent, Seller, GNLV, GNL, GNELLC and Purchaser.

 

“Patents” means all patents and industrial designs, including any continuations,
divisionals, continuations-in-part, renewals, reissues and applications for any
of the foregoing, and rights to sue for past Infringement thereof.

 

“PB Gaming” shall have the meaning ascribed in Schedule 2.1.

 

“Permitted Exceptions” shall have the meaning ascribed in Section 3.8(b).

 

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“Person” means an individual, corporation, partnership, limited liability
company, joint stock company, joint venture, association, trust or other entity
or organization, including a Governmental Entity.

 

“Phase I Audit” shall have the meaning ascribed in Section 5.19.

 

“Plans” shall have the meaning ascribed in Section 3.14(a).

 

“Policies” shall have the meaning ascribed in Section 3.19.

 

“Poster Financing” means the $5,000,000 investment by Timothy Poster in PB
Gaming as evidenced by the Poster Note.

 

“Poster Guaranty” means the Guaranty, dated as of the Closing Date, by Timothy
Poster.

 

“Poster Note” means the junior subordinated note of PB Gaming evidencing the
Poster Financing and ranking pari passu with the Seller Note and having the same
terms as those set forth on Schedule 2.1 (except for the Poster Guaranty and the
pledge of shares of PB Gaming owned by Timothy Poster) and issued to Timothy
Poster at the Closing pursuant to documentation substantially similar to the
documentation relating to the Seller Note.

 

“Pre-Closing Period Tax Returns” shall have the meaning ascribed in Section
8.2(a).

 

“Pre-Closing Periods” shall have the meaning ascribed in Section 8.1(a)(ii).

 

“Purchaser” shall have the meaning ascribed in the preamble.

 

“Purchaser Common Stock” shall have the meaning ascribed in Section 4.2.

 

“Purchaser Indemnified Parties” means Purchaser and, after the Closing, the MGM
Acquired Entities and their respective directors, managers, officers, employees,
agents and representatives.

 

“Purchaser Indemnifying Parties” means Purchaser and, after the Closing, the MGM
Acquired Entities.

 

“Real Property” shall have the meaning ascribed in Section 3.8(a).

 

“Recipient” shall have the meaning ascribed in Section 8.4(a).

 

“Release” means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, dispersal, leaching or migration into the indoor
or outdoor environment (including ambient air, surface water, groundwater and
surface or subsurface strata) of Hazardous Materials in, at, on or under the
property, including the

 

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movement of Hazardous Materials through or in the air, soil, surface water,
groundwater or real property.

 

“Release of Encumbrances” shall have the meaning ascribed in Section 5.22.

 

“Release of Guaranties” shall have the meaning ascribed in Section 5.22.

 

“Rent Roll” shall have the meaning ascribed in Section 3.8(d).

 

“Resolution Period” means the period ending thirty days following receipt by an
Indemnified Party of a written notice from an Indemnifying Party stating that it
disputes all or any portion of a claim set forth in an Indemnity Notice.

 

“Rights of Publicity” means all rights of publicity and privacy, as defined
under applicable Law, including the Use of the names, likenesses, voices,
signatures, biographical information, persona and other recognizable aspects of
real Persons, and rights to sue for past Infringement thereof.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
including the rules and regulations promulgated thereunder.

 

“Seller” shall have the meaning ascribed in the preamble.

 

“Seller Financing” shall have the meaning ascribed in Section 2.1.

 

“Seller Indemnified Parties” means Seller and Parent and their respective
directors, officers, employees, agents and representatives.

 

“Seller Indemnifying Parties” means Parent and Seller.

 

“Seller Note” means the junior subordinated note of PB Gaming evidencing the
Seller Financing and ranking pari passu with the Poster Note and having the
terms set forth on Schedule 2.1 and issued to Seller at the Closing pursuant to
documentation substantially similar to the documentation relating to the Poster
Note.

 

“Shares” shall have the meaning ascribed in the preamble.

 

“Slot Machine Transfer” shall have the meaning ascribed in Section 5.13.

 

“Software” means all computer programs (whether in source code or object code
form), databases, compilations and data, and all documentation related to any of
the foregoing.

 

“SOXA” means the Sarbanes-Oxley Act of 2002, as amended from time to time,
including the rules and regulations promulgated thereunder.

 

“Straddle Period” shall have the meaning ascribed in Section 8.1(a)(ii).

 

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“Straddle Period Tax Returns” shall have the meaning ascribed in Section 8.2(b).

 

“Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust, estate or other Person of which (or in which),
directly or indirectly, more than 50% of (a) the issued and outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or profits
of such partnership, joint venture or limited liability company or other Person
or (c) the beneficial interest in such trust or estate, is at the time owned by
such first Person, or by such first Person and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

“Tangible Personal Property” means all items of tangible personal property owned
or leased by any of the MGM Acquired Entities, including: (a) FF&E; (b)
Consumable Items; (c) Liquor Assets; (d) accounting, inventory control and other
business related software used by any of the MGM Acquired Entities in connection
with its operation of its business; and (e) all such other items of tangible
personal property that are located at, and used in the operation of, its
business.

 

“Target Working Capital” means $10,022,000.

 

“Tax Claim” shall have the meaning ascribed in Section 8.4(a).

 

“Tax Returns” means all information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to Taxes,
including attachments thereto, declarations, disclosures, schedules, estimates
and elections and amendments thereof, including information returns.

 

“Taxes” means any and all taxes, charges, customs, fees, levies, duties,
Liabilities, impositions or other assessments, including income, gross receipts,
profits, excise, real or personal property, environmental, recapture, sales,
use, value-added, withholding, social security, retirement, employment,
unemployment, occupation, service, license, net worth, payroll, franchise,
gains, stamp, transfer and recording taxes, general or special assessments, fees
and charges, imposed by the IRS or any other taxing authority (whether domestic
or foreign including any state, county, local or foreign government or any
subdivision or taxing agency thereof (including a United States possession)),
and all taxes, fees and other charges assessed under the Gaming Laws (excluding
any and all fees, charges, costs and expenses assessed against Purchaser or any
of its principals by the Gaming Authorities in connection with the filing,
investigation and/or processing of the applications of Purchaser and any of its
principals to obtain all Governmental Approvals necessary to own and operate the
MGM Acquired Entities and their respective facilities and related amenities),
whether computed on a separate, consolidated, unitary, combined or any other
basis; and any interest, fines, penalties, additions to tax, or additional
amounts attributable to, or imposed upon, or with respect to, any such taxes,
charges, customs, fees, levies, duties, Liabilities, impositions or other
assessments.  For purposes of this Agreement, “Taxes” also includes any
obligation under any Law,

 

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agreement or arrangement with any other Person with respect to Taxes of such
other Person (including pursuant to Treasury Regulation Section 1.1502-6 or
comparable provisions of state, local or foreign tax Law) and including any
liability for Taxes of any predecessor entity.

 

“Tenant Leases” means all leases and subleases of Real Property as to which GNLV
or GNL is the lessor or sublessor.

 

“Termination Fee” shall have the meaning ascribed in Section 5.20.

 

“Termination of Affiliate Contracts” shall have the meaning ascribed in Section
5.18.

 

“Third Party” shall have the meaning ascribed in Section 5.4.

 

“Third Party Claim” shall have the meaning ascribed in Section 7.3(a).

 

“Title IV Plans” shall have the meaning ascribed in Section 3.14(a).

 

“Trade Secrets” means all trade secrets (as defined under applicable Law), if
any, including trade secrets of the following nature: financing and marketing
information; technology; know-how; inventions; proprietary processes; formulae;
algorithms; models and methodologies; Lists of Unique Customers; and rights to
sue for past Infringement thereof.

 

“Trademarks” means all trademarks, service marks, trade names, designs, logos,
emblems, signs or insignia, slogans, other similar designations of source or
origin and general intangibles of like nature, together with the goodwill of the
business symbolized by any of the foregoing, registrations and applications
relating to any of the foregoing, and rights to sue for past Infringement
thereof.

 

“Transfer Taxes” shall have the meaning ascribed in Section 8.5.

 

“Transitional Services Agreement” shall have the meaning ascribed in Section
5.17.

 

“Trust Agreement” shall have the meaning ascribed in Section 5.1(vii).

 

“Use” means to copy, display, perform, transmit, disclose to third Persons,
create derivative works from and otherwise modify, make, use, sell (or offer to
make, use or sell), import, export, and otherwise exploit, and grant to others
the right or license to do the same.

 

“Used Intellectual Property” means all Intellectual Property owned or controlled
by (a) Parent or its Affiliates other than any of the MGM Acquired Entities or
(b) any other Person other than any of the MGM Acquired Entities, and Used or
held for Use in the business of any of the MGM Acquired Entities, but excluding
MGM Acquired Entities Owned Intellectual Property.

 

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“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act of
1988, as amended from time to time, including the rules and regulations
promulgated thereunder.

 

“Working Capital” shall have the meaning ascribed in Schedule IA.

 

“Working Capital Statement” shall have the meaning ascribed in Section 2.5(a).

 

ARTICLE II

 

PURCHASE AND SALE OF SHARES; CLOSING

 

Section 2.1                                      Purchase and Sale of Shares. 
On and subject to the terms and conditions of this Agreement, Purchaser agrees
to purchase from Seller, and Seller agrees to sell to Purchaser, all of the
Shares.  At the Closing, the Shares shall be transferred or otherwise conveyed
to Purchaser free and clear of all Encumbrances, excepting only restrictions on
the subsequent transfer of the Shares as may be imposed under applicable Laws. 
In consideration of the purchase and sale of the Shares and the execution and
delivery of the other agreements of Seller, Purchaser and other Persons upon the
terms of this Agreement, at the Closing, Purchaser shall pay the Closing Date
Purchase Price, subject to further adjustment post-Closing pursuant to Section
2.5 (as so adjusted in Section 2.6, the “Final Purchase Price”); provided that
if no adjustment is made post-Closing to the Closing Date Purchase Price
pursuant to Section 2.5, the Closing Date Purchase Price shall be the Final
Purchase Price for purposes of this Agreement.  Seller and Purchaser agree that
up to $10,000,000 of the Closing Date Purchase Price shall be evidenced by the
Seller Note (the “Seller Financing”).  The specific dollar amount of Seller
Financing shall be dependent upon the terms of the Financing and the net
proceeds of the Financing and shall be determined prior to the Closing by
Purchaser in good faith after consultation with Seller and the underwriters of
the Financing.

 

Section 2.2                                      Closing.  The Closing (the
“Closing”) of the purchase and sale of the Shares under this Agreement shall
take place at the executive offices of Parent, 3600 Las Vegas Boulevard South,
Las Vegas, Nevada 89109 (or such other location agreed upon in writing by
Purchaser and Seller) at such time to be agreed upon by Purchaser and Seller on
a date to be specified by Purchaser and Seller, which shall be no later than the
second Business Day after satisfaction or, if permissible, waiver of the
conditions set forth in Article VI (the “Closing Date”), unless another date is
agreed to in writing by Purchaser and Seller.

 

Section 2.3                                      Closing Deliveries.

 

(a)                    At the Closing, Seller shall deliver or cause to be
delivered to Purchaser:

 

(i)                       one or more certificate(s) representing the Shares,
duly endorsed or accompanied by stock powers duly executed in blank and
otherwise in a form reasonably satisfactory to Purchaser for transfer on the
books of GNLV and GNL (with any requisite transfer Tax stamps attached by
Seller);

 

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(ii)                    an executed receipt for the Closing Date Purchase Price;

 

(iii)                 copies of the Articles of Incorporation (in the case of
GNELLC, its Articles of Organization) of each of the MGM Acquired Entities,
certified as of a date within three Business Days of the Closing Date by the
Secretary of State of the State of Nevada;

 

(iv)                a copy, certified by the Secretary of (A) each of the MGM
Parties, of the resolutions of its Board of Directors or Executive Committee
thereof (in the case of GNELLC, its Board of Managers) authorizing the execution
and delivery of this Agreement and consummation of the transactions contemplated
by this Agreement, and in each case such resolutions shall be in full force and
effect and not revoked and (B) each of the MGM Acquired Entities, of its Bylaws
(in the case of GNELLC, the GNELLC Operating Agreement);

 

(v)                   a duly executed certificate of the President of each of
the MGM Parties pursuant to Section 6.3(c);

 

(vi)                a good standing certificate (or its equivalent) for each of
the MGM Acquired Entities issued by the Secretary of State of the State of
Nevada and of such other applicable jurisdictions where any of the MGM Acquired
Entities are qualified or licensed to do business or own, lease or operate
property making such qualification or licensing necessary, dated as of a date
within three Business Days prior to the Closing Date;

 

(vii)             a bring down good standing certificate, dated as of the
Closing Date, of each of the certificates delivered pursuant to Section
2.3(a)(vi), or a verbal confirmation from the Secretary of State of the
applicable jurisdiction on the Closing Date with respect to such good standing;

 

(viii)          the original stock and corporate minutes books (or their
equivalent) of each of the MGM Acquired Entities, except for the GNLV stock and
corporate minute books for the years 1974-1988;

 

(ix)                  duly executed resignations effective as of the Closing
Date from such directors, officers and managers of the MGM Acquired Entities and
FSELLC (in the case of any appointees of the MGM Acquired Entities to the FSELLC
Board of Managers) as Purchaser shall have requested in writing not less than
two Business Days prior to the Closing Date;

 

(x)                     an opinion from Seller’s outside counsel in form and
substance reasonably satisfactory to Purchaser and its outside counsel
addressing reasonable and customary matters for this type of transaction;

 

(xi)                  duly executed copies of the consents required to be
obtained by the MGM Parties pursuant to Section 5.8;

 

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(xii)               duly executed copies of the bills of sale evidencing the
Slot Machine Transfer;

 

(xiii)            a duly executed copy of the bill of sale evidencing the
Nuggets Transfer;

 

(xiv)           a duly executed copy of the bill of sale evidencing the Artwork
Transfer;

 

(xv)              duly executed copies of documentation evidencing the Amendment
of Indemnification Contracts;

 

(xvi)           duly executed copies of documentation evidencing the Termination
of Affiliate Contracts;

 

(xvii)        evidence in form and substance satisfactory to Purchaser that the
Release of Encumbrances occurs at the Closing, including without limitation, the
delivery of Uniform Commercial Code financing UCC-3 collateral change
statements, discharges, executed releases to be filed with the United States
Patent and Trademark Office and the United States Copyright Office with respect
to Intellectual Property or other appropriate termination statements, recordings
and other actions Purchaser deems necessary or advisable;

 

(xviii)     evidence in form and substance satisfactory to Purchaser that the
Release of Guaranties occurs at the Closing;

 

(xix)             results of a recent search, by a Person satisfactory to the
Purchaser, of all effective Uniform Commercial Code financing statements and
fixture filings and all judgment and Tax lien filings that may have been made
with respect to the Shares, the GNELLC Interest, the FSELLC Interest and any
assets or properties of the MGM Acquired Entities, together with copies of all
such filings disclosed by such search;

 

(xx)                an executed counterpart of the Transitional Services
Agreement;

 

(xxi)             FIRPTA certificates in form and substance reasonably
satisfactory to Purchaser;

 

(xxii)          duly executed copies of the assignment and license agreements as
required by Section 5.14(d), including evidence of the filing of all assignments
with the United States Patent and Trademark Office, United States Copyright
Office and any applicable domain name registries and any other documents
executed by Parent or its Affiliates conveying the MGM Acquired Entities Owned
Intellectual Property and the right to Use the Used Intellectual Property to
Purchaser;

 

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(xxiii)       a duly executed copy of the contribution agreement evidencing the
Government Treasury Strips Transfer;

 

(xxiv)      duly executed copies of the consents required to be obtained by the
MGM Parties pursuant to Section 5.27; and

 

(xxv)         all other previously undelivered documents, agreements,
instruments, writings and certificates, and such other documents, agreements,
instruments, writings and certificates as Purchaser may reasonably request to
effect the transactions contemplated by this Agreement, in form and substance
reasonably satisfactory to Purchaser.

 

(b)                   At the Closing, the Purchaser shall deliver or cause to be
delivered to Seller:

 

(i)                       the Closing Date Purchase Price (less the Seller
Financing) in immediately available funds by wire transfer to an account
designated by Seller in writing to Purchaser with such notice being provided to
Purchaser no less than five Business Days prior to the Closing Date;

 

(ii)                    an executed receipt for delivery of the Shares;

 

(iii)                 the executed Seller Note;

 

(iv)                the executed Poster Guaranty;

 

(v)                   the executed stock pledge agreement relating to the shares
of PB Gaming owned by Timothy Poster and the stock certificate(s) evidencing
such shares accompanied by stock power(s) duly executed in blank;

 

(vi)                copies of the principal transaction documents relating to
the Financing;

 

(vii)             a copy of the Poster Note;

 

(viii)          a copy of the Articles of Incorporation of PB Gaming, certified
as of a date within three Business Days of the Closing Date by the Secretary of
State of the State of Nevada;

 

(ix)                  a copy, certified by the Secretary of PB Gaming of its
Bylaws;

 

(x)                     an executed receipt for the Shares;

 

(xi)                  a copy, certified by the Secretary of Purchaser, of the
resolutions of Purchaser’s board of directors authorizing the execution and
delivery of this Agreement and consummation of the transactions

 

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contemplated by this Agreement, which resolutions shall be in full force and
effect and not revoked;

 

(xii)               a duly executed certificate of the President of Purchaser
pursuant to Section 6.2(c);

 

(xiii)            a good standing certificate of each of Purchaser and PB Gaming
issued by the Secretary of State of the State of Nevada, dated as of a date
within three Business Days prior to the Closing Date;

 

(xiv)           a bring down good standing certificate, dated as of the Closing
Date, of the certificate delivered pursuant to Section 2.3(b)(xiii), or a verbal
confirmation from the Secretary of State of the State of Nevada on the Closing
Date with respect to such good standing;

 

(xv)              an opinion from Purchaser’s outside counsel in form and
substance reasonably satisfactory to Seller and its outside counsel addressing
reasonable and customary matters for this type of transaction;

 

(xvi)           copies of Gaming Licenses required to be obtained by Purchaser
or any of its directors, officers, employees, stockholders and Affiliates in
connection with the consummation of the transactions contemplated by this
Agreement;

 

(xvii)        an executed counterpart of the Transitional Services Agreement;

 

(xviii)     a duly executed copy of the solvency certificate from the Chief
Financial Officer of the Purchaser in connection with paragraph (i) of the
Commitment Letter; provided that Parent and Seller as a condition to delivery
hereby expressly disclaim and waive any reliance on the information contained in
the solvency certificate; and

 

(xix)             all other previously undelivered documents, agreements,
instruments, writings and certificates, and such other documents, agreements,
instruments, writings and certificates as Seller may reasonably request to
effect the transactions contemplated by this Agreement, in form and substance
reasonably satisfactory to Seller.

 

Section 2.4                                      Closing Date Purchase Price. 
Two days prior to the Closing Date, Seller shall deliver to Purchaser the
Estimated Working Capital Statement for the MGM Acquired Entities (the
“Estimated Working Capital Statement”).  The Estimated Working Capital Statement
shall be prepared by Seller using the same types of management judgments,
estimates, forecasts, policies, opinions and allocations, including reserve
calculations, that were used for the Target Working Capital calculation in
Schedule IA.  The amount of Working Capital of the MGM Acquired Entities set
forth on the Estimated Working Capital Statement shall hereinafter be referred
to as the “Adjusted Working Capital.”  Purchaser (and its independent
accountants) shall be afforded the opportunity

 

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to review and participate in the preparation of the Estimated Working Capital
Statement.  The “Closing Date Purchase Price” shall be equal to $215,000,000
(the “Base Price”), adjusted as follows: (i) if the Adjusted Working Capital is
greater than the Target Working Capital, then the Closing Date Purchase Price
shall be increased by the amount of such excess; or (ii) if the Adjusted Working
Capital is less than the Target Working Capital, then the Closing Date Purchase
Price shall be decreased by the amount of such deficiency.  The Seller and
Purchaser agree that $197,000,000 of the Base Price shall be allocated to GNLV
and $18,000,000 of the Base Price shall be allocated to GNL and that any
adjustments to the Base Price resulting from the calculation of the Closing Date
Purchase Price and the Final Purchase Price shall be allocated to GNLV and GNL
in the same proportion.

 

Section 2.5                                      Post-Closing Adjustment
Procedures to the Closing Date Purchase Price.

 

(a)                    As promptly as practicable, but no later than sixty days
after the Closing Date, Purchaser shall prepare and deliver to Seller a
statement setting forth the Working Capital of the MGM Acquired Entities as of
the Closing Date (the “Working Capital Statement”).  The Working Capital
Statement shall be prepared by Purchaser using the same types of management
judgments, estimates, forecasts, policies, opinions and allocations, including
reserve calculations, that were used for the Target Working Capital calculation
in Schedule IA.  Following the Closing, each of Purchaser and Seller shall give
the other Person and any independent accountants of such other Person access at
all reasonable times to the properties, books, records and personnel of the MGM
Acquired Entities relating to periods prior to the Closing for purposes of
preparing and reviewing the Working Capital Statement.  Seller shall have thirty
days following delivery to Seller of the Working Capital Statement during which
to notify Purchaser in writing of any dispute of any item contained in the
Working Capital Statement, which notice shall set forth in reasonable detail the
basis for such dispute and the Working Capital proposed by Seller (the “Dispute
Notice”).  If Seller fails to notify Purchaser in writing of any dispute within
such thirty-day period, the Working Capital Statement shall be deemed to be a
“Final Statement.”  In the event that Seller shall so notify Purchaser of any
dispute on or prior to such thirtieth day, any amounts contained in the Working
Capital Statement that are not disputed by Seller in the Dispute Notice shall be
deemed to have been finally determined for purposes of calculating the Actual
Working Capital.  For a period of fifteen days following the delivery of the
Dispute Notice to Purchaser, the President and Chief Financial Officer (or the
person or persons performing similar functions) of each of Purchaser and Seller
shall attempt to resolve in good faith the amounts disputed in the Dispute
Notice.  During such fifteen-day period, Purchaser shall be permitted to review
the working papers of Seller and Seller’s auditors relating to the Estimated
Working Capital Statement and the Dispute Notice, and Seller shall be permitted
to review the working papers of Purchaser and Purchaser’s auditors relating to
the Working Capital Statement.  Amounts resolved by such attempts within such
fifteen-day period shall be deemed to have been finally determined for purposes
of calculating the Actual Working Capital.

 

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(b)                   If Purchaser and Seller are unable to resolve any such
dispute prior to the end of such fifteen-day period, an accounting firm mutually
acceptable to both Purchaser and Seller (the “Independent Accounting Firm”)
shall be deemed appointed by Purchaser and Seller to resolve such dispute and
such determination shall be final and binding on the parties to this Agreement. 
If Purchaser and Seller cannot mutually agree on the selection of the
Independent Accounting Firm, Purchaser and Seller shall submit to such other
Person’s independent accountants the name of a nationally recognized accounting
firm which does not at the time and has not in the prior two years provided
audit or other attestation services to any of the MGM Parties or Purchaser or
any of their respective Affiliates, and the Independent Accounting Firm shall be
selected by lot from these two firms by the independent accountants of Purchaser
and Seller.  The Independent Accounting Firm may not make any determination with
respect to any matter not set forth in the Dispute Notice and the Independent
Accounting Firm’s determination shall not be more than the Working Capital set
forth in the Dispute Notice or less than the amount of the Working Capital of
the MGM Acquired Entities as of the Closing Date set forth in the Working
Capital Statement.  Each of Purchaser and Seller and their respective
independent accountants shall give the Independent Accounting Firm access at all
reasonable times to the properties, books, records and personnel of the MGM
Acquired Entities relating to periods prior to the Closing for purposes of
reviewing the Estimated Working Capital Statement, the Dispute Notice and the
Working Capital Statement and calculating the Actual Working Capital.  The
Independent Accounting Firm shall be instructed to use every reasonable effort
to perform its services within thirty days of submission of the Estimated
Working Capital Statement, the Dispute Notice and the Working Capital Statement
to it and, in any case, as promptly as practicable after such submission.  The
Working Capital Statement, as modified by resolution of any disputes by
Purchaser and Seller or by the Independent Accounting Firm, shall be deemed to
be a “Final Statement.”

 

(c)                    Any expenses relating to the engagement of the
Independent Accounting Firm shall be paid by Purchaser and Seller in proportion
to the percentage of the dollar value of the disputed items prevailed upon by
each Person.  Each of Purchaser and Seller shall pay all advisors’ fees, charges
and expenses incurred by such Person in connection with the dispute.

 

Section 2.6                                      Post-Closing Adjustment to the
Closing Date Purchase Price.

 

(a)                    The Closing Date Purchase Price shall be adjusted as
follows:  (i) if the Actual Working Capital is greater than the Adjusted Working
Capital, then the Closing Date Purchase Price shall be increased by the amount
of such excess; or (ii) if the Actual Working Capital is less than the Adjusted
Working Capital, then the Closing Date Purchase Price shall be decreased by the
amount of such deficiency.

 

(b)                   To the extent the Actual Working Capital is: (i) greater
than the Adjusted Working Capital, Purchaser shall, within ten days of
Purchaser’s receipt of the Final Statement, deliver by wire transfer of
immediately available funds to the account specified by Seller in writing for
the Closing Date Purchase Price, an amount equal to such excess; or (ii) less
than the Adjusted Working Capital, Seller shall, within ten days

 

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of Seller’s receipt of the Final Statement, deliver by wire transfer of
immediately available funds to an account specified by Purchaser in writing (no
later than two Business Days prior to the expiration of such ten day period), an
amount equal to such deficiency, in either case without interest.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE MGM PARTIES

 

Each of the MGM Parties, jointly and severally, represents and warrants to
Purchaser that the statements contained in this Article III are true and
correct, except as set forth herein and in the disclosure schedule delivered by
the MGM Parties to Purchaser before the execution and delivery of this Agreement
(the “Disclosure Schedule”).

 

Section 3.1                                      Organization and Qualification.

 

(a)                    Except as set forth in Section 3.1(a) of the Disclosure
Schedule, each of the MGM Parties is duly organized, validly existing and in
good standing under the laws of the State of Nevada (or in the case of Parent,
Delaware) and has all requisite corporate or other, power and authority to carry
on its business as now being conducted.  GNLV is duly qualified or licensed to
do business and is in good standing in Mississippi, which, is the only
jurisdiction where the character of the property owned, leased or operated by
the MGM Acquired Entities or the nature of the business conducted by the MGM
Acquired Entities makes such qualification or licensing to do business
necessary, except for such jurisdictions where the failure to so qualify or be
licensed would not reasonably be expected to have a Material Adverse Effect.

 

(b)                   Parent has delivered to Purchaser a complete, accurate and
current copy of the Articles of Incorporation and Bylaws or comparable charter
and organizational documents of the MGM Acquired Entities, in each case as
amended to the date of this Agreement.  The stock transfer books and minute
books or similar records of the MGM Acquired Entities, which have heretofore
been delivered or made available by the MGM Parties to Purchaser, are complete,
accurate and current.  To the knowledge of any of the MGM Parties, no matter was
disclosed in the minute books of GNLV for the years 1974-1988 that would
reasonably be expected to have a Material Adverse Effect.

 

Section 3.2                                      Capitalization.

 

(a)                    The authorized capital stock of GNLV consists solely of
1,000,000 shares of common stock, par value $1.00 per share (the “GNLV Common
Stock”), of which 25,000 shares of GNLV Common Stock are issued and outstanding,
all of which are owned of record and beneficially by Seller and, except as set
forth in Section 3.2(a) of the Disclosure Schedule, are free and clear of all
Encumbrances, excepting only restrictions on the subsequent transfer as may be
imposed under applicable Laws.  All of the issued and outstanding shares of GNLV
Common Stock have been duly authorized, validly issued and fully paid, are
nonassessable, are not subject to any preemptive or other similar rights and
have not been issued in violation of any applicable Laws, the GNLV

 

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Articles of Incorporation, the GNLV Bylaws or the terms of any Contract to which
any of the MGM Parties is a party or bound.  There are no obligations,
contingent or otherwise, to repurchase, redeem (or establish a sinking fund with
respect to redemption) or otherwise acquire any shares of GNLV Common Stock. 
There are no bonds, debentures, notes or other indebtedness of GNLV having
voting rights (or convertible into securities having voting rights).  There are
no shares or other equity interests or securities of GNLV reserved for issuance
or any outstanding subscriptions, options, warrants, rights, “phantom” stock
rights, convertible or exchangeable securities, stock appreciation rights, or
other Contracts (other than this Agreement) granting to any Person any interest
in or right to acquire at any time, or upon the happening of any stated event,
any shares of GNLV Common Stock or other equity interests or securities of GNLV,
or any interest in, exchangeable for, or convertible into, shares of GNLV Common
Stock or other equity interests or securities of GNLV.

 

(b)                   The authorized capital stock of GNL consists solely of
2,500 shares of common stock, no par value per share (the “GNL Common Stock”),
of which 100 shares of GNL Common Stock are issued and outstanding, all of which
are owned of record and beneficially by Seller and, except as set forth in
Section 3.2(b) of the Disclosure Schedule, are free and clear of all
Encumbrances, excepting only restrictions on the subsequent transfer as may be
imposed under applicable Laws.  All of the issued and outstanding shares of GNL
Common Stock have been duly authorized, validly issued and fully paid, are
nonassessable, are not subject to preemptive or other similar rights and have
not been issued in violation of any applicable Laws, the GNL Articles of
Incorporation, the GNL Bylaws or the terms of any Contract to which any of the
MGM Parties is a party or bound.  There are no obligations, contingent or
otherwise, to repurchase, redeem (or establish a sinking fund with respect to
redemption) or otherwise acquire any shares of GNL Common Stock.  There are no
bonds, debentures, notes or other indebtedness of GNL having voting rights (or
convertible into securities having voting rights).  There are no shares or other
equity interests or securities of GNL reserved for issuance or any outstanding
subscriptions, options, warrants, rights, “phantom” stock rights, convertible or
exchangeable securities, stock appreciation rights or other Contracts (other
than this Agreement) granting to any Person any interest in or right to acquire
at any time, or upon the happening of any stated event, any shares of GNL Common
Stock or other equity interests or securities of GNL, or any interest in,
exchangeable for, or convertible into, shares of GNL Common Stock or other
equity interests or securities of GNL.

 

(c)                    The authorized capital of GNELLC consists solely of
member’s interests, of which 100% are issued and outstanding, all of which are
owned of record and beneficially by GNLV and, except as set forth in Section
3.2(c) of the Disclosure Schedule, are free and clear of all Encumbrances,
excepting only restrictions on the subsequent transfer as may be imposed under
applicable Laws.  The GNELLC Interest has been duly authorized and validly
issued, is not subject to any preemptive or similar rights and has not been
issued in violation of any applicable Laws, the GNELLC Articles of Organization,
the GNELLC Operating Agreement or the terms of any Contract to which any of the
MGM Parties is a party or bound.  There are no obligations, contingent or
otherwise, to repurchase, redeem (or establish a sinking fund with respect to

 

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redemption) or otherwise acquire the GNELLC Interest.  There are no bonds,
debentures, notes or other indebtedness of GNELLC having rights (or convertible
into securities having voting rights).  There are no interests or other
securities of GNELLC reserved for issuance or any outstanding subscriptions,
options, warrants, rights, convertible or exchangeable securities or other
Contracts granting to any Person any interest in or right to acquire at any
time, or upon the happening of any stated event, any interests in GNELLC or
other securities of GNELLC, or any interest in, exchangeable for or convertible
into, interests of GNELLC or other securities of GNELLC.

 

(d)                   The authorized capital of FSELLC consists solely of 1,800
voting units and 360 non-voting units, of which 1700 voting units and 360
non-voting units are issued and outstanding, of which 300 voting units and 180
non-voting units are owned of record and beneficially by GNELLC and, except as
set forth in Section 3.2(d) of the Disclosure Schedule, are free and clear of
all Encumbrances, excepting only restrictions on the subsequent transfer as may
be imposed under applicable Laws.  The FSELLC Interest has been duly authorized
and validly issued, and has not been issued in violation of any applicable Laws,
the FSELLC Articles of Organization, the FSELLC Operating Agreement or the terms
of any Contract to which any of the MGM Parties or, to the knowledge of any of
the MGM Parties, FSELLC is a party or bound.  Section 3.2(d) of the Disclosure
Schedule sets forth, to the knowledge of any of the MGM Parties, the managers of
FSELLC and the members of FSELLC, together with their ownership of voting and
non-voting units of FSELLC.  Section 3.2(d) of the Disclosure Schedule sets
forth the date and amount and number of voting or non-voting units received for
each capital contribution made by Golden Nugget Experience Corp. (the
predecessor of GNELLC) and GNELLC in respect of its purchase of the FSELLC
Interest.  Section 3.2(d) of the Disclosure Schedule sets forth a schedule of
all loans and advances to, guarantees made on behalf of, letters of credit
issued on behalf of and any other credit enhancement arrangements made by or on
behalf of FSELLC by GNLV and/or GNELLC (the “FSELLC Loans”), and also contains
the material terms, including, principal amount, maturity date and repayment
schedule of loans and advances.  Parent has delivered to Purchaser complete,
accurate and current copies of the FSELLC Loans.  To the knowledge of any of the
MGM Parties, the FSELLC Loans are valid and binding obligations of FSELLC and
are in full force and effect and enforceable by GNLV and/or GNELLC in accordance
with their terms and there has been no breach or default or claim of default
and, to the knowledge of any of the MGM Parties, no event has occurred which,
with or without notice, the passage of time, or both, would constitute a default
by FSELLC.  Except as set forth in Section 8.4 (Budget) of the FSELLC Operating
Agreement or as required by applicable Law, GNELLC is not obligated to make any
additional capital contributions in FSELLC.  No member of FSELLC is obligated to
make loans to FSELLC.  Except for the FSELLC Operating Agreement, GNELLC has not
entered into or consummated any Contract for the purchase or sale of voting
and/or non-voting units of FSELLC or with respect to the voting of the FSELLC
Interest.

 

(e)                    Except for its ownership of the BRRI Shares, the GNMC
Shares, the GNELLC Interest and the FSELLC Interest, GNLV does not own directly
or indirectly, of record or beneficially, or have the right to acquire under any
Contract, any capital stock or equity interests or any securities convertible,
exchangeable, redeemable or

 

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exercisable into capital stock or equity interests of any other Person.  GNL
does not own directly or indirectly, of record or beneficially, or have the
right to acquire under any Contract, any capital stock or equity interests or
any securities convertible, exchangeable, redeemable or exercisable into capital
stock or equity interests of any other Person.  Except for its ownership of the
FSELLC Interest, GNELLC does not own directly or indirectly, of record or
beneficially, or except, with respect to voting and non-voting units of FSELLC
pursuant to Section 4.1(c) (Preemptive Rights) and Section 8.4 (Budget) of the
FSELLC Operating Agreement, have the right to acquire under any Contract, any
capital stock or equity interests or any securities convertible, exchangeable,
redeemable or exercisable into capital stock or equity interests in any other
Person.

 

(f)                      Upon consummation of the Distribution, GNLV shall not
own directly or indirectly, of record or beneficially, any shares of capital
stock or equity interests of BRRI or GNMC.

 

Section 3.3                                      Authority; No Conflict;
Required Filings and Consents.

 

(a)                    Each of the MGM Parties has all requisite corporate or
company power and authority to enter into this Agreement and to consummate the
transactions that are contemplated by this Agreement and to perform its
obligations hereunder.  The execution and delivery of this Agreement by the MGM
Parties and the performance by the MGM Parties of the transactions that are
contemplated by this Agreement have been duly authorized by all necessary
corporate or company action on the part of the MGM Parties, respectively.  No
corporate or company act or proceeding on the part of the MGM Parties or their
respective stockholders or members is necessary to authorize, execute, deliver
and perform this Agreement and consummate the transactions contemplated by this
Agreement.  This Agreement has been duly executed and delivered by each of the
MGM Parties and, assuming this Agreement constitutes the valid and binding
obligation of Purchaser, constitutes the valid and binding obligation of each of
the MGM Parties, enforceable against each of the MGM Parties, jointly and
severally, in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar Laws now or hereafter in effect relating to
creditors’ rights generally and (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding at Law or in equity).

 

(b)                   Except as set forth in Section 3.3(b) of the Disclosure
Schedule, the execution and delivery of this Agreement by each of the MGM
Parties does not, and the consummation by each of the MGM Parties of the
transactions to which it is a party that are contemplated by this Agreement,
including the Distribution and the Intercompany Account Settlement will not, (i)
conflict with, or result in any violation or breach of, any provision of the
Articles of Incorporation (in the case of Parent, its Certificate of
Incorporation and in the case of GNELLC, its Articles of Organization) or Bylaws
(in the case of GNELLC, the GNELLC Operating Agreement and the FSELLC Operating
Agreement) of the MGM Parties, (ii) conflict with, result in a breach of,
constitute a default (or an event which with the giving of notice or lapse of
time, or both, would become a default) under, require any notice, consent,
approval or waiver under, or give to

 

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others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation or continuance of any
Encumbrance on the Shares, the GNELLC Interest, the FSELLC Interest or any of
the assets or properties of the MGM Acquired Entities pursuant to, any Contract,
permit or obligation to which any of the MGM Parties is a party or by which any
of the MGM Parties or any of their respective assets or properties is bound or
(iii) conflict with or violate any Law or Governmental Order applicable to any
of the MGM Parties or the Shares, the GNELLC Interest, the FSELLC Interest or
any of the assets or properties of the MGM Acquired Entities.

 

(c)                    Except for (i) the filing of notification reports under
the HSR Act, (ii) any Governmental Approvals related to, or arising out of,
compliance with (x) Gaming Laws and (y) Gaming Licenses, (iii) any Governmental
Approvals related to, or arising out of, compliance with Liquor Licenses, (iv)
any Governmental Approvals as may be required under applicable state securities
Laws, (v) any Governmental Approvals as may be required under any environmental
health or safety Laws pertaining to any notification, disclosure or required
approval triggered by the Closing or the transactions contemplated by this
Agreement, (vi) the matters relating to consummating the Seller Financing and
(vii) the satisfaction or waiver of the closing conditions in Section 6.1 and
Section 6.3 and the closing deliveries in Section 2.3(a), no Governmental
Approval, or consent, approval, authorization or action by, notice to, filing
with, or waiver from, any other Person is required in connection with the
execution, delivery and performance by the MGM Parties of this Agreement and
consummation by the MGM Parties of the transactions contemplated by this
Agreement.

 

Section 3.4                                      Financial Information.

 

(a)                    Section 3.4(a) of the Disclosure Schedule contains
audited (i) Supplemental Consolidating Balance Sheet Information of Parent,
including Consolidated (excluding BRRI) Balance Sheet Information of GNLV and
its Subsidiaries as of December 31, 2000, 2001 and 2002 (such balance sheet as
of December 31, 2002 is referred to herein as the “GNLV Balance Sheet”), and
(ii) Supplemental Consolidating Income Statement Information and Supplemental
Consolidating Cash Flows Information of Parent, including Consolidated
(excluding BRRI) Income Statement Information and Consolidated (excluding BRRI)
Cash Flows Information of GNLV and its Subsidiaries for each of the years ended
December 31, 2001 and 2002, audited by Deloitte & Touche LLP for the 2002 fiscal
year and Arthur Andersen LLP for the 2001 and 2000 fiscal years, whose reports
thereon are included therein (including all notes thereto).  Section 3.4(a) of
the Disclosure Schedule contains (x) a pro forma, unaudited consolidated balance
sheet of GNLV and GNELLC as of March 31, 2003, assuming the consummation of the
Distribution and the Intercompany Account Settlement and (y) pro forma,
unaudited consolidated statements of income and cash flows of GNLV and GNELLC
for the three months ended March 31, 2003, assuming the consummation of the
Distribution and the Intercompany Account Settlement.  The Consolidated
(excluding BRRI) Balance Sheet Information of GNLV and its Subsidiaries included
in the audited Supplemental Consolidating Balance Sheet Information of Parent
and the notes thereto are true, complete and accurate, have been prepared in
accordance with the books of

 

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account and other financial records of GNLV and its Subsidiaries (excluding
BRRI), and present fairly the assets, liabilities and financial condition of
GNLV and its Subsidiaries on a consolidated basis (excluding BRRI) as of the
respective dates thereof, and the Consolidated (excluding BRRI) Income Statement
Information of GNLV and its Subsidiaries and Consolidated (excluding BRRI) Cash
Flows Information of GNLV and its Subsidiaries included in the audited
Supplemental Consolidating Income Statement Information of Parent and the
audited Supplemental Consolidating Cash Flows Information of Parent and the
notes thereto are true, complete and accurate, have been prepared in accordance
with the books of account and other financial records of GNLV and its
Subsidiaries (excluding BRRI), and present fairly the results of operations of
GNLV and its Subsidiaries on a consolidated basis (excluding BRRI) for the
periods therein referred to, all in accordance with GAAP.  The pro forma,
unaudited consolidated balance sheet and the pro forma, unaudited statements of
income and cash flows of GNLV and GNELLC have been prepared in accordance with
the books of account and other financial records of GNLV and GNELLC by
management of GNLV based upon reasonable assumptions, consistent with past
practice and in accordance with GAAP.

 

(b)                   Section 3.4(b) of the Disclosure Schedule contains audited
(i) Supplemental Consolidating Balance Sheet Information of Parent, including
Balance Sheet Information of GNL as of December 31, 2000, 2001 and 2002 (such
balance sheet as of December 31, 2002 is referred to herein as the “GNL Balance
Sheet”), and (ii) Supplemental Consolidating Income Statement Information and
Supplemental Consolidating Cash Flows Information of Parent, including Income
Statement Information and Cash Flows Information of GNL for each of the years
ended December 31, 2001 and 2002, audited by Deloitte & Touche LLP for the 2002
fiscal year and Arthur Andersen LLP for the 2001 and 2000 fiscal years, whose
reports thereon are included therein (including all notes thereto).  Section
3.4(b) of the Disclosure Schedule contains (x) a pro forma, unaudited balance
sheet of GNL as of March 31, 2003, assuming the consummation of the Intercompany
Account Settlement and (y) pro forma, unaudited statements of income and cash
flows of GNL for the three months ended March 31, 2003, assuming the
consummation of the Intercompany Account Settlement.  The Balance Sheet
Information of GNL included in the audited Supplemental Consolidating Balance
Sheet Information of Parent and the notes thereto are true, complete and
accurate, have been prepared in accordance with the books of account and other
records of GNL and present fairly the assets, liabilities and financial
condition of GNL as of the respective dates thereof, and the Income Statement
Information and Cash Flows Information of GNL included in the audited
Supplemental Consolidating Income Statement Information of Parent and audited
Supplemental Consolidating Cash Flows Information of Parent and the notes
thereto are true, complete and accurate, have been prepared in accordance with
the books of account and other financial records of GNL and present fairly the
results of operation of GNL for the periods therein referred to, all in
accordance with GAAP.  The pro forma, unaudited balance sheet and the pro forma,
unaudited statements of income and cash flows of GNL have been prepared in
accordance with the books of account and other financial records of GNL by
management of GNL based upon reasonable assumptions, consistent with past
practice and in accordance with GAAP.

 

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(c)                    Section 3.4(c) of the Disclosure Schedule contains an
unaudited balance sheet of GNELLC as of December 31, 2000, 2001 and 2002 (such
balance sheet as of December 31, 2002 is referred to herein as the “GNELLC
Balance Sheet”).  The unaudited balance sheet of GNELLC has been prepared in
accordance with the books of account and other financial records of GNELLC by
management of GNELLC based upon reasonable assumptions, consistent with past
practice and in accordance with GAAP.

 

Section 3.5                                      No Undisclosed Liabilities. 
Except as set forth in Section 3.5 of the Disclosure Schedule, and except for
any Liabilities of any kind for bodily injury, property damage, illness or
injury or under any employee benefit, pension, disability or medical plan
whether or not subject to any workers’ compensation Law, which Liability arises
out of any occurrence prior to the Closing Date or related to any event
occurring prior to the Closing Date regardless of when the actual claim may be
reported (“IBNR”), none of the MGM Acquired Entities has any Liability of any
nature that is not reflected or reserved against in the case of GNLV, the GNLV
Balance Sheet or otherwise disclosed in the notes thereto, in the case of GNL,
in the GNL Balance Sheet or otherwise disclosed in the notes thereto, and in the
case of GNELLC, in the GNELLC Balance Sheet and other than Liabilities incurred
subsequent to December 31, 2002 in the Ordinary Course of Business which would
reasonably be expected to have a Material Adverse Effect.  None of the MGM
Acquired Entities knows or has any reasonable expectation of any basis for the
assertion against the MGM Acquired Entities, respectively, of any such
Liability.  The letters from Parent dated October 31, 2002 and April 8, 2003 to
LG CNS Co., Ltd. and The Export-Import bank of Korea delivered by Parent to
Purchaser, respectively, do not rise to a guarantee or obligation of the MGM
Acquired Entities with respect to the subject matters of such letters and none
of the MGM Acquired Entities has assumed any Liability with respect to such
matters or entities.

 

Section 3.6                                      Absence of Certain Changes or
Events.  Except as disclosed in Section 3.6 of the Disclosure Schedule, since
December 31, 2002, except as contemplated by this Agreement, the business and
operations of each of the MGM Acquired Entities have been conducted only in the
Ordinary Course of Business and, since such date, there has not been (a) any
Material Adverse Effect and (b) any action which, if taken after the date of
this Agreement, would constitute a breach of the covenants set forth in Section
5.1 (excluding any requirement set forth in Section 5.1 to give notice as to any
action occurring prior to the date of this Agreement).

 

Section 3.7                                      Taxes.  Except as set forth in
Section 3.7 of the Disclosure Schedule:

 

(a)                    Parent and each of the MGM Acquired Entities (i) has
timely filed (taking into account all valid extensions of time for filing) with
the appropriate taxing authorities all material federal, state and local income
Tax Returns and, with respect to the MGM Acquired Entities only, all other
material Tax Returns required to be filed through the date hereof and (ii) will
timely file any such returns required to be filed (taking into account all valid
extensions of time for filing) on or prior to the Closing Date.  Such Tax
Returns are (and, to the extent they will be filed prior to the Closing, will
be) complete

 

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and accurate in all material respects.  None of the MGM Acquired Entities has
pending any request for an extension of time within which to file Tax Returns.

 

(b)                   Parent has paid or will pay all material income Taxes in
respect of periods or portions thereof beginning before and ending on or before
the Closing Date, or has or will provide an adequate reserve therefore on its
financial statements.  Each of the MGM Acquired Entities has paid or will pay
all material Taxes in respect of periods or portions thereof beginning before
and ending on or before the Closing Date or has or will provide an adequate
reserve therefore on its financial statements.

 

(c)                    No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the MGM Acquired Entities.  None of the
MGM Acquired Entities has received notice of any such pending audits or
proceedings.  There are no outstanding waivers extending the statutory period of
limitation relating to the payment of Taxes due from the MGM Acquired Entities.

 

(d)                   Neither the IRS nor any other taxing authority (whether
domestic or foreign) has asserted, or to the knowledge of any of the MGM
Acquired Entities threatened to assert, against any of the MGM Acquired Entities
any material deficiency or material claim for Taxes.

 

(e)                    There are no Encumbrances for Taxes upon any property or
assets of the MGM Acquired Entities, except for Encumbrances for Taxes not yet
due and payable and as to which adequate reserves have been established on the
financial statements of the MGM Acquired Entities.

 

(f)                      None of the MGM Acquired Entities has any obligation
under any Tax sharing agreement or similar arrangement with any other Person
with respect to Taxes of such other Person.

 

(g)                   None of the MGM Acquired Entities has, with regard to any
assets or property held or acquired by any of them, filed a consent to the
application of Section 341(f) of the Code, or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by any of the MGM Acquired
Entities.

 

(h)                   None of the MGM Acquired Entities has received a written
ruling from any taxing authority.  No closing agreement pursuant to Section 7121
of the Code (or similar provision of state, local or foreign Law) has been
entered into by or with respect to the MGM Acquired Entities.

 

(i)                       None of the MGM Acquired Entities has agreed to or is
required to make any adjustment under Section 481(a) of the Code (or any similar
provision of state, local or foreign Law) by reason of a change in accounting
method or otherwise for any taxable period for which the applicable statute of
limitations has not yet expired.

 

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(j)                       No jurisdiction where any of the MGM Acquired Entities
does not file a Tax Return has made a claim that any of such entities is
required to file a Tax Return in such jurisdiction.

 

Section 3.8                                      Real Property.

 

(a)                    Section 3.8(a) of the Disclosure Schedule identifies a
complete, accurate and current list, including the address or other description,
and the identity of the holder of title, of all real property owned by the MGM
Acquired Entities (including all land, and all interests in buildings,
structures, improvements and fixtures located thereon and all easements and
other rights and interests appurtenant thereto, the “Owned Real Property”), and
Section 3.8(a) of the Disclosure Schedule identifies a complete, accurate and
current list of all real property leased or operated by the MGM Acquired
Entities, including the date of each Lease, the expiration date of such Lease,
the term of such Lease, the parties to such Lease, all renewal rights and
options to purchase and a description of the demised premises thereunder
(including all leasehold, subleasehold, ground leasehold, or other rights to use
or occupy any land, buildings, structures, improvements, fixtures, or other
interest in real property used in connection with any of the MGM Acquired
Entities and the operation of its business) (collectively, the “Leased Real
Property” and together with the Owned Real Property shall be referred to herein
collectively as the “Real Property”).  Each of the MGM Acquired Entities is in
lawful possession of all of the Real Property, subject only to Permitted
Exceptions.

 

(b)                   With respect to each parcel of the Owned Real Property,
except as set forth in Section 3.8(b)(x) of the Disclosure Schedule:  (i) an MGM
Acquired Entity has good and marketable indefeasible fee simple title to the
Owned Real Property, free and clear of all Encumbrances, except (A) Encumbrances
for real estate Taxes or ad valorem Taxes that are not past due; (B) easements
for the erection and maintenance of public utilities exclusively serving the
properties and other matters set forth in Section 3.8(b)(y) of the Disclosure
Schedule that, to the knowledge of any of the MGM Parties, neither (I)
materially interferes with the use or operation of an MGM Acquired Entity in the
conduct of its business as it is presently conducted, or (II) renders title to
the Owned Real Property unmarketable or uninsurable; and (C) Tenant Leases
(collectively with (A), (B) and (C), the “Permitted Exceptions”); (ii) except as
set forth in Section 3.8(b)(y) and Section 3.8(d) of the Disclosure Schedule, an
MGM Acquired Entity has neither leased nor otherwise granted to any Person the
right to use or occupy the Owned Real Property or any portion thereof except for
licensing of hotel rooms in the Ordinary Course of Business; (iii) there are no
outstanding options, rights of first offer, rights of reverter, or rights of
first refusal to purchase the Owned Real Property or any portion thereof or
interest therein; and (iv) none of the MGM Acquired Entities is a party to any
Contract to purchase any real property or interest therein.

 

(c)                    Complete, accurate and current copies of all Leases
pursuant to which the Leased Real Property is leased or operated have been
delivered or made available by the MGM Parties to Purchaser and there are no
other material Contracts between or among the MGM Parties and their respective
Subsidiaries or Affiliates, with respect to the Leased Real Property or
otherwise relating to the use and occupancy of the Real

 

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Property.  With respect to each Lease, except as set forth in Section 3.8(c) of
the Disclosure Schedule, (i) each party named therein is not in default
thereunder, (ii) no defaults (whether or not subsequently cured) are currently
alleged thereunder, by or against either party, and no event has occurred or
failed to occur or circumstance exists which, with the delivery of notice, the
passage of time or both, would constitute such a breach or default, or permit
the termination, modification or acceleration of rent under such Lease, (iii)
such Lease is a valid and binding obligation upon the applicable MGM Acquired
Entity and, to the knowledge of the applicable MGM Acquired Entity, is a valid
and binding obligation of each other party thereto, and is in full force and
effect and enforceable by the applicable MGM Acquired Entity in accordance with
its terms, except as such enforceability may be limited by (x) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar Laws
now or hereafter in effect relating to creditors’ rights generally, and (y)
general principles of equity (regardless of whether enforcement is considered in
a proceeding at Law or in equity), (iv) the transactions contemplated by this
Agreement do not require the consent of any other party to such Lease and will
not result in a breach of or default under such Lease, or otherwise cause such
Lease to cease to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing, (v) there are no disputes with
respect thereto, (vi) no security deposit or portion thereof deposited with
respect to such Lease has been applied in respect of a breach or default under
such Lease that has not been redeposited in full, except where the failure to
redeposit such security deposit would not reasonably be expected to have a
Material Adverse Effect, (vii) none of the MGM Acquired Entities owes any
brokerage commissions or finder’s fees with respect to such Lease, (viii) the
landlord thereunder is not an Affiliate of any of the MGM Acquired Entities,
(ix) the interest of tenant thereunder has not been subleased, licensed, or
assigned, and no Person has otherwise been granted the right to use or occupy
the Leased Real Property or any portion thereof, (x) to the knowledge of any of
the MGM Parties, the interest of tenant thereunder has not been collaterally
assigned nor has any other security interest in such Lease or any interest
therein been granted and (xi) there are no Encumbrances, Contracts, defects,
claims or exceptions on or affecting the estate or interest created thereby or
pursuant thereto.

 

(d)                   A complete, accurate and current rent roll for the Tenant
Leases (the “Rent Roll”) is set forth in Section 3.8(d) of the Disclosure
Schedule.  There are no Tenant Leases with respect to the Real Property other
than the Tenant Leases which are set forth on the Rent Roll.  Except as set
forth in the Rent Roll, to the knowledge of any of the MGM Parties, as of the
date of this Agreement: (i) each Tenant Lease is in full force and effect; (ii)
the tenants have accepted possession of, and are in occupancy of, all of their
respective demised premises and have commenced the payment of rent under the
Tenant Leases to the extent set forth on the Rent Roll, and there are no
offsets, claims or defenses to the enforcement thereof presently outstanding;
(iii) all rents due and payable under the Tenant Leases have been paid and no
portion of any rent has been paid for any period more than thirty days in
advance; (iv) the rent payable under each Tenant Lease is the amount of rent set
forth in the Rent Roll, and there is no claim or basis for a claim by the tenant
thereunder for an adjustment to such rent; (v) no tenant or other party in
possession of any of the Real Property subject to the Tenant Leases has any
right to purchase, or holds any right of first refusal to purchase, such
properties; (vi) no Tenant

 

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Lease letter of credit has been delivered as a security deposit, or in lieu of
cash security deposit, under any Tenant Lease; (vii) there is no tenant
improvement work remaining to be done under any Tenant Lease; and (viii) there
are no remaining rent concessions, tenant allowances or abatements with respect
to any Tenant Lease.  All security deposits under the Tenant Leases are as set
forth on the Rent Roll and each of the MGM Acquired Entities is in material
compliance with all Laws with respect to all security deposits.  The Rent Roll
sets forth the scheduled expiration date of each Tenant Lease and any arrearages
in the payment of rent thereunder as of the date of the Rent Roll.  Section
3.8(d) of the Disclosure Schedule may be amended after the date of this
Agreement to add Tenant Leases and to add additional agreements comprising the
Tenant Leases so long as the MGM Parties comply with Section 5.1 of this
Agreement.  Each Tenant Lease is enforceable in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws now or
hereafter in effect relating to creditors’ rights generally and (ii) general
principles of equity (regardless of whether enforcement is considered in a
proceeding at Law or in equity).  The MGM Parties have delivered or made
available to Purchaser complete, accurate and current copies of each Tenant
Lease.  None of the MGM Acquired Entities owes or will owe any brokerage
commissions in respect of the Tenant Leases.

 

(e)                    Except as set forth in Section 3.8(e) of the Disclosure
Schedule, all material buildings, structures, fixtures, building systems and
equipment included in the Real Property (the “Improvements”) are in good
condition and repair in all material respects, subject to reasonable wear and
tear, and there are no facts or conditions affecting any of the Improvements
that would adversely interfere with the use or occupancy of the Improvements or
any portion thereof in the operation of the business presently conducted
thereon.

 

(f)                      None of the MGM Acquired Entities has received notice
of any currently proposed or pending assessment for public improvements or
otherwise.

 

(g)                   The present use of the Improvements is in substantial
conformity with or is excused from conformity with all applicable Laws, and none
of the MGM Acquired Entities has received any notice of violation thereof.  The
MGM Parties have not received written notice of, or to the knowledge of any Vice
President of the MGM Acquired Entities, any assertion of, violation of any
Improvements of any zoning ordinance.

 

(h)                   All requisite certificates of occupancy required with
respect to the Improvements on any of the Real Property have been obtained and
are currently in full force and effect.

 

(i)                       Prior to the date of this Agreement, the MGM Parties
have delivered or made available to Purchaser complete, accurate and current
copies of all deeds, mortgages, surveys, licenses, title insurance policies,
certificates of occupancy, or equivalent documentation with respect to the Real
Property and other documents relating to or affecting the title to the Owned
Real Property or leasehold interests in the Leased Real Property in the MGM
Parties’ possession.

 

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(j)                       Except as set forth in Section 3.8(j) of the
Disclosure Schedule, none of the MGM Acquired Entities has received written
notice of, or has any knowledge of, any action, proceeding or litigation
pending, overtly contemplated or threatened: (i) to take all or any material
portion of the Real Property, or any interest therein, by eminent domain; (ii)
to modify the zoning of, or other governmental rules or restrictions applicable
to, the Real Property or the use or development thereof; (iii) for any street
widening or changes in highway or traffic lanes or patterns in the immediate
vicinity of the Real Property; or (iv) otherwise relating to the Real Property
or the interests of any of the MGM Acquired Entities therein.

 

(k)                    The parcels constituting the Owned Real Property are
assessed separately from all other adjacent property not constituting Owned Real
Property for purposes of real property Taxes and the Leased Real Property and
each of the parcels of the Owned Real Property complies with all applicable
subdivision, land parcelization and local governmental taxation or separate
assessment requirements, without reliance on property not constituting Real
Property.

 

(l)                       Except as contemplated by this Agreement, there are no
Contracts or other obligations outstanding for the sale, exchange, Encumbrance
or transfer of any of the Real Property, or any portion of it.

 

Section 3.9                                      Tangible Personal Property. 
Section 3.9 of the Disclosure Schedule sets forth each item of Tangible Personal
Property (other than inventory and supplies) owned by the MGM Acquired Entities
having an initial purchase price in excess of $50,000 (including subsequent
installment payments).  Section 3.9 of the Disclosure Schedule sets forth each
item of Tangible Personal Property leased by any of the MGM Acquired Entities
(other than pursuant to individual leases having an annual rental of less than
$50,000 or that are terminable by any of the MGM Acquired Entities prior to the
Closing Date without Liability to the MGM Acquired Entities).  Section 3.9 of
the Disclosure Schedule sets forth an inventory of all gold nuggets on display
at GNLV and except as set forth in Section 3.9 of the Disclosure Schedule, such
gold nuggets are owned by GNLV free and clear of all Encumbrances.  Section 3.9
of the Disclosure Schedule lists each live gaming device (including gaming
tables), electronic gaming devices (including all slot machines), and other
gaming-related equipment owned, leased or otherwise used by the MGM Acquired
Entities.  Except as set forth in Section 3.9 of the Disclosure Schedule, the
Tangible Personal Property owned by the MGM Acquired Entities is free and clear
of all Encumbrances.  Except as set forth in Section 3.9 of the Disclosure
Schedule, the Tangible Personal Property owned by the MGM Acquired Entities is
located at the Real Property.  The Tangible Personal Property owned or leased by
the MGM Acquired Entities is in working order, subject to ordinary wear and
tear, or, if not, such failure would not reasonably be expected to have a
Material Adverse Effect.  The Tangible Personal Property owned by the MGM
Acquired Entities has been maintained in all material respects in accordance
with past practice of the MGM Acquired Entities.

 

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Section 3.10                                Intellectual Property.

 

(a)                    Section 3.10(a) of the Disclosure Schedule sets forth,
for all of the following included in MGM Acquired Entities Owned Intellectual
Property, a complete list of all United States, foreign, international and
state:  (i) Patents and Patent applications; (ii) Trademark registrations,
applications and material unregistered Trademarks; (iii) Domain Names; (iv)
Copyright registrations, applications and material unregistered Copyrights; (v)
Trademarks for which registration efforts will not be pursued or will not be
renewed due to discontinued use; and (vi) Domain Names that will not be
maintained or have been discontinued and allowed to reenter the Domain Name
market.

 

(b)                   Section 3.10(b) of the Disclosure Schedule sets forth a
complete list of all IP Agreements and IP Enforcement Documents.  The listing of
IP Agreements and IP Enforcement Documents shall include a brief description of
the rights covered by each agreement.

 

(c)                    Except as set forth on Section 3.10(c) of the Disclosure
Schedule, there is no pending or, to the knowledge of any of the MGM Parties,
threatened IP Claim against Parent or its Affiliates involving MGM Acquired
Entities Owned Intellectual Property or Used Intellectual Property, (i) alleging
Infringement of Intellectual Property rights of any Person, (ii) alleging that
such Intellectual Property is defamatory, obscene or otherwise in violation of
applicable Law or (iii) challenging Parent’s or its Affiliates’ ownership or Use
of, or the validity, enforceability or registrability of any such Intellectual
Property, and there is no reasonable basis for an IP Claim regarding any of the
foregoing except as such IP Claim would not reasonably be expected to have a
Material Adverse Effect.

 

(d)                   Except as set forth on Section 3.10(d) of the Disclosure
Schedule, none of Parent or its Affiliates has brought or threatened an IP Claim
against any Person (i) alleging Infringement of MGM Acquired Entities Owned
Intellectual Property or Used Intellectual Property or (ii) challenging any
Person’s ownership or Use of, or the validity, enforceability or registrability
of any Intellectual Property based upon Parent’s or any of its Affiliates’
rights in the MGM Acquired Entities Owned Intellectual Property or Used
Intellectual Property, and there is no reasonable basis for an IP Claim
regarding any of the foregoing.  Section 3.10(d) of the Disclosure Schedule may
be amended after the date of this Agreement to add any IP Claim brought or
threatened against any Person by Parent or its Affiliates acting in good faith.

 

(e)                    Except as set forth on Section 3.10(e) of the Disclosure
Schedule, at Closing, (i) the MGM Acquired Entities will own all MGM Acquired
Entities Owned Intellectual Property, free and clear of all Encumbrances, and
have the valid and enforceable right to Use all Used Intellectual Property and
(ii) all MGM Acquired Entities Owned Intellectual Property will list the MGM
Acquired Entities as the sole current owner of record for each continuing
application and registration listed in Section 3.10(a) of the Disclosure
Schedule with the appropriate United States, state or foreign Governmental
Entity.

 

(f)                      Except as set forth on Section 3.10(f) of the
Disclosure Schedule, and except for Trademarks for which registration efforts
will not be pursued or will not be renewed

 

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due to discontinued use and Domain Names that will not be maintained or have
been discontinued and allowed to reenter the Domain Name market as set forth on
Section 3.10(a) of the Disclosure Schedule, each of the MGM Acquired Entities
Owned Intellectual Property and the Used Intellectual Property has been duly
maintained, is subsisting, in full force and effect, has not been cancelled,
expired or abandoned, and is valid and enforceable.

 

(g)                   Except as set forth on Section 3.10(g) of the Disclosure
Schedule, there are no actions that must be taken by Parent or its Affiliates
within one hundred eighty days from the date of this Agreement, including (i)
the payment of any registration, maintenance, or renewal fees or (ii) the filing
with the United States Patent and Trademark Office or such other appropriate
United States, foreign or state office or similar administrative agency, of
documents, applications or certificates for the purposes of obtaining,
maintaining, perfecting, preserving, or renewing any rights in the registered or
applied-for MGM Acquired Entities Owned Intellectual Property, except where the
failure to perform such action would not reasonably be expected to have a
Material Adverse Effect.

 

(h)                   There exists no event or condition (including the
consummation of the transactions contemplated by this Agreement) that will
result in a violation or breach of, or constitute (with the giving of notice or
lapse of time, or both, would become) a default under any IP Agreement or IP
Enforcement Document by the MGM Parties, or to the knowledge of any of the MGM
Parties any other party thereto, except those which would not reasonably be
expected to have a Material Adverse Effect.

 

(i)                       Each of the MGM Acquired Entities takes reasonable
measures to protect the confidentiality of its Trade Secrets.  Except as set
forth in Section 3.10(i) of the Disclosure Schedule, no Trade Secret of the MGM
Acquired Entities has been disclosed or authorized to be disclosed to any third
Person other than pursuant to a written non-disclosure agreement that adequately
protects its proprietary interests in and to such Trade Secrets, except where
such disclosure would not reasonably be expected to have a Material Adverse
Effect.

 

(j)                       Neither this Agreement nor the transactions
contemplated by this Agreement will result in (i) any Person being granted
rights or access to, or the placement in or release from escrow of, any MGM
Acquired Entities Owned Intellectual Property, (ii) the granting to any Person
of rights to MGM Acquired Entities Owned Intellectual Property greater than the
rights granted prior to the date of this Agreement, (iii) any of the MGM
Acquired Entities being bound by, or subject to, any non-compete or other
restriction on the operation or scope of its business greater than the
restrictions to which the MGM Acquired Entities are bound or subject to prior to
the date of this Agreement or (iv) any of the MGM Acquired Entities being
obligated to pay any royalties or other amounts to any Person in excess of the
amounts payable by the MGM Acquired Entities prior to the date of this
Agreement, except in each case where such result would not reasonably be
expected to have a Material Adverse Effect.

 

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(k)                    Except as set forth on Schedule 3.10(k) of the Disclosure
Schedule, none of Parent or its Affiliates or any current or former stockholder,
partner, member, director, officer or employee of Parent or its Affiliates (or
any of their respective predecessors in interest) has or will have, after giving
effect to the transactions contemplated by this Agreement, any legal or
equitable right, title, or interest in or to, or any right to Use, directly or
indirectly, in whole or in part, any MGM Acquired Entities Owned Intellectual
Property.

 

(l)                       Each of the MGM Acquired Entities discloses its
personal data collection and use on its Web site(s) and is and has been in
compliance with such posted data protection practices and all applicable Laws.

 

Section 3.11                                Contracts.

 

(a)                    Section 3.11(a) of the Disclosure Schedule sets forth a
complete, accurate and current list of any Contract providing for aggregate
payments to or by any of the MGM Acquired Entities in excess of $100,000 in the
case of GNLV and $25,000 in the case of each of GNL and GNELLC, and any other
Contract that is necessary to operate their respective businesses as conducted
prior to the Closing (collectively the “Material Contracts”).  Upon mutual
agreement of the Parties or as expressly permitted by Section 5.1, Section
3.11(a) of the Disclosure Schedule may be amended after the date of this
Agreement to add additional Contracts as Material Contracts.  Each Material
Contract is a valid and binding obligation upon the applicable MGM Acquired
Entity and, to the knowledge of any of the applicable MGM Acquired Entity, is a
valid and binding obligation of each other party thereto, and is in full force
and effect and enforceable by the applicable MGM Acquired Entity in accordance
with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar Laws
now or hereafter in effect relating to creditors’ rights generally and (ii)
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).  Each of the MGM Acquired Entities has
performed all material obligations required to be performed by it under each
Material Contract to which it is a party, and there has been no breach or
default or claim of default by it or, to its knowledge by any other party
thereto, under any provision thereof and no event has occurred which, with or
without notice, the passage of time or both, would constitute a default by it,
or, to its knowledge any other party thereto, under any provision thereof or
that would permit modification, acceleration or termination of any Material
Contract by any other party thereto or by it, except where such failure to
perform, breach, default, claim of default, modification, acceleration or
termination would not reasonably be expected to have a Material Adverse Effect. 
Except as set forth in Section 3.11(a) of the Disclosure Schedule, the
enforceability after the Closing by the MGM Acquired Entities of the Material
Contracts shall not be affected in any material respect by the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and no notice to, or consent, approval or waiver is required from any
other Person.  Complete, accurate and current copies of each of the Contracts
set forth in Section 3.11(a) of the Disclosure Schedule have been delivered or
made available by the MGM Parties to Purchaser.

 

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(b)                   Except as set forth in Section 3.11(b) of the Disclosure
Schedule, none of the MGM Acquired Entities is a party to or bound by: (i) any
Material Contract with agents, consultants, advisors, salesmen, sales
representatives, distributors, suppliers or dealers that is not cancelable by
the MGM Acquired Entities as applicable, at will, without Liability; (ii) any
Material Contract providing for the payment of any bonus or commission based on
sales or earnings; (iii) any Contract for the purchase or sale of any security,
except as contemplated by this Agreement; (iv) any Contract for Indebtedness;
(v) any Contract relating to the granting of express product or service
warranties by any of the MGM Acquired Entities; (vi) any Contract containing a
covenant not to compete by any of the MGM Acquired Entities; (vii) any Contract
granting an Encumbrance on the Shares, the GNELLC Interest, the FSELLC Interest
or any of the assets or properties of the MGM Acquired Entities; (viii) any
Material Contract providing for exclusive purchases by or from any of the MGM
Acquired Entities or containing a requirement purchase obligation; (ix) any
Contract with a Governmental Entity other than licenses and permits used in the
Ordinary Course of Business of any of the MGM Acquired Entities; (x) any
Material Contract providing for administration, service, utilization review,
adjustment, claims management or similar functions relating to reservations,
legal, Intellectual Property, insurance, collections, litigation or Plans of any
of the MGM Acquired Entities; (xi) any Material Contract permitting or requiring
any of the MGM Acquired Entities to provide insurance or indemnification or
advance expenses to any Person; or (xii) any Contract for the sale of any of the
assets, properties or rights of any of the MGM Acquired Entities outside of the
Ordinary Course of Business, except as contemplated by this Agreement.

 

(c)                    Other than the transactions contemplated by this
Agreement or as set forth in Section 3.11(c) of the Disclosure Schedule, there
are no Contracts between or among the MGM Acquired Entities on the one hand, and
Parent and its Affiliates (other than the MGM Acquired Entities), on the other
hand (the “Affiliate Contracts”), which would survive the Closing.  Complete,
accurate and current copies of each of the Contracts set forth in Section
3.11(c) of the Disclosure Schedule have been delivered or made available to
Purchaser by the MGM Parties.

 

(d)                   No material purchase commitment of the MGM Acquired
Entities, or by which any of them is bound, is materially in excess of the
normal, ordinary and usual requirements of its business or, to the knowledge of
any of the MGM Acquired Entities, was at a price substantially above market at
the time it was made.

 

(e)                    Except as set forth in Section 3.11(e) of the Disclosure
Schedule, none of the MGM Acquired Entities has given any power of attorney
(whether revocable or irrevocable) to any Person that is or may hereafter be in
force for any purpose whatsoever.

 

(f)                      Except as set forth in Section 3.11(f) of the
Disclosure Schedule, none of the MGM Acquired Entities is paying, or has any
obligation to pay, any pension, deferred compensation or retirement allowance to
any Person.

 

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Section 3.12                                Litigation.  Except as set forth in
Section 3.12 of the Disclosure Schedule, (a) there is no action, suit or
proceeding, claim, arbitration or investigation, including indemnification
matters, against any of the MGM Acquired Entities or any property or asset of
the MGM Acquired Entities, pending, or as to which any of the MGM Acquired
Entities has received notice of assertion, or to the knowledge of any of the MGM
Acquired Entities, threatened against, any of the MGM Acquired Entities or any
property or asset of the MGM Acquired Entities, before any Governmental Entity
or arbitration body, the adverse determination of which would reasonably be
expected to have a Material Adverse Effect and (b) there is no Governmental
Order or arbitration award outstanding against any of the MGM Acquired Entities
or any property or asset of the MGM Acquired Entities, which would reasonably be
expected to have a Material Adverse Effect or which would reasonably be expected
to adversely affect in a material manner the ability of Purchaser to consummate
the acquisition of the Shares.  Except as set forth in Section 3.12 of the
Disclosure Schedule, there is no action, suit or proceeding, claim, arbitration
or investigation, including indemnification matters, by any of the MGM Acquired
Entities, pending, or as to which any of the MGM Acquired Entities has sent any
notice of assertion.  To the knowledge of any of the MGM Parties, none of the
MGM Acquired Entities is a party or subject to (including any property or asset
of the MGM Acquired Entities) or in default of a Governmental Order or
arbitration award.

 

Section 3.13                                Environmental Matters.  Except as
set forth in Section 3.13 of the Disclosure Schedule:

 

(a)                    Each of the MGM Acquired Entities is in compliance with
all applicable Environmental Laws (which compliance includes, but is not limited
to, the possession by each of the MGM Acquired Entities of all permits and other
Governmental Approvals required under applicable Environmental Laws, and
compliance with the terms and conditions thereof), except where the failure to
comply would not reasonably be expected to have a Material Adverse Effect.  None
of the MGM Acquired Entities has received any written or, to the knowledge of
any of the MGM Acquired Entities, oral, notice from a Person alleging that any
of the MGM Acquired Entities is not in such compliance, and there are no present
or, to the knowledge of any of the MGM Acquired Entities, past or future,
actions, activities, circumstances, conditions, events or incidents that may
prevent or interfere with such compliance.  All Governmental Approvals currently
held by each of the MGM Acquired Entities pursuant to applicable Environmental
Laws are set forth in Section 3.13 of the Disclosure Schedule.

 

(b)                   Except for notice to an issuing Governmental Entity or the
processing of an administrative amendment with an issuing Governmental Entity
resulting from the change in control of the permittee or a change in the name or
contact information of the Persons identified in the Governmental Approval
resulting from the change in control, to the knowledge of any of the MGM
Acquired Entities, no transfers of permits or other Governmental Approvals under
Environmental Laws, and no additional permits or other Governmental Approvals
under Environmental Laws, will be required to permit the Purchaser to conduct
its business in full compliance with all applicable Environmental Laws
immediately following the Closing Date, so long as such business is conducted in
the same manner as conducted by each of the MGM Acquired Entities immediately
prior

 

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to the Closing Date.  All permits requiring a notice or application of an
administrative amendment are set forth in Section 3.13(b) of the Disclosure
Schedule.  To the extent that any transfers or additional permits and other
Governmental Approvals are required, each of the MGM Acquired Entities agrees to
cooperate with the Purchaser to effect such transfers and obtain such permits
and other Governmental Approvals prior to the Closing Date; provided that in the
event a notice or application of an administrative amendment is required to be
filed, the Governmental Entity may not provide formal acknowledgment of the
requested change until they have been advised that the Closing has occurred.

 

(c)                    There is no Environmental Claim pending or, to the
knowledge of any of the MGM Acquired Entities, threatened, against any of the
MGM Acquired Entities or, to the knowledge of any of the MGM Acquired Entities,
against any Person whose liability for any Environmental Claim any of the MGM
Acquired Entities has or may have retained or assumed either by Contract or by
operation of Law, the adverse determination of which would reasonably be
expected to have a Material Adverse Effect.

 

(d)                   There are no present (or to the knowledge of any of the
MGM Acquired Entities, past) actions, activities, circumstances, conditions,
events or incidents, including the Release, threatened Release or presence of
any Hazardous Materials that is reasonably expected to form the basis of any
Environmental Claim against any of the MGM Acquired Entities, or, to the
knowledge of any of the MGM Acquired Entities, against any Person whose
Liability for any Environmental Claim any of the MGM Acquired Entities has or
may have retained or assumed either by Contract or by operation of Law, the
adverse determination of which would reasonably be expected to have a Material
Adverse Effect.

 

(e)                    None of the MGM Acquired Entities has, and to the
knowledge of any of the MGM Acquired Entities, no other Person has placed,
stored, deposited, discharged, buried, dumped or disposed of Hazardous Materials
or any other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or, without any duty
of nor undertaking of any investigation or inquiry by any of the MGM Acquired
Entities, adjacent to any property currently or formerly owned, operated or
leased by any of the MGM Acquired Entities, except (i) for inventories of such
substances to be used, and wastes generated therefrom, in the Ordinary Course of
Business of any of the MGM Acquired Entities (which inventories and wastes, if
any, were and are stored or disposed of in accordance with applicable
Environmental Laws), or (ii) as would not reasonably be expected to have a
Material Adverse Effect.

 

(f)                      The MGM Parties have delivered or made available to
Purchaser complete, accurate and current copies and results of any reports,
studies, analyses, tests or monitoring possessed or initiated by or on behalf of
the MGM Acquired Entities and in their possession pertaining to Hazardous
Materials, if any, in, on, beneath or adjacent to any property currently or
formerly owned, operated or leased by any of the MGM Acquired Entities, or
regarding the MGM Acquired Entities’ compliance with applicable Environmental
Laws.

 

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(g)                   To the knowledge of any of the MGM Acquired Entities, none
of the Real Property contains any of the following in violation of Environmental
Laws or in such a manner that is reasonably expected to form the basis of an
Environmental Claim: underground storage tanks; asbestos; polychlorinated
biphenyls (PCBs); toxic mold; underground injection wells; radioactive
materials; or septic tanks or waste disposal pits in which process wastewater or
any Hazardous Materials have been discharged or disposed, except for any
violation that would not reasonably be expected to have a Material Adverse
Effect.

 

Section 3.14                                Employee Benefit Plans.

 

(a)                    Section 3.14(a) of the Disclosure Schedule sets forth a
complete, accurate and current list of each deferred compensation and each bonus
or other incentive compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement, each severance or
termination pay, medical, surgical, hospitalization, life insurance and other
“welfare” plan, fund or program (within the meaning of section 3(1) of ERISA);
each profit-sharing, stock bonus or other “pension” plan, fund or program
(within the meaning of section 3(2) of ERISA), each employment, termination,
change in control or severance agreement; and each other material employee
benefit plan, fund, program, agreement or arrangement; in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
Parent or by any trade or business, whether or not incorporated (an “ERISA
Affiliate”), that together with Parent would be deemed a “single employer”
within the meaning of section 4001(b) of ERISA, or to which Parent or an ERISA
Affiliate is a party, whether written or oral, for the benefit of any employee
or former employee of any of the MGM Acquired Entities (collectively, the
“Plans”).  Section 3.14(a) of the Disclosure Schedule sets forth each of the
Plans that is subject to section 302 or Title IV of ERISA or section 412 of the
Code (collectively, the “Title IV Plans”).  None of the MGM Acquired Entities or
any ERISA Affiliate has any legally binding or publicly announced commitment or
formal plan to create any additional employee benefit plan or modify or change
any existing Plan that would affect any employee or former employee of any of
the MGM Acquired Entities.

 

(b)                   With respect to each Plan, Parent has delivered or made
available to Purchaser complete, accurate and current copies of each of the
following documents:

 

(i)                      a copy of the Plan and any amendments thereto (or if
the Plan is not a written Plan, a written description of the material terms
thereof);

 

(ii)                   a copy of the two most recent annual reports and
actuarial reports, if required under ERISA, and the most recent report (if any)
prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87;

 

(iii)                a copy of the most recent Summary Plan Description required
under ERISA with respect thereto;

 

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(iv)               if the Plan is funded through a trust or any third-party
funding vehicle, a copy of the trust or other funding agreement and the latest
financial statements thereof (if any); and

 

(v)                  the most recent determination letter received from the IRS
with respect to each Plan intended to qualify under section 401 of the Code.

 

(c)                    No material Liability under Title IV or Section 302 of
ERISA has been incurred by Parent or any ERISA Affiliate that has not been
satisfied in full within the period permitted by applicable Law.

 

(d)                   To the knowledge of Parent or any ERISA Affiliate, the
Pension Benefit Guaranty Corporation has not instituted proceedings to terminate
any Title IV Plan and no condition exists that presents a material risk that
such proceedings will be instituted.

 

(e)                    Except as set forth in Section 3.14(e) of the Disclosure
Schedule with respect to each Title IV Plan, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan’s actuary
with respect to such plan did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits.

 

(f)                      No Title IV Plan or any trust established thereunder
has incurred any “accumulated funding deficiency” (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each Title IV Plan ended prior to the Closing
Date.

 

(g)                   As of the date of this Agreement, all contributions
required to be made on or before December 31, 2002 with respect to any Plan have
been timely made, or are reflected on the audited, consolidated balance sheet
(or the notes thereto) of Parent contained in its Form 10-K for the fiscal year
ended December 31, 2002 filed with the SEC on March 26, 2003 to the extent such
contributions were required to have been so reflected by the Exchange Act.  All
contributions required to be made with respect to any Plan from and after the
date of this Agreement and prior to the Closing Date will have been timely made,
or will be reflected on the most recent balance sheet (or the notes thereto) of
Parent contained in an Exchange Act filing with the SEC to the extent such
contributions were required to have been so reflected by the Exchange Act. 
There has been no amendment to, written interpretation of or announcement
(whether or not written) by Parent or any ERISA Affiliate relating to, or change
in employee participation or coverage under, any Plan that would increase
materially the expense of maintaining such Plan above the level or expense
incurred in respect thereof for the Parent’s most recent fiscal year ended prior
to the date of this Agreement.

 

(h)                   If any Title IV Plan is a “multiemployer pension plan,”
(i) neither Parent nor any ERISA Affiliate has made or suffered a “complete
withdrawal” or a “partial withdrawal,” as such terms are respectively defined in
sections 4203 and 4205 of ERISA

 

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(or any Liability resulting therefrom has been satisfied in full), (ii) no event
has occurred that presents a material risk of a partial withdrawal, (iii)
neither Parent nor any ERISA Affiliate has any contingent Liability under
section 4204 of ERISA and (iv) to the knowledge of Parent or any ERISA
Affiliate, no circumstances exist that present a material risk that any Title IV
Plan will go into reorganization.

 

(i)  The consummation of the transactions contemplated by this Agreement will
not, either alone or in combination with another event, (i) entitle any current
or former director, officer or employee of any MGM Acquired Entity to severance
pay, unemployment compensation or any other payment or distribution, (ii)
accelerate the time of payment or vesting (other than the vesting of equity
awards granted under any Plan), or increase, the amount of compensation due any
such director, officer or employee, (iii) result in the forgiveness of any
Indebtedness with respect to any such director, officer or employee or (iv)
result in the obligation to fund benefits with respect to any such director,
officer or employee.

 

(j)                       There has been no material failure of a Plan that is a
group health plan (as defined in section 5000(b)(1) of the Code) to meet the
requirements of section 4980B(f) of the Code with respect to a qualified
beneficiary (as defined in section 4980B(g) of the Code).  Neither Parent nor
any ERISA Affiliate has contributed to a nonconforming group health plan (as
defined in section 5000(c) of the Code) and neither Parent nor any ERISA
Affiliate of Parent has incurred a Tax under section 5000(a) of the Code that is
or could become a Liability of Purchaser or the MGM Acquired Entities.

 

(k)                    Except for the employment agreements and the
multiemployer plans set forth in Section 3.14(a) of the Disclosure Schedule, as
of the Closing Date, the MGM Acquired Entities have no Liabilities with respect
to the Plans.

 

(l)                       No amounts payable under the Plans will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code.

 

Section 3.15                                Compliance with Applicable Laws.

 

(a)                    (i)  Each of the MGM Acquired Entities has in the past
complied and is presently complying with all applicable Laws and (ii) none of
the MGM Acquired Entities has received notification of any asserted present or
past failure to comply, or to its knowledge, is aware of any threatened action
to do so, except where the failure to have been in compliance or comply would
not reasonably be expected to have a Material Adverse Effect.

 

(b)                   Each of the MGM Acquired Entities has and will have in
full force and effect immediately prior to the Closing all Governmental
Approvals necessary for it to acquire, own, lease or operate its assets and
properties and to carry on its business as now conducted and there has occurred
no default, revocation or suspension under any such Governmental Approval,
except for such which would not reasonably be expected to have a Material
Adverse Effect.

 

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(c)                    Each of GNLV and GNL holds and will hold immediately
prior to the Closing all Gaming Licenses necessary to operate its gaming
business, and such Gaming Licenses are in full force and effect and have not
been revoked or suspended, and there has been no violation under such Gaming
Licenses, except for such as would not reasonably be expected to have a Material
Adverse Effect.  Each of GNLV and GNL has maintained and will maintain at all
times reserves for working capital, capital improvements, replacements and/or
contingencies to the extent, and in the amounts, required by the Gaming Laws,
including the cash reserve requirements thereunder.

 

(d)                   Neither GNLV nor GNL has: (i) ever applied for a casino,
racing or other Gaming License in any state or other jurisdiction and been
denied; (ii) experienced any revocation or failure to renew any such license; or
(iii) withdrawn or not applied for any such license or renewal after being
informed orally or in writing by any Governmental Entity, that GNLV or GNL,
would be denied such a license or renewal if it were applied for.

 

(e)                    Parent has delivered and will provide Purchaser access to
copies of all correspondence between the Nevada Gaming Authorities and GNLV or
GNL relating to the compliance by GNLV and GNL with the rules and regulations of
the Nevada Gaming Authorities and the terms of their respective Gaming Licenses
in GNLV’s or GNL’s or its Affiliates’ possession.  Except as disclosed in such
correspondence and such applications, neither GNLV nor GNL has knowledge of any
facts or circumstances relating to the conduct of GNLV or GNL, or any director,
officer, employee or stockholder of GNLV or GNL that would reasonably be
expected to cause any Nevada Gaming Authority to revoke, suspend or fail to
renew their respective Gaming Licenses or take disciplinary action against GNLV
or GNL or any director, officer, employee or stockholder thereof.

 

(f)                      Each of the MGM Acquired Entities’ respective
directors, officers, employees and stockholders hold all Governmental Approvals
(including, in the case of GNLV and GNL, all Gaming Licenses and other
authorizations under Gaming Laws and Liquor Licenses) necessary to carry on its
business as now conducted, each of which is in full force and effect, and there
has occurred no default, revocation or suspension under any such Governmental
Approval.

 

(g)                   Neither GNLV nor GNL, nor any of its directors, officers,
employees or stockholders, has received any written claim, demand, notice,
complaint, court order or administrative order from any Governmental Entity
since January 1, 2000 under, or relating to, any violation or possible violation
of any Gaming Laws that did or would result in fines or penalties of $250,000 or
more.  There are no facts that, if known to the Gaming Authorities under the
Gaming Laws, would result in the revocation, limitation or suspension of a
Gaming License of GNLV or GNL, or any of its directors, officers, employees or
stockholders.

 

(h)                   None of the MGM Acquired Entities or, to the knowledge of
any of the MGM Acquired Entities, any of its directors, officers, employees or
stockholders, has made any payments to any Person in connection with its
business, which payments violate applicable Law, including without limitation
the Foreign Corrupt Practices Act.

 

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Section 3.16                                Labor Matters.  Except as set forth
in Section 3.16 of the Disclosure Schedule:

 

(a)                    Each of the MGM Acquired Entities is, and has at all
times been, in compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and is not engaged in any unfair labor
practices as defined in the NLRA or other applicable Law, except where the
failure to comply or any such labor practice would not reasonably be expected to
have a Material Adverse Effect.

 

(b)                   There is no labor strike, dispute, slowdown, stoppage or
lockout pending or threatened against or affecting any of the MGM Acquired
Entities, and since January 1, 2000 there has not been any such action.

 

(c)                    No union represents the employees of any of the MGM
Acquired Entities.

 

(d)                   None of the MGM Acquired Entities is a party to or bound
by any collective bargaining or similar agreement with any labor organization,
or work rules or practices agreed to with any labor organization or employee
association applicable to employees of any of the MGM Acquired Entities.

 

(e)                    None of the employees of the MGM Acquired Entities is
represented by any labor organization in their capacities as employees of the
MGM Acquired Entities, there are no current union organizing activities among
the employees of the MGM Acquired Entities, nor does any question concerning
representation exist concerning such employees.

 

(f)                      The MGM Parties have delivered or made available to
Purchaser a complete, accurate and current copy of all written personnel
policies, rules or procedures applicable to employees of the MGM Acquired
Entities.

 

(g)                   None of the MGM Acquired Entities has received notice of
any unfair labor practice charge or complaint against it pending or threatened
before the NLRB or any other Governmental Entity.

 

(h)                   None of the MGM Acquired Entities has received notice of
any grievance arising out of any collective bargaining agreement or other
grievance procedure against it.

 

(i)                       None of the MGM Acquired Entities has received notice
of any charge or complaint with respect to or relating to it pending before the
Equal Employment Opportunity Commission or any other Governmental Entity
responsible for the prevention of unlawful employment practices.

 

(j)                       None of the MGM Acquired Entities has received notice
of the intent of any Governmental Entity responsible for the enforcement of
labor, employment, wages and hours of work, or occupational safety and health
Laws to conduct an investigation with respect to or relating to it and no such
investigation is in progress.

 

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(k)                    None of the MGM Acquired Entities has received notice of
any complaint, lawsuit or other proceeding pending or threatened in any forum by
or on behalf of any present or former employee of such entities, any applicant
for employment or classes of the foregoing alleging breach of any express or
implied Contract of employment, any Law governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection with
the employment relationship.

 

Section 3.17                                Compliance with the WARN Act. 
Except as set forth in Section 3.17 of the Disclosure Schedule, since the
enactment of the WARN Act, none of the MGM Acquired Entities has (a) effectuated
a “plant closing” (as defined in the WARN Act) affecting any site of employment
or one or more facilities or operating units within any site of employment or
facility of any of the MGM Acquired Entities, (b) effectuated a “mass layoff”
(as defined in the WARN Act) affecting any site of employment or facility of any
of the MGM Acquired Entities or (c) been affected by any transaction which
would, or engaged in layoffs or employment terminations sufficient in number to,
trigger application of any similar Law.  None of the employees of any of the MGM
Acquired Entities or an Affiliate thereof has suffered an “employment loss” (as
defined in the WARN Act) since six months prior to the date of this Agreement.

 

Section 3.18                                Indebtedness.  Section 3.18 of the
Disclosure Schedule sets forth a complete, accurate and current list of all
outstanding Indebtedness of each of the MGM Acquired Entities as of the date of
this Agreement.  None of the MGM Acquired Entities is in default and no waiver
of default is currently in effect, in the payment of any principal or interest
on any Indebtedness of the MGM Acquired Entities and no event or condition
exists with respect to any Indebtedness of the MGM Acquired Entities that would
permit (or that with notice or lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.  Except as set
forth in Section 3.18 of the Disclosure Schedule, none of the MGM Acquired
Entities has agreed or consented to cause or permit in the future (upon
happening of a contingency or otherwise), itself or any of its equity interests,
assets or properties, whether now owned or hereafter acquired, to be subject to
an Encumbrance.

 

Section 3.19                                Insurance.  Section 3.19 of the
Disclosure Schedule sets forth a complete, accurate and current description of
all policies of property and casualty insurance, including physical damage,
general liability, workers compensation and all other forms of insurance and
similar arrangements (collectively, the “Policies”) presently in effect with
respect to the properties, assets and operations of the MGM Acquired Entities. 
Except as set forth in Section 3.19 of the Disclosure Schedule, all Policies are
in full force and effect, all premiums with respect thereto covering all periods
up to and including the Closing Date have been paid, and no notice of
cancellation or termination has been received with respect to any Policies,
except for such cancellations or terminations which would not reasonably be
expected to have a Material Adverse Effect; and no insurance or proceeds
relating to such Policies have been assigned by any of the MGM Acquired Entities
to any Person.  For each Policy, Section 3.19 of the Disclosure Schedule sets
forth: (i) the date thereof; (ii) the name of the insurer; (iii) the names of
the entities covered thereby; (iv) the premiums (or similar consideration) paid
therefor for

 

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each Contract/calendar year for the relevant Policy since January 1, 2000; and
(v) the expiration date.  Except as set forth in Section 3.19 of the Disclosure
Schedule, the Policies (v) are sufficient for compliance in all material
respects with all Contracts to which any of the MGM Acquired Entities is a party
or bound, (w) are valid, outstanding and enforceable, (x) provide sufficient
insurance coverage for the properties, assets and operations of the MGM Acquired
Entities and (y) will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated hereby.  The MGM Parties have delivered
or made available to Purchaser a list of all claims made under the Policies set
forth in Section 3.19 of the Disclosure Schedule and of all payments made to the
insured party or parties thereunder since January 1, 2000, and the information
contained in such list is complete, accurate and current.

 

Section 3.20                                Internal Controls and Procedures. 
Each of the MGM Acquired Entities maintains accurate books and records
reflecting its assets and liabilities and maintains proper and adequate internal
accounting controls that provide assurance that:  (i) transactions are executed
with management’s authorization; (ii) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets; (iii) access to its assets is permitted only in accordance with
management’s authorization; (iv) the reporting of its assets is compared with
existing assets at regular intervals; and (v) accounts, notes and other
receivables and inventory are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a current and
timely basis.

 

Section 3.21                                Nevada Takeover Statute.  As of the
date hereof and at all times from June 1, 2000 through the Closing, Seller is
not and will not be an “issuing corporation” as defined in Section 78.3788 of
the NRS.

 

Section 3.22                                Brokers.  No broker, financial
advisor or finder is entitled to any brokerage fees, commissions or finder’s
fees in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the MGM Parties or their respective
Affiliates.

 

Section 3.23                                Suppliers.  Section 3.23 of the
Disclosure Schedule sets forth a complete, accurate and current list of the
names and addresses of the twenty-five largest suppliers (indicating approximate
dollar volume for each) of products and services to each of the MGM Acquired
Entities during the twelve months ended April 30, 2003, indicating the existing
contractual arrangements, if any, for continued supply from each such firm. 
None of the MGM Acquired Entities has received any notice of, and knows of no
reasonable basis for, any development that threatens to affect adversely its
arrangements with its suppliers that would reasonably be expected to result in a
Material Adverse Effect.

 

Section 3.24                                Bank Accounts.  Section 3.24 of the
Disclosure Schedule sets forth the names and locations of all banks in which the
MGM Acquired Entities have a bank account or safe deposit box, if any, and the
names of all Persons authorized to draw thereon or to have access thereto.

 

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Section 3.25                                Solvency; Sufficient Capital.

 

(a)                    After giving effect to (i) the Distribution and (ii) the
Intercompany Account Settlement, (A) the fair saleable value of all of the
assets and properties (including goodwill) of GNLV will be greater than the
total of its Liabilities and (B) the projected cash flow from operating
activities of GNLV is sufficient to pay the probable Liability on its existing
debts as such debts become due and payable and will not result in unreasonably
small capital of GNLV.  GNLV currently pays its Liabilities as they become due
and payable in the normal course of business.

 

(b)                   After giving effect to the Intercompany Account
Settlement, (i) the fair saleable value of all of the assets and properties
(including goodwill) of GNL will be greater than the total of its Liabilities
and (ii) the projected cash flow from operating activities of GNL is sufficient
to pay the probable Liability on its existing debts as such debts become due and
payable and will not result in unreasonably small capital of GNL.  GNL currently
pays its Liabilities as they become due and payable in the normal course of
business.

 

Section 3.26                                Sufficiency of Assets and
Contracts.  Except with respect to the matters set forth in Section 3.26 of the
Disclosure Schedule and those matters set forth in Schedule 5.17 that will be
addressed in the Transitional Services Agreement, after giving effect to the
Closing, each of the MGM Acquired Entities will own, license or lease from a
Person that is not an Affiliate of Parent all Intellectual Property, Real
Property and Tangible Personal Property necessary for the conduct of its
business and operations as presently conducted.  Except with respect to the
matters set forth in Section 3.26 of the Disclosure Schedule, after giving
effect to the Closing, the contractual rights of the Purchaser under the IP
Agreements, the Material Contracts, the Leases with respect to the Leased Real
Property and the Transitional Services Agreement, will permit Purchaser to
conduct the business and operations of each of the MGM Acquired Entities as
presently conducted.

 

Section 3.27                                Receivables.  Parent has delivered
to Purchaser a complete, accurate and current copy of a list and the aging of
the accounts receivable and casino collection receivables, by customer, of the
MGM Acquired Entities that are outstanding as of May 31, 2003.  All accounts
receivable and casino collection receivables (a) arise out of bona fide sales
and deliveries of goods, performance of services or other transactions in
connection with the business and represent income earned in the Ordinary Course
of Business and (b) are not subject to material defenses, setoffs or
counterclaims to the knowledge of any of the MGM Acquired Entities, other than
normal allowances.  Unless paid prior to the Closing Date, the accounts
receivable and casino collection receivables of the MGM Acquired Entities are
expected to be collected in the Ordinary Course of Business, net of the reserves
set forth on the most recent balance sheet of each of the MGM Acquired Entities.

 

Section 3.28                                Investment Intent.  Seller
understands that the security evidencing the Seller Financing may not be sold,
transferred or otherwise disposed of, without registration under the Securities
Act or a valid exemption from registration under the

 

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Securities Act and that in the absence of an effective registration statement
covering the securities evidencing the Seller Financing or a valid exemption
from registration under the Securities Act, the security evidencing the Seller
Financing must be held indefinitely.  Seller is acquiring the security
evidencing the Seller Financing for its own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to the MGM Parties that the statements
contained in this Article IV are true and correct, except as set forth herein.

 

Section 4.1                                      Organization of Purchaser; No
Business Operations.

 

(a)                    Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.  As of the
date of this Agreement, PB Gaming is the sole stockholder of Purchaser.  As of
the date of this Agreement, Timothy Poster and Thomas Breitling are the sole
stockholders of PB Gaming.

 

(b)                   Other than in connection with the transactions
contemplated by this Agreement, since its date of incorporation, Purchaser has
not conducted any business, has not owned, leased or operated any real property,
has not entered into any Contract and has not incurred any Liabilities.

 

Section 4.2                                      Capitalization.  The authorized
capital stock of Purchaser consists solely of 10,000 shares of common stock, no
par value per share (the “Purchaser Common Stock”), of which 100 shares of
Purchaser Common Stock are issued and outstanding, all of which are owned of
record and beneficially by PB Gaming and are free and clear of all Encumbrances,
excepting only (a) Encumbrances imposed under the Financing documents and (b)
restrictions on the subsequent transfer as may be imposed under applicable Laws.

 

Section 4.3                                      Authority; No Conflict;
Required Filings and Consents.

 

(a)                    Purchaser has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions that are
contemplated by this Agreement and to perform its obligations hereunder.  The
execution and delivery of this Agreement by Purchaser and the consummation by
Purchaser of the transactions that are contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of Purchaser.  No
corporate act or proceeding on the part of Purchaser or its stockholders is
necessary to authorize, execute and deliver this Agreement and consummate the
transactions contemplated by this Agreement.  This Agreement has been duly
executed and delivered by Purchaser and, assuming this Agreement constitutes the
valid and binding obligation of the MGM Parties, constitutes the valid and
binding obligation of Purchaser, enforceable against Purchaser, in accordance
with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization,

 

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moratorium, fraudulent conveyance or other similar Laws now or hereafter in
effect relating to creditors’ rights generally and (ii) general principles of
equity (regardless of whether enforcement is considered in a proceeding at Law
or in equity).

 

(b)                   The execution and delivery of this Agreement by Purchaser
does not, and the consummation by Purchaser of the transactions to which it is a
party that are contemplated by this Agreement will not, (i) conflict with, or
result in any violation or breach of, any provision of the Articles of
Incorporation or Bylaws of Purchaser, (ii) conflict with, result in a breach of,
constitute a default (or an event which with the giving of notice or lapse of
time, or both, would become a default) under, require any notice, consent,
approval or waiver under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation or continuance of any Encumbrance on any of the assets or
properties of Purchaser pursuant to, any Contract, permit or obligation to which
Purchaser is a party or by which it or any of its assets or properties is bound,
except for the notice, consent and approval provisions of, and the creation of
Encumbrances under, the Commitment Letter and related documentation or (iii)
conflict with or violate any Law or Governmental Order applicable to Purchaser
or any of its assets or properties.

 

(c)                    Except for (i) the filing of notification reports under
the HSR Act, (ii) any Governmental Approvals related to, or arising out of,
compliance with Gaming Laws, (iii) any Governmental Approvals related to, or
arising out of, compliance with Liquor Licenses, (iv) any Governmental Approvals
as may be required under applicable state securities Laws, (v) any Governmental
Approvals as may be required under any environmental health or safety Laws
pertaining to any notification, disclosure or required approval triggered by the
Closing or the transactions contemplated by this Agreement, (vi) the matters
relating to securing and consummating the Financing, the Seller Financing, the
Equity Commitment and the Poster Financing and (vii) the satisfaction or waiver
of the closing conditions in Section 6.1 and Section 6.2 and the closing
deliveries in Section 2.3(b), no Governmental Approval, or consent, approval,
authorization or action by, notice to, filing with, or waiver from, any other
Person is required in connection with the execution, delivery and performance of
this Agreement by Purchaser and consummation by Purchaser of the transactions
contemplated by this Agreement.

 

Section 4.4                                      Brokers.  No broker, financial
advisor or finder is entitled to any brokerage fees, commissions or finder’s
fees in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Purchaser or its Affiliates, except
that Purchaser has engaged Lehman Brothers to assist in the Financing. 
Purchaser shall be responsible for the costs and expenses of its engagement of
Lehman Brothers.

 

Section 4.5                                      Financing.  Purchaser has
obtained the Commitment Letter that together with the Seller Financing, the
Equity Commitment, the Poster Financing and the Additional Capital Contribution
provide for the financing necessary to consummate the acquisition of the Shares
and to pay its portion of associated costs and expenses in connection
therewith.  As of the date of this Agreement, the Commitment Letter together
with its exhibits accurately and completely set forth the material terms of the
Financing

 

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as contemplated on the date of this Agreement.  The Commitment Letter has not
been amended, modified, withdrawn, terminated or replaced, except that it may be
amended or replaced in a manner which (a) does not adversely affect in a
material manner the ability of Purchaser to consummate the acquisition of the
Shares, (b) is not reasonably likely to cause a material delay in the
consummation of the acquisition of the Shares or (c) does not adversely affect
in a material manner the material terms of the Seller Financing.  Purchaser has
delivered or made available true, accurate and complete copies of the Commitment
Letter (and any amendment or replacement thereof, if any) to Parent and Seller.

 

Section 4.6                                      Licensing.  Purchaser has no
reason to expect that all Gaming Licenses necessary for it to own and operate
the MGM Acquired Entities immediately after Closing will not be obtained.

 

Section 4.7                                      Litigation.  There is no
action, suit or proceeding, claim, arbitration or investigation, including
indemnification matters, against Purchaser or any property or asset of
Purchaser, pending, or as to which Purchaser has received notice of assertion,
or to the knowledge of Purchaser, threatened against, Purchaser or any property
or asset of Purchaser, before any Governmental Entity or arbitration body, the
adverse determination of which would reasonably be expected to have a material
adverse effect on Purchaser or its ability to consummate the acquisition of the
Shares and there is no Governmental Order or arbitration award outstanding
against Purchaser or any property or asset of Purchaser which would reasonably
be expected to have a material adverse effect on (i) Purchaser, (ii) Purchaser’s
ability to consummate the acquisition of the Shares or (iii) the ability of the
MGM Parties to consummate the transactions contemplated by this Agreement.  To
the knowledge of Purchaser, Purchaser is not a party or subject to (including
any property or asset of Purchaser) or in default of a Governmental Order or
arbitration award.

 

Section 4.8                                      Investment Intent.  Purchaser
understands that the Shares may not be sold, transferred or otherwise disposed
of, without registration under the Securities Act or a valid exemption from
registration under the Securities Act and that in the absence of an effective
registration statement covering the Shares or a valid exemption from
registration under the Securities Act, the Shares must be held indefinitely. 
Purchaser is acquiring the Shares for its own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof.

 

ARTICLE V

 

COVENANTS

 

Section 5.1                                      Conduct of Business of the MGM
Acquired Entities.  During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Closing, subject to the limitations set forth below, each of the MGM Acquired
Entities (to the extent applicable) agrees, except to the extent Purchaser shall
consent in writing or as expressly contemplated by this Agreement, to (a) carry
on its business and operations diligently, only in the Ordinary Course of
Business, (b) pay its

 

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debts when due (or within any applicable grace periods) and to pay its Taxes
when due subject to the right of each MGM Acquired Entity to timely contest the
payment of any such debt and/or Tax, so long as done in good faith and a
reasonable position under applicable Law exists in the case of contesting the
payment of any Tax, (c) pay or perform its other obligations when due (or within
any applicable grace periods), (d) maintain the Real Property and Tangible
Personal Property in good repair, order and condition (subject to normal wear
and tear) consistent with the current needs of its business, replace in
accordance with prior practice its inoperable, worn out or obsolete assets with
assets of quality consistent with past practice and, in the event of a casualty,
loss or damage to any property prior to the Closing Date, whether or not its
property is insured, either repair or replace such damaged property to the
condition it was in immediately prior to such casualty, loss or damage to the
extent the failure to so repair or replace would reasonably be expected to have
a Material Adverse Effect and (e) use all Commercially Reasonable Efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with its customers, suppliers,
distributors, and others having business dealings with it.  Without limiting the
generality of the foregoing and except (w) as expressly contemplated by this
Agreement, (x) as set forth in Schedule 5.1 or (y) to the extent Purchaser shall
consent in writing, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Closing, none of the MGM Acquired Entities (nor any of Parent or its Affiliates
acting for or on behalf of any of the MGM Acquired Entities) shall:

 

(i)             amend (whether by merger, consolidation or otherwise) or restate
its Articles of Incorporation or Bylaws (or comparable organizational documents)
or convert into a different form of entity;

 

(ii)          issue, pledge or sell, or authorize the issuance, pledge or sale
of additional equity securities, or securities convertible into equity
securities, or any rights, warrants or options to acquire any convertible
securities or equity securities, or any other securities in respect of, in lieu
of, or in substitution for, equity securities;

 

(iii)       except for the Distribution and the Intercompany Account Settlement,
declare, set aside or pay any dividend or other distribution (whether in cash,
securities or property or any combination thereof) in respect of any equity
securities, or any of its other securities;

 

(iv)      split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem, purchase or otherwise acquire, any equity
securities;

 

(v)         increase the compensation or fringe benefits payable or to become
payable to its directors, officers, managers or employees, or pay any benefit
not required by any existing plan or arrangement (including the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units), or grant any severance or termination pay to

 

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(except pursuant to existing agreements or policies, which shall be interpreted
and implemented in a manner consistent with past practice), or enter into or
amend (except in the Ordinary Course of Business) any employment or severance
agreement with any of its directors, officers, managers or employees or
establish, adopt, enter into, or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, savings, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any of its directors, officers,
managers or current or former employees, including any Plan, except (i) to the
extent required by applicable Law, (ii) pursuant to any collective bargaining
agreements or Plan as in effect on the date of this Agreement consistent with
past practices, (iii) for salary and other benefit increases, grants, payments
or modifications in the Ordinary Course of Business to employees other than its
directors, executive officers or managers, (iv) to extend the term of any
existing employment agreements to a date not later than the day following the
Closing Date on the same terms as such previous employment agreements, (v) to
execute and deliver (and revise solely as to immaterial, non-economic changes)
the collective bargaining agreement between GNLV and Culinary Workers Union
Local 226 and Bartenders Union Local 165, Local Joint Executive Board of Las
Vegas, substantially in the draft form delivered to Purchaser’s counsel on
May 6, 2003; provided, however, that the MGM Acquired Entities shall meet and
confer with Purchaser regarding the negotiation of any collective bargaining
agreements, (vi) to the extent necessary to terminate the participation of the
MGM Acquired Entities in the Plans effective as of the date immediately
preceding the Closing Date, (vii) to the extent necessary to transfer to Seller,
effective as of the date immediately preceding the Closing Date, the Liabilities
of the MGM Acquired Entities with respect to benefits accrued under the MGM
MIRAGE Deferred Compensation Plan (the “MGM DCP”) and the MGM MIRAGE
Supplemental Executive Retirement Plan (the “MGM SERP”) with respect to
employees of the MGM Acquired Entities through such date and any right, title or
interest, whether contingent or otherwise, with respect to the MGM Acquired
Entities pursuant to the trust created by the Trust Agreement for the MGM MIRAGE
Nonqualified Plans (the “Trust Agreement”), to the extent necessary to enable
Seller to be treated as the grantor of the account maintained pursuant to
section 1.7 of the Trust Agreement for each of the MGM Acquired Entities and the
payment of such Liabilities as provided in the Trust Agreement to be deductible
by Seller to the maximum extent allowed by Law or (viii) to the extent necessary
to effectuate the provisions contained in Section 5.16(e).

 

(vi)                (A)  sell, pledge, lease, dispose of, grant, encumber, or
otherwise authorize the sale, pledge, disposition, grant or Encumbrance of any
of its properties or assets, except for (1) the Distribution, (2)(a) sales

 

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of current assets in the Ordinary Course of Business and (b) sales of equipment
and other non-current assets in the Ordinary Course of Business and (3) any
Encumbrance arising from the operation of existing Indebtedness of the MGM
Parties; provided that the amount of each such sale of equipment and other
non-current assets in the Ordinary Course of Business shall not exceed $75,000
individually, or $300,000 in the aggregate, or (B) acquire, including by merger,
consolidation, lease or acquisition of stock or assets, any corporation,
partnership, other business organization or any division thereof (or a
substantial portion of the assets thereof) or any other assets, except for (1)
acquisitions of current assets in the Ordinary Course of Business and (2)
acquisitions of equipment and other non-current assets in the Ordinary Course of
Business; provided that the amount of each such purchase of equipment and other
non-current assets in the Ordinary Course of Business shall not exceed $75,000
individually, or $300,000 in the aggregate;

 

(vii)             (A)  incur, assume or pre-pay any Indebtedness, except (1) in
the case of the Intercompany Account Settlement and (2) that it may incur or
pre-pay Indebtedness in the Ordinary Course of Business that is not to or on
behalf of an Affiliate, (B) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
Indebtedness obligations of any other Person or (C) except as contractually
required as of the date of this Agreement, make any loans, advances or capital
contributions to, or investments in, any other Person (including advances to
officers, managers or employees), except in the Ordinary Course of Business;

 

(viii)              authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of it or, in the
case of GNLV, its Subsidiaries, other than in connection with the Distribution;

 

(ix)                  make or rescind any material express or deemed election
relating to Taxes, settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or except as may be required by applicable Law, make any
change to any of its material Tax accounting policies or procedures; provided,
however, that Purchaser shall not unreasonably withhold its consent to any such
matter that would preclude any of the MGM Parties from timely filing Tax Returns
or timely paying Taxes;

 

(x)                     pay, discharge or satisfy any Liabilities, other than
the payment, discharge or satisfaction in the Ordinary Course of Business of
Liabilities that are not to or on behalf of an Affiliate, except for the
Intercompany Account Settlement;

 

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(xi)                  conduct any material reevaluation of any asset, including
any write-down of inventory or writing-off of accounts receivable, other than in
the Ordinary Course of Business or as otherwise required by GAAP;

 

(xii)               change any of its current policies or practices relating to
the extension of credit to customers or the collection from customers of
receivables from gaming operations;

 

(xiii)            fail to continue to administer claims involving or relating to
its properties, assets and operations, covered under and/or addressed by the
self-insurance arrangements represented in Section 3.19 in the Ordinary Course
of Business.  Subject to the foregoing, the claims administration performed by
Seller, its Affiliates and/or agents regarding, and with respect to, the MGM
Acquired Entities shall include, but not be limited to: (A) the provisions of
forms necessary for submission and processing of claims; (B) the receipt of
notices and review of all claims, and the creation and maintenance of files with
respect to, and administration to final disposition and payment of, each such
claim; (C) prompt acknowledgment to claimants of the receipt of notices received
from claimants in connection with any claim to the extent required by applicable
Law; (D) prompt investigation of any claim, as necessary, to determine its
validity and compensability, including verification of coverage; (E) performance
of all administrative and clerical work in connection with any claim; (F)
notification to claimants of declined claims and the reasons for such
declinations; (G) provision of the services of claim experts on matters relating
to claims; (H) compliance with claims file maintenance, record retention and
reconciliation requirements in conformity with ordinary course standards; (I)
prosecution and defense of disputes involving claims; (J) engagement and
direction, as necessary, of outside counsel, consultants or other professionals
in connection with the processing and handling of claims; (K) the establishment
of adequate reserves in respect of claims; and (L) generally, all such other
acts and things reasonably necessary in the administration and settlement of
claims regarding or relating to the MGM Acquired Entities, including allowing
the Purchaser access to files and information relating to the information set
forth in this Section 5.1(xiii);

 

(xiv)           terminate, cancel or amend, or cause the termination,
cancellation or amendment of, any insurance coverage (and any surety bonds,
letters of credit, cash collateral or other deposits related thereto required to
be maintained with respect to such coverage) maintained by any of the MGM
Acquired Entities that is not replaced by a comparable insurance coverage, other
than in the Ordinary Course of Business;

 

(xv)              make any material change with respect to financial accounting
methods, policies or procedures, unless required by GAAP or

 

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other than reasonable and usual actions in the Ordinary Course of Business;

 

(xvi)           modify or amend in any material respect or terminate any of the
Material Contracts or waive, release or assign any material rights or claims
thereunder;

 

(xvii)        enter into any Contract outside of the Ordinary Course of Business
that could exceed $100,000 in payments in any fiscal year or enter into any
Contract with a term greater than one year that is not terminable prior to the
Closing Date without Liability to it;

 

(xviii)     take, or agree to commit to take, any action that would make any
representation or warranty of it contained herein inaccurate in any material
respect at, or as of any time prior to, the Closing so as to cause the
conditions to Purchaser consummating the transactions contemplated herein not to
be satisfied;

 

(xix)             engage in any transaction with, or enter into any Contract
with any Affiliate that involves the transfer of consideration that (A) has
terms less favorable than it could receive from a non-Affiliate or (B) has or
would have a material adverse financial impact on it, other than, in each case
pursuant to the Distribution, the Intercompany Account Settlement or the
Affiliate Contracts existing on the date of this Agreement (without giving
effect to any amendments or restatements);

 

(xx)                close, shut down, or otherwise eliminate any of its hotels,
casinos and related properties, except for such closures, shutdowns or
eliminations that are (A) required by Governmental Order or otherwise required
by Law or (B) due to acts of God or other force majeure events; or

 

(xxi)             enter into a Contract to do any of the foregoing, or to
authorize, announce or threaten an intention to do any of the foregoing.

 

Section 5.2                                      Cooperation; Notice; Cure. 
Subject to compliance with applicable Law (including antitrust Laws and Gaming
Laws), each of Seller and Purchaser shall confer on a regular and frequent basis
with one or more representatives of the other Person to discuss the general
status of the business and ongoing operations of the MGM Acquired Entities. 
Each of the Parties shall promptly notify the other(s) in writing of, and shall
use its Commercially Reasonable Efforts to cure before the Closing Date, any
event, transaction or circumstance, as soon as practical after it becomes known
to such Party, that causes or may reasonably be expected to cause any covenant,
obligation or agreement under this Agreement to be violated or remain unfilled
in any material respect or that renders or shall render untrue in any material
respect any representation or warranty contained in this Agreement.  Nothing
contained in this Section 5.2 above shall prevent any of the Parties from giving
such notice, using such efforts or taking any action

 

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to cure or curing any such event, transaction or circumstance.  No written
notice given pursuant to this Section 5.2 shall have any effect on the
representations, warranties, covenants, obligations or agreements contained in
this Agreement for purposes of determining satisfaction of any condition
contained herein.

 

Section 5.3                                      Access to Information.

 

(a)                    Upon reasonable notice, subject to applicable Law,
including antitrust Laws and Gaming Laws, the MGM Parties shall afford to the
directors, officers, employees, accountants, counsel, agents, auditors and other
representatives of Purchaser and its Financing source(s), reasonable access,
during normal business hours to the MGM Parties’ personnel and to the
properties, books, statements, accounts, Contracts and records relating to the
MGM Acquired Entities, as well as to the MGM Parties’ internal auditors and
outside auditors in order to allow for the audit of financial statements of the
MGM Acquired Entities necessary in connection with the Financing.  Each of the
MGM Acquired Entities shall permit Purchaser’s senior officers to meet with its
respective personnel who are responsible for its financial statements, its
internal controls, and its disclosure controls and procedures to discuss such
matters as Purchaser may deem reasonably necessary or appropriate for Purchaser
to satisfy its obligations (if any) under the SOXA post-Closing Date.

 

(b)                   Each of the MGM Acquired Entities shall deliver to
Purchaser promptly after they become available and in any case within fifteen
days after the end of each calendar month, an unaudited balance sheet of each of
GNLV, GNL and GNELLC as of the end of such month and an unaudited statement of
income of GNLV, GNL and GNELLC for the one month period then ending and the
period since January 1, 2003.  Such balance sheets and statements of income
shall be in the form currently prepared for management’s use.  All such balance
sheets and statements of income shall be prepared in accordance with the books
of account and other financial records of the MGM Acquired Entities in good
faith by the management of the MGM Acquired Entities based upon reasonable
assumptions and consistent with past practice.

 

(c)                    Each of GNLV and GNL shall deliver to Purchaser promptly
after they become available and in any case within five days after the end of
each week, separate reports setting forth the gross gaming win of each of GNLV
and GNL during such week.  Such reports shall be prepared in good faith and
derived from the books and records of GNLV or GNL.

 

(d)                   Each of the MGM Acquired Entities shall deliver to
Purchaser monthly reports setting forth all hirings, terminations and
resignations of employees, the date of termination or resignation and the stated
reason or cause (if known) for such termination or resignation.

 

Section 5.4                                      No Acquisition Negotiation. 
From and after the date of this Agreement, neither Parent nor its Affiliates
shall, directly or indirectly, through any director, officer, employee,
stockholder, financial advisor, representative or agent of such Person (i)
solicit, initiate, aid or encourage (including by way of furnishing information

 

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or advice) or take any other action to facilitate any inquiries or proposals
that constitute, or could reasonably be expected to lead to, a proposal or offer
for a merger, consolidation, business combination, sale of assets or properties
(other than as permitted in Section 5.1(vi)(A)), sale of shares of capital stock
(including by way of a tender or exchange offer) or similar transaction
involving the MGM Acquired Entities, other than the transactions contemplated by
this Agreement (an “Acquisition Proposal”), (ii) engage in negotiations or
discussions with any Person (or group of Persons) other than Purchaser or its
advisors (a “Third Party”) concerning, or provide any non-public information or
advice to any Person relating to, any Acquisition Proposal, (iii) continue any
prior discussions or negotiations with any Third Party concerning any
Acquisition Proposal or (iv) accept, or enter into any Contract (whether or not
contingent upon consummation of the transactions contemplated by this Agreement)
concerning, any Acquisition Proposal with any Third Party or consummate any
Acquisition Proposal other than as contemplated by this Agreement.  In the event
that Parent or any of its Affiliates receives or has knowledge of an Acquisition
Proposal, the Person receiving or who has knowledge of such Acquisition Proposal
shall promptly notify Purchaser of such proposal and provide a copy thereof (if
in written or electronic form) or, if in oral form, a written summary of the
material terms and conditions.  Notwithstanding the foregoing, the Board of
Directors of Parent shall not be precluded from engaging in any of the foregoing
with respect to a proposal or offer relating to Parent and its Subsidiaries as a
whole; provided that to the extent any Contract was entered into in respect of
the foregoing, such Contract shall contain a specific reference to the
enforceability of the terms of this Agreement and such Contract and any
transaction resulting therefrom shall be subject to the terms of this Agreement.

 

Section 5.5                                      Confidentiality of
Information.  Except as necessary or appropriate to comply with its respective
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement, each of Parent and Purchaser shall comply with, and shall
cause their respective directors, officers, employees, agents and
representatives to comply with the provisions of the Confidentiality Agreement. 
Parent agrees that the Confidentiality Agreement and the rights and obligations
of Timothy Poster thereunder are hereby assigned effective as of the date of
this Agreement to Purchaser; provided, however, Timothy Poster shall remain
bound by the terms of the Confidentiality Agreement.

 

Section 5.6                                      Intercompany Account
Settlement.  All intercompany accounts or amounts payable (or accrued) by Parent
or any of its Affiliates (other than the MGM Acquired Entities), on the one
hand, to any of the MGM Acquired Entities, on the other hand, shall, immediately
prior to the Closing, be netted against any intercompany accounts or amounts
payable (or accrued), including the Promissory Note, dated December 31, 1993
from GNLV, as “Maker,” to Seller, as “Holder” (or any other instrument
evidencing such Indebtedness), by any of the MGM Acquired Entities, on the one
hand, to Parent or any of its Affiliates (other than the MGM Acquired Entities),
on the other hand, and the balance, if any, shall be contributed by Parent to
the capital of the applicable MGM Acquired Entity (collectively, the
“Intercompany Account Settlement”).  After giving effect to the consummation of
the Intercompany Account Settlement, none of the MGM Acquired Entities shall owe
or be liable for the satisfaction of any

 

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intercompany accounts or amounts payable (or accrued) to any of the MGM Parties,
except those between or among the MGM Acquired Entities, if any.

 

Section 5.7                                      Governmental Approvals.

 

(a)                    The Parties shall cooperate with each other and use their
Commercially Reasonable Efforts to (and, with respect to the Gaming Laws, and
antitrust Laws, if applicable, shall use their Commercially Reasonable Efforts
to cause their respective directors and officers to) promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all Governmental Approvals, and to
comply (and, with respect to the Gaming Laws, to cause their respective
directors and officers to comply) with the terms and conditions of all such
Governmental Approvals.  The Parties and their respective directors and officers
shall use their Commercially Reasonable Efforts to file within twenty days after
the date of this Agreement all required initial applications and documents in
connection with obtaining the Governmental Approvals (including without
limitation under applicable Gaming Laws) and shall act reasonably and promptly
thereafter in responding to additional requests and comments in connection
therewith.  The Parties acknowledge that this Agreement and the transactions
contemplated hereby are subject to the review and approval of the applicable
Gaming Authorities.  Each of Seller and Purchaser shall have the right to
consult with the other on, in each case subject to applicable Laws relating to
the exchange of information (including antitrust Laws and Gaming Laws), all the
information relating to the other Person and any of its Affiliates that appears
in any filing made with, or written materials submitted to, any third Person or
Governmental Entity in connection with the transactions contemplated by this
Agreement.  Without limiting the foregoing, each of Seller and Purchaser (the
“Notifying Party”) shall notify the other promptly of the receipt of comments or
requests from Governmental Entities relating to Governmental Approvals, and
shall supply the other with copies of all correspondence between the Notifying
Party or any of its representatives and Governmental Entities with respect to
Governmental Approvals; provided, however, that none of the MGM Parties, on the
one hand, and Purchaser, on the other hand, shall be required to supply the
other with copies of communications relating to the personal applications of
individual applicants except for evidence of filing.

 

(b)                   Each of Seller and Purchaser shall promptly notify the
other Party upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement that causes such Person to reasonably believe
that there is a reasonable likelihood that such consent or approval from such
Governmental Entity will not be obtained or that the receipt of any such consent
or approval will be materially delayed.

 

(c)                    Each of Parent and Seller on the one hand, and Purchaser,
on the other hand, shall use their/its respective Commercially Reasonable
Efforts to take, or cause to be taken, all actions reasonably necessary to (i)
defend any lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated by this Agreement and (ii) prevent
the entry by any Governmental Entity of any Governmental Order challenging this
Agreement or the consummation of the

 

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transactions contemplated by this Agreement, appealing as promptly as possible
any such Governmental Order and having any such Governmental Order vacated or
reversed.

 

(d)                   Notwithstanding the foregoing or any other provision of
this Agreement, Purchaser shall have no obligation or affirmative duty under
this Section 5.7 to dispose of any of its assets or properties, disassociate
itself from any Person, or agree to do any of the foregoing at any time in the
future, in connection with seeking any Governmental Approval.

 

Section 5.8                                      Consents.  Each of the MGM
Parties shall use its Commercially Reasonable Efforts to, at its expense as
provided in Section 10.1, obtain prior to the Closing all consents, other than
Governmental Approvals that are governed by Section 5.7, necessary to the
consummation of the transactions contemplated by this Agreement, including such
other non-governmental consents as Purchaser or its counsel shall reasonably
determine to be necessary, including any required consents to the assignment of
the Material Contracts.  All such consents shall be in writing, and executed
counterparts thereof shall be delivered to Purchaser and its counsel promptly
after receipt thereof by any of the MGM Parties, but in no event later than
immediately prior to the Closing.

 

Section 5.9                                      Performance.  Each of the
Parties shall perform all acts to be performed by it pursuant to this Agreement
and shall refrain from taking or omitting to take any action that would violate
or cause to remain unfilled its covenants, obligations or agreements or breach
its representations and warranties hereunder or render them inaccurate in any
material respect as of the date of this Agreement or the Closing Date or that in
any way would prevent or materially adversely affect the consummation of the
transactions contemplated by this Agreement.  Each of the Parties shall use its
Commercially Reasonable Efforts to satisfy or cause to be satisfied all of the
conditions to the obligations of the other Parties/Party set forth in
Sections 6.2 and 6.3, respectively.

 

Section 5.10                                Publicity.  Parent and Purchaser
shall agree on the form and content of any initial press releases regarding the
transactions contemplated by this Agreement and thereafter shall consult with
each other before issuing, provide each other the opportunity to review and
comment upon and use all Commercially Reasonable Efforts to agree upon, any
press release or other public statement with respect to any of the transactions
contemplated hereby and shall not issue directly or indirectly any such press
release or make directly or indirectly any such public statement prior to such
consultation and prior to considering in good faith any such comments, except
(a) as may be required by applicable Law or (b) in connection with (i) Parent
complying with its obligations under the rules of the New York Stock Exchange,
(ii) Purchaser pursuing the Financing or (iii) the Parties complying with their
respective obligations under this Agreement.  Nothing in this Section 5.10 shall
be deemed to limit, impede or prohibit Purchaser from exercising its rights
under or receiving the benefits of Section 5.16.

 

Section 5.11                                Stockholder Litigation.  Parent
shall promptly notify Purchaser of and give Purchaser the opportunity to
participate, at Purchaser’s sole cost and expense, in the defense of any
stockholder litigation against Parent or its Affiliates and their

 

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respective directors, officers, employees, agents and representatives relating
to the transactions contemplated by this Agreement.

 

Section 5.12                                Amendment of Indemnification
Contracts.  Parent shall, and shall cause its Affiliates to, amend and restate
any Contracts for the indemnification or advancement of expenses of its
respective directors, officers, managers and employees to provide a full written
release and exculpation to, and for the benefit of, the MGM Acquired Entities
and Purchaser from any Liability or Loss in connection with, arising out of, or
relating to any act or failure to act or state of facts existing prior to the
Closing, or any restriction or performance thereunder (collectively, the
“Amendment of Indemnification Contracts”).

 

Section 5.13                                Transfer of Slot Machine Ownership. 
Except as set forth in Schedule 5.13, Parent shall cause the ownership of all
slot machines that are leased by GNMC to each of GNLV and GNL as of the date of
this Agreement to be transferred to GNLV and GNL by a duly executed bill of sale
(the “Slot Machine Transfer”), without Liability or Loss to the MGM Acquired
Entities and Purchaser, including as to Liabilities or Losses remaining under
any Contracts for the lease of the machines to GNLV and GNL (which Contracts
shall terminate and be of no further force and effect after the Closing), such
that each of GNLV and GNL shall have good and valid title to such slot machines
in order to allow each of GNLV and GNL to conduct, and continue to conduct, its
business as and where currently conducted.

 

Section 5.14                                Intellectual Property – Pre-Closing.

 

(a)                    Except as set forth in Section 3.10(a)(v), Section
3.10(a)(vi) or Section 3.10(f) of the Disclosure Schedule, none of Parent and
its Affiliates shall, directly or indirectly, do any act or omit to do any act
whereby any MGM Acquired Entities Owned Intellectual Property may lapse, become
abandoned, dedicated to the public, or unenforceable.

 

(b)                   Except as set forth in Section 3.10(a)(v) or Section
3.10(f) of the Disclosure Schedule, none of Parent and its Affiliates shall
cease the Use of any of the Trademarks included in the MGM Acquired Entities
Owned Intellectual Property or fail to maintain the level of the quality of
products sold and services rendered under any such Trademark at a level at least
substantially consistent with the quality of such products and services as of
the date of this Agreement and Parent and its Affiliates shall take or cause to
be taken all steps necessary or appropriate to insure that licensees of such
Trademarks Use such consistent standards of quality during the period between
the date of this Agreement and the Closing Date.

 

(c)                    Immediately after the Closing, Parent and its Affiliates
shall make appropriate filings with all applicable Governmental Entities and any
other applicable registries to change the legal name and any tradename of Parent
and its Affiliates (other than the MGM Acquired Entities) to names that do not
include “Golden Nugget” or any Trademarks included in the MGM Acquired Entities
Owned Intellectual Property set forth in Section 3.10(a) of the Disclosure
Schedule or anything confusingly similar

 

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thereto.  Parent shall, and shall cause its Affiliates to, sign such reasonable
consents and other documents that may be necessary to effect the foregoing.

 

(d)                   At the Closing, to the extent that any MGM Acquired
Entities Owned Intellectual Property, IP Agreements or IP Enforcement Documents
Used in the business of the MGM Acquired Entities are owned or licensed by
Parent or any of its Affiliates (other than the MGM Acquired Entities), all of
Parent’s and its Affiliates’ rights in such Intellectual Property, IP Agreements
and IP Enforcement Documents shall be assigned to the MGM Acquired Entities,
including all Lists to the extent used solely in the business of the MGM
Acquired Entities; provided that Parent and Seller may elect, with respect to
any Software owned by Parent or Seller or any of their Subsidiaries (other than
the MGM Acquired Entities) which is part of the property to be assigned, to
irrevocably and perpetually license (without cost) rather than assign such
Software to Purchaser or the MGM Acquired Entities.

 

(e)                    To the extent any Lists are used, but not exclusively
used, in the business of the MGM Acquired Entities, at the Closing, such Lists
shall hereby be irrevocably and perpetually licensed (without cost) to the MGM
Acquired Entities.

 

Section 5.15                                Intellectual Property –
Post-Closing.

 

(a)                    From and after Closing, Parent and its Affiliates shall
not register or authorize others to Use or register MGM Acquired Entities Owned
Intellectual Property and any other Intellectual Property substantially or
confusingly similar thereto and shall not challenge Purchaser’s or any of its
Affiliates’ right to Use or register such Intellectual Property.  Within thirty
days after the Closing, Parent and its Affiliates shall cease Use of MGM
Acquired Entities Owned Intellectual Property or any other Intellectual Property
substantially or confusingly similar thereto.  Notwithstanding the foregoing,
(i) the Parties agree that for a period of up to one hundred eighty days from
the Closing Date, Parent and its Affiliates shall be entitled to continue to use
the MGM Acquired Entities’ Trademarks to the extent that any such MGM Acquired
Entities’ Trademarks exist or are contained as of the Closing Date on any
promotional or advertising materials used in the business of Parent and its
Affiliates; provided, however, that Parent and its Affiliates shall use their
respective Commercially Reasonable Efforts to cease the use of the MGM Acquired
Entities’ Trademarks on the soonest possible date and (ii) this Section 5.15(a)
shall neither diminish nor broaden Parent’s and its Affiliates’ “fair use”
rights under 17 U.S.C. § 107.

 

(b)                   Within thirty days after the Closing Date, Seller shall
deliver or cause to be delivered to Purchaser evidence of the filing of the
releases described in Section 2.3(a)(xvii) with the United States Patent and
Trademark Office and the United States Copyright Office with respect to
Intellectual Property.

 

(c)                    Following the Closing, Purchaser shall be responsible for
all updates, maintenance fees and related upgrades on all assigned license
agreements for third party Software.

 

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(d)                   Within thirty days after the Closing, the MGM Acquired
Entities shall cease Use of Parent’s and its Affiliates’ Trademarks (excluding
the MGM Acquired Entities’ Trademarks) or any other Trademarks substantially or
confusingly similar thereto.  Notwithstanding the foregoing, (i) the Parties
agree that for a period of up to one hundred eighty days from the Closing Date,
the MGM Acquired Entities shall be entitled to continue to use the Parent’s and
its Affiliates’ Trademarks to the extent that any such Trademarks exist or are
contained as of the Closing Date on any promotional or advertising materials
used in the business of the MGM Acquired Entities; provided, however, that the
MGM Acquired Entities shall use their Commercially Reasonable Efforts to cease
the use of the Parent’s and its Affiliates’ Trademarks on the soonest possible
date and (ii) this Section 5.15(d) shall neither diminish nor broaden the MGM
Acquired Entities’ “fair use” rights under 17 U.S.C. § 107.

 

Section 5.16                                Employees.

 

(a)                    Upon execution of this Agreement, Purchaser shall be
permitted to hold joint meetings with all employees of each of the MGM Acquired
Entities and, to the extent applicable, any bargaining representatives of such
employees, provide preliminary information relating to the transactions
contemplated by this Agreement, and thereafter Purchaser shall be entitled to
conduct one-on-one meetings with all employees of each of the MGM Acquired
Entities at such times as Purchaser shall reasonably request and at space
provided by each of the MGM Acquired Entities at the Real Property or at such
other location as shall be reasonably acceptable to Purchaser.  In connection
therewith, each of the MGM Acquired Entities shall provide Purchaser with access
to complete personnel files of all employees of each of the MGM Acquired
Entities.  From and after September 1, 2003, each of the MGM Acquired Entities
shall also provide Purchaser with space at the Real Property on an as needed
basis and at no cost to Purchaser in order for Purchaser to handle employment
and transition related matters.  Purchaser in exercising its rights under this
Section 5.16 shall comply with applicable Gaming Laws and with Parent’s
non-solicitation policies.

 

(b)                   Except as set forth in any collective bargaining agreement
or as otherwise prohibited by applicable Law, effective as of the date
immediately preceding the Closing Date, the participation of the MGM Acquired
Entities in all Plans sponsored and maintained by the Parent and its ERISA
Affiliates shall terminate.

 

(c)                    Parent shall use its Commercially Reasonable Efforts,
including providing all necessary information and taking all reasonably
necessary actions, to assist Purchaser in creating and establishing employee
benefit plans, programs and arrangements for the MGM Acquired Entities prior to
the Closing Date.

 

(d)                   Notwithstanding any provision of this Agreement to the
contrary, nothing in this Agreement shall give any employee of any of the MGM
Acquired Entities the right to continuing employment or alter the at-will
employment status of any such employee.

 

(e)                    Solely for purposes of determining when the payment of
benefits under the MGM DCP and MGM SERP commences with respect to any individual
who is an

 

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employee of the MGM Acquired Entities as of the date immediately preceding the
Closing Date and who is a participant in the MGM DCP or the MGM SERP as of such
date, (i) termination of the MGM Acquired Entities as a participating employer
in the MGM DCP and MGM SERP shall not result in the commencement of payment of
such benefits and (ii) continued employment with the MGM Acquired Entities or
any successor thereto after the Closing Date shall be treated as continued
employment with a participating employer.

 

Section 5.17                                Transitional Services.  Recognizing
the existing operational interdependencies among Parent and its Affiliates
(other than the MGM Acquired Entities), on the one hand, and the MGM Acquired
Entities, on the other hand, the Parties agree that Parent and one or more of
its Affiliates and Purchaser, GNLV and GNL shall enter into prior to the Closing
Date a written agreement (the “Transitional Services Agreement”) evidencing the
arrangements set forth in Schedule 5.17.  Seller and its Affiliates have
informed Purchaser that the licensing, servicing, or other provision of
gaming-related software and services under the Transitional Services Agreement
may require the approval of the Gaming Authorities.  Parent and its Affiliates
agree to use Commercially Reasonable Efforts to obtain any such approvals prior
to entering into the Transitional Services Agreement.  Accordingly,
notwithstanding anything to the contrary in the Transitional Services Agreement,
Parent and its Affiliates shall not provide any service to Purchaser, GNLV
and/or GNL, as the case may be, which would be in violation of the applicable
Law.  The Parties agree that the fees charged by Parent and its Affiliates to,
and paid by, Purchaser, GNLV and/or GNL, as the case may be, for services and
use of equipment pursuant to the Transitional Services Agreement shall be
consistent with past practice and shall include costs of Parent and its
Affiliates personnel providing such services and that the quality and
performance level of services provided pursuant to the Transitional Services
Agreement shall be consistent with past practice.

 

Section 5.18                                Termination of Affiliate Contracts. 
Purchaser shall, and shall cause its Affiliates (other than the MGM Acquired
Entities), on the one hand, and the MGM Acquired Entities, on the other hand, to
terminate the Affiliate Contracts with effect as of the Closing (the
“Termination of Affiliate Contracts”).  The Termination of Affiliate Contracts
shall be without Liability or Loss to the MGM Acquired Entities, including as to
Liabilities or Losses remaining under any Affiliate Contracts.  Parent and
Seller shall provide a full written release and exculpation to, and for the
benefit of, the MGM Acquired Entities and Purchaser from any Liability, Loss,
restriction or performance in connection with, arising out of, or relating to,
the Termination of Affiliate Contracts.  Notwithstanding the foregoing, the
termination of the Affiliate Contracts shall not affect the performance of the
parties to the Transitional Services Agreement.

 

Section 5.19                                Phase I Environmental Audit. 
Purchaser and/or its appointed agents shall be entitled to perform at
Purchaser’s sole cost and expense, a Phase I environmental audit of all the Real
Property (the “Phase I Audit”); provided that the Phase I Audit shall not
include any invasive testing or soils boring.  Purchaser agrees to undertake the
Phase I Audit within thirty days of the date of this Agreement and to complete
the Phase I Audit within forty-five days of the date of this Agreement.  Each of
the MGM Acquired Entities shall provide Purchaser and its appointed agents
access to

 

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the Real Property as needed to conduct the Phase I Audit.  Each of the MGM
Acquired Entities shall fully cooperate with all reasonable requests made by
Purchaser and its appointed agents in connection with the Phase I Audit. 
Purchaser hereby indemnifies and holds the MGM Parties harmless from and against
any and all Liabilities and Losses arising from or otherwise relating to the
entry of the personnel performing the Phase I Audit on the Real Property, except
if the Liability or Loss results from the gross negligence of the MGM Parties.

 

Section 5.20                                Termination Fee.  In the event that
(a) each of the closing conditions set forth in each of Section 6.1 and Section
6.3 have been satisfied and (b) the closing conditions set forth in Section 6.2
have been satisfied or waived by the MGM Parties or in the case of (a) and (b)
would have been satisfied but for Purchaser failing to use its Commercially
Reasonable Efforts to perform its obligations under this Agreement in accordance
with the terms and conditions of this Agreement, the MGM Parties shall have the
right to give written notice to Purchaser of their intention to terminate this
Agreement if Purchaser fails to close (or be prepared to close) the transactions
contemplated by this Agreement on or prior to the fifth Business Day following
receipt of such written notice and as promptly as practicable following
termination (which shall occur automatically on such fifth Business Day unless
agreed to otherwise by the Parties in writing) Purchaser shall pay, or cause to
be paid, in same day funds to Seller $10,000,000 (the “Termination Fee”).  Only
one Termination Fee shall be payable to Seller regardless of the circumstances. 
In the event Seller receives payment of the Termination Fee, Seller, and Seller
on behalf of its Affiliates, agrees to forego and not to pursue (or aid any
other Person in pursuing) or assign any allegation, claim, right or remedy,
whether legal or equitable, including specific performance, against, directly or
indirectly, Purchaser or any of its Affiliates, Timothy Poster, Thomas Breitling
or any of their respective agents, representatives and counsel for Purchaser’s
failure to consummate the transactions contemplated by this Agreement.  The
obligation of Purchaser to pay the Termination Fee pursuant to this Section 5.20
shall be guaranteed by Timothy Poster and Thomas Breitling pursuant to the
Guaranty.  Subject to the occurrence of the matters set forth in subsection (a)
and subsection (b) of the first sentence of this Section 5.20, the Parties
acknowledge and agree that (i) the MGM Parties would sustain substantial damages
in the event the sale of the Shares to Purchaser as contemplated by this
Agreement is not consummated as a result of Purchaser’s failure to close and
(ii) Seller’s actual damages in the event the sale of the Shares to Purchaser as
contemplated by this Agreement is not consummated as a result of Purchaser’s
failure to close would be difficult or impractical to determine, and the
Termination Fee represents a reasonable estimate of the harm likely to be
suffered by Seller in the event the sale of the Shares to Purchaser as
contemplated by this Agreement is not consummated as a result of Purchaser’s
failure to close.

 

Section 5.21                                Capital Expenditures.  Each of GNLV
and GNL shall (a) undertake and complete any and all capital expenditures
required to meet an emergency (it being understood and agreed that Seller shall
promptly notify Purchaser of any such emergency and the emergency expenditures
and other actions taken in response thereto), and (b) undertake and continue in
the normal course of business and consistent with past practice any and all
capital expenditures necessary or appropriate to maintain, renovate and/or

 

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improve its respective assets and properties; provided that Purchaser
acknowledges that the ticket-in/ticket-out slot machines set forth in Schedule
5.13 shall not be transferred to the MGM Acquired Entities.

 

Section 5.22                                Releases.  Parent shall, and shall
cause its Affiliates to, negotiate and enter into one or more Contracts and/or
commence one or more consent solicitations, if required, to release all
Encumbrances on the Shares, the GNELLC Interest, the FSELLC Interest and the
assets and properties of the MGM Acquired Entities, such that the Shares, the
GNELLC Interest, the FSELLC Interest and the assets and properties of the MGM
Acquired Entities shall be delivered at Closing free and clear of all
Encumbrances, except (a) the Shares, the GNELLC Interest and the FSELLC Interest
shall be subject to restrictions on subsequent transfer as may be imposed under
applicable Laws and, in the case of the FSELLC Interest, the FSELLC Operating
Agreement and (b) the Owned Real Property may be subject to the Permitted
Exceptions (collectively, the “Release of Encumbrances”).  Parent shall, and
shall cause its Affiliates, to negotiate and enter into one or more Contracts
and/or commence one or more consent solicitations, if required, to release each
of the MGM Acquired Entities from all guaranty, credit enhancement, credit
support, keep-well obligations or similar arrangements to or for the benefit of,
or on behalf of, Parent and/or its Affiliates (other than the MGM Acquired
Entities) (collectively, the “Release of Guaranties”).  Parent and Seller
acknowledge and agree that all Liability or Loss associated with the Release of
Encumbrances and the Release of Guaranties shall be borne exclusively by Parent
and Seller.  Parent and Seller shall provide a full written release and
exculpation to, and for the benefit of, the MGM Acquired Entities and Purchaser
from any Liability, Loss, restriction or performance in connection with, arising
out of, or relating to, the Release of Encumbrances and the Release of
Guaranties.

 

Section 5.23                                Distribution.  Seller and GNLV shall
undertake and complete the Distribution.

 

Section 5.24                                Non-Solicitation of Unique
Customers.  For purposes of this Section 5.24, the term “Unique Customers” means
customers who, as of the date hereof, are listed on the Lists of GNLV and/or GNL
and who are not, as of the date hereof, listed on the Lists of any other
operating property of Parent or its Subsidiaries.  From and after the date
hereof until the second anniversary of the Closing Date, neither Parent nor any
of its Affiliates (other than GNLV and GNL) shall intentionally engage in any
direct or targeted solicitation of any of the Unique Customers; provided,
however, that the foregoing shall not prohibit Parent or any of its Affiliates
from engaging in any general advertising or other indirect method of soliciting
customers that does not target any Unique Customers or which is otherwise not
intended to circumvent the foregoing provision.  On the Closing Date, Seller
shall deliver to Purchaser a list of the Unique Customers as of the Closing
Date.

 

Section 5.25                                No Solicitation.  From and after the
date of this Agreement until the second anniversary of the Closing Date, neither
Parent nor any of its Affiliates shall (a) solicit or induce, or attempt to
solicit or induce, any employee of, or in the case of an independent contractor
exclusive to, the MGM Acquired Entities or Purchaser or any of

 

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Purchaser’s Affiliates engaged in the business or the casino and gaming
activities and operations of GNLV or GNL to leave the MGM Acquired Entities or
Purchaser or any of Purchaser’s Affiliates engaged in the business or the casino
and gaming activities and operations of GNLV or GNL for any reason whatsoever or
(b) hire, solicit to hire, or in any other manner interfere with the business
relationship between the MGM Acquired Entities or Purchaser or any of
Purchaser’s Affiliates and any employee or independent contractor of the MGM
Acquired Entities set forth in Schedule 5.25.  If any employee listed on
Schedule 5.25, (i) is not offered employment by Purchaser or one of Purchaser’s
Affiliates on financial terms and conditions comparable to the financial terms
and conditions of such employee’s employment with Parent or Parent’s
Subsidiaries, as may be applicable, (ii) is terminated by Purchaser or
Purchaser’s Affiliates with cause under the terms of such employee’s employment
agreement (or, if no employment agreement has been executed, under the
definition of cause in the last draft employment agreement offered to such
employee by Purchaser or Purchaser’s Affiliate), (iii) terminates his or her
employment with Purchaser or Purchaser’s Affiliates for good reason under the
terms of such employee’s employment agreement (or, if no employment agreement
has been executed, under the definition of good reason in the last draft
employment agreement offered to such employee by Purchaser or Purchaser’s
Affiliate), or (iv) terminates his or her employment with Purchaser or
Purchaser’s Affiliates based upon the mutual consent of such employee and
Purchaser or Purchaser’s Affiliates, then the provisions of this Section 5.25
will not apply with respect to that employee after a period of six months
following such employee’s termination of employment with Purchaser or
Purchaser’s Affiliate, as applicable, nor shall such employee receive
compensation or payments from Parent or any of its Affiliates during or with
respect to such six-month period.  Notwithstanding anything to the contrary,
Parent and its Affiliates may conduct general searches for employees or
independent contractors by use of advertisements or the media that are not
directly targeted at the employees or independent contractors of the MGM
Acquired Entities, Purchaser or any of Purchaser’s Affiliates engaged in the
business or the casino and gaming activities and operations of GNLV or GNL.

 

Section 5.26                                Transfer of Certain Assets Owned by
Seller.  Seller shall cause the ownership of the gold nugget referred to on its
books as the “Hand of Faith” and the gold nugget referred to on its books as
“Robbin’s Nugget” or in the case of theft or destruction, the insurance proceeds
thereof (the “Nuggets”) to be transferred to GNLV, as a contribution to capital,
and evidenced by a duly executed bill of sale (the “Nuggets Transfer”), without
Liability or Loss to the MGM Acquired Entities and Purchaser, such that GNLV
shall have good and valid title to the Nuggets free and clear of all
Encumbrances.  Seller shall cause the ownership of the Leroy Neiman mural
currently displayed in the lobby of GNLV or in the case of theft or destruction,
the insurance proceeds thereof (the “Artwork”) to be transferred to GNLV, as a
contribution to capital, and evidenced by a duly executed bill of sale (the
“Artwork Transfer”), without Liability or Loss to the MGM Acquired Entities and
Purchaser, such that GNLV shall have good and valid title to the Artwork free
and clear of all Encumbrances.  Seller shall cause THE MIRAGE CASINO-HOTEL to
transfer ownership of the Government Treasury Strips to GNLV, as a contribution
to capital, and evidenced by a duly executed contribution agreement (the
“Government Treasury Strips Transfer”), without Liability or Loss to the

 

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MGM Acquired Entities and Purchaser, such that GNLV shall have good and valid
title to the Government Treasury Strips free and clear of all Encumbrances.

 

Section 5.27                                Leased Real Property.  Seller shall
use its Commercially Reasonable Efforts to, at its expense as provided in
Section 10.1, obtain prior to the Closing the consent of each of the landlords
of the Leased Real Property to (i) the consummation of the transactions
contemplated by this Agreement and (ii) Purchaser encumbering the leasehold
interest of GNLV in the Leased Real Property.  All such consents shall be in
writing, and executed counterparts thereof shall be delivered to Purchaser and
its counsel promptly after receipt thereof by any of the MGM Parties, but in no
event later than immediately prior to the Closing.

 

Section 5.28                                Further Actions.  In case at any
time after the date of this Agreement and from time to time any further action
is necessary to carry out the purposes of this Agreement and to vest Purchaser
with valid and legal title, to the Shares, the GNELLC Interest and the FSELLC
Interest and all properties and assets of the Acquired Entities, free and clear
of all Encumbrances, including to execute, deliver and file all such further
documents including the termination of financing statements, the directors,
officers and employees of the Parties or their Affiliates shall take or cause to
be taken all such necessary or appropriate action in accordance with and subject
to the terms of this Agreement and Seller shall bear the cost of any such
necessary or appropriate action; provided that if such action is necessary or
appropriate due to events or circumstances particular to Purchaser, Purchaser
shall bear the cost of such action, including the cost of Purchaser’s HSR Act
filing.

 

ARTICLE VI

 

CONDITIONS TO CLOSING

 

Section 6.1                                      Conditions of the Parties’
Obligations to Effect the Closing.  The respective obligations of the Parties to
this Agreement to effect the Closing shall be subject to the satisfaction or
waiver by each of the Parties prior to the Closing of the following conditions:

 

(a)                    No Injunctions.  No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any Governmental Order or Law
that is in effect and that has the effect of making the Closing illegal or
otherwise prohibiting consummation of the transactions contemplated by this
Agreement and the Closing.

 

(b)                   Governmental Approvals.  All Governmental Approvals
required to consummate the transactions contemplated hereby shall have been
obtained (including under Gaming Laws), all such approvals shall remain in full
force and effect, all statutory waiting periods in respect thereof (including
under the HSR Act) shall have expired and no such approval or expiration shall
contain any conditions, limitations or restrictions.

 

Section 6.2                                      Additional Conditions to
Obligation of the MGM Parties to Effect the Closing.  The obligation of the MGM
Parties to effect the Closing is subject to the

 

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satisfaction of each of the following conditions prior to or concurrent with the
Closing, any of which may be waived in writing exclusively by the MGM Parties:

 

(a)                    Representations and Warranties.  The representations and
warranties of Purchaser contained in this Agreement shall have been true and
correct when made and shall be true and correct as of the Closing Date, with the
same force and effect as if made as of the Closing Date, other than such
representations and warranties as are made as of another date, which shall be
true and correct as of such date, if earlier than the Closing Date.

 

(b)                   Performance of Obligation of Purchaser.  Purchaser shall
have performed in all material respects all obligations required to be performed
by Purchaser under this Agreement on or prior to the Closing Date.

 

(c)                    Officer’s Certificate.  Seller shall have received a
certificate dated the Closing Date duly executed by the President of Purchaser
to the effect of Section 6.2(a) and Section 6.2(b).

 

(d)                   Seller Financing.  Seller shall be reasonably satisfied
with the Seller Note; provided that if the Seller Note reflects the terms set
forth in Schedule 2.1, this Section 6.2(d) shall be satisfied.

 

(e)                    Proceeds of the Financing, Equity Commitment and Poster
Financing.  The proceeds of the Financing, the Equity Commitment and the Poster
Financing shall have been received by Purchaser and/or PB Gaming, as applicable.

 

Section 6.3                                      Additional Conditions to
Obligation of Purchaser to Effect the Closing.  The obligation of Purchaser to
effect the Closing is subject to the satisfaction of each of the following
conditions prior to or concurrent with the Closing, any of which may be waived
in writing exclusively by Purchaser:

 

(a)                    Representations and Warranties.  The representations and
warranties of the MGM Parties contained in this Agreement shall have been true
and correct when made and shall be true and correct as of the Closing Date, with
the same force and effect as if made as of the Closing Date, other than such
representations and warranties as are made as of another date, which shall be
true and correct as of such date, if earlier than the Closing Date; provided
that this condition shall be deemed to be satisfied solely for purposes of the
Closing if the aggregate adverse economic effect of breaches or violations of
such representations and warranties as of the Closing Date shall be or is
reasonably expected to be less than $5,000,000 in the reasonable determination
of the Purchaser; provided further that Purchaser shall be entitled, without
prejudice or waiver, to its rights of indemnification pursuant to Article VII
and Article VIII.

 

(b)                   Performance of Obligations of the MGM Parties.  The MGM
Parties shall have performed in all material respects all obligations required
to be performed by the MGM Parties under this Agreement on or prior to the
Closing Date.

 

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(c)                    Officer’s Certificate.  Purchaser shall have received a
certificate dated the Closing Date duly executed by the President of each of the
MGM Parties to the effect of Section 6.3(a) and Section 6.3(b).

 

(d)                   Consents.  Each of the MGM Parties shall have received all
consents required to be obtained by the MGM Parties pursuant to Section 5.8.

 

(e)                    Financing Commitment.  The condition precedent to the
funding of the Financing set forth in paragraph (e) of Exhibit D to the
Commitment Letter shall have been satisfied.

 

(f)                      Seller Financing.  Purchaser shall be reasonably
satisfied with the Seller Note; provided that if the Seller Note reflects the
terms set forth in Schedule 2.1, this Section 6.3(f) shall be satisfied.

 

(g)                   Tax Withholding Forms and Certificates.  Purchaser shall
have received a statement or statements (in form and substance reasonably
satisfactory to Purchaser) that satisfies Purchaser’s obligations under Treasury
Regulation Section 1.1445-2(b)(2).

 

(h)                   Distribution.  Seller and GNLV shall have completed the
Distribution.

 

(i)                       Intentionally Omitted.

 

(j)                       Intellectual Property.  Purchaser shall have received
evidence, in a form reasonably satisfactory to Purchaser, that the assignment
and licensing of rights to the MGM Acquired Entities, as required by Section
5.14(d), has occurred.

 

(k)                    Cash on Hand.  The Cash on Hand on the Closing Date shall
be equal to or greater than $14,477,000.

 

(l)                       Phase I Environmental Audit.  Purchaser shall have
received acceptable results from the Phase I Audit which results disclose no
adverse conditions not set forth in Section 3.13 of the Disclosure Schedule. 
The results shall be deemed acceptable if the Phase I Audit confirms the
accuracy of the representations and warranties made in Section 3.13 and reveals
no material environmental risks or Liabilities associated with any of the Real
Property or the business conducted thereon.  If the Phase I Audit reveals
adverse conditions not set forth in Section 3.13 of the Disclosure Schedule
which would require expenditures in excess of $1,000,000 to remediate, Purchaser
may notify Seller in writing of its election to terminate this Agreement not
later than fifteen days following Purchaser’s receipt of the Phase I Audit
written report.  Seller shall then have fifteen days to elect to accept
Purchaser’s termination or to remediate the adverse conditions prior to the
Closing at Seller’s sole cost and expense and to the Purchaser’s reasonable
satisfaction, in which case this Agreement shall continue in full force and
effect.

 

(m)                 Releases.  The Release of Encumbrances and the Release of
Guaranties shall have been completed.

 

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(n)                   Intercompany Account Settlement.  The Intercompany Account
Settlement shall have been completed.

 

(o)                   Transfer of Certain Assets.  The Nuggets Transfer, the
Artwork Transfer and the Government Treasury Strips Transfer shall have been
completed.

 

(p)                   Additional Capital Contribution.  An amount in excess of
the Additional Capital Contribution shall not be necessary to make up the
difference in the Financing from the amount of debt financing set forth in the
Additional Capital Contribution Letter.

 

(q)                   Landlord Consents.  Seller shall have obtained fully
executed landlord consent agreements as required by Section 5.27.

 

ARTICLE VII

 

INDEMNIFICATION; REMEDIES

 

Section 7.1                                      Survival; Right to
Indemnification Not Affected by Knowledge.

 

(a)                    Subject to Section 8.9, all representations and
warranties contained in this Agreement shall terminate one year after the
Closing Date; provided that the representations and warranties contained in
Section 3.13 (Environmental Matters) shall survive the Closing until the
expiration of the applicable statute of limitations; provided further that the
representations and warranties contained in Section 3.2 (Capitalization) shall
survive the Closing indefinitely.  Notwithstanding anything in this Agreement to
the contrary, nothing in this Section 7.1(a) shall limit any covenant,
obligation or agreement of the Parties which by its terms contemplates
performance after the Closing.

 

(b)                   The right of the Purchaser Indemnified Parties, on the one
hand, and the Seller Indemnified Parties, on the other hand, to indemnification,
shall not be affected by any investigation conducted, or any knowledge acquired
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any of the representations,
warranties, covenants, obligations or agreements set forth in this Agreement. 
The waiver of any condition based on the accuracy of any representation or
warranty set forth in this Agreement, or on the performance of or compliance
with any covenant, obligation or agreement set forth in this Agreement, shall
not affect the right to indemnification or other remedy based on such
representations, warranties, covenants, obligations and agreements.

 

(c)                    Notwithstanding anything in this Agreement to the
contrary, if the Closing occurs (i) each of the Seller Indemnified Parties
hereby waives any right to indemnification, contribution, reimbursement, set-off
or other rights to recovery that it might otherwise have against any of the MGM
Acquired Entities with respect to representations, warranties, covenants,
obligations and agreements made by any of the MGM Parties contained in this
Agreement and (ii) the representations, warranties, covenants, obligations and
agreements made by the MGM Acquired Entities contained in

 

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this Agreement shall terminate solely with respect to the MGM Acquired Entities
(not as to the other MGM Parties).

 

Section 7.2                                      Indemnification.

 

(a)                    Subject to Section 7.2(c) of this Agreement and excluding
all Losses related to Tax matters that are addressed in Article VIII, the Seller
Indemnifying Parties shall, jointly and severally, defend and indemnify the
Purchaser Indemnified Parties in respect of, and hold each of them harmless from
and against, any and all Losses suffered, incurred or sustained by any of them
or to which any of them becomes subject, resulting from, arising out of, or
relating to (i) any breach of or inaccuracy in any representation, warranty,
covenant, obligation or agreement on the part of any of the MGM Parties
contained in this Agreement, (ii) nonfulfillment of or failure to perform any
covenant, obligation or agreement on the part of any of the MGM Parties
contained in this Agreement, (iii) the business, operations, financing and
activities of BRRI, (iv) the business, operations, financing and activities of
GNMC and (v) IBNR.

 

(b)                   Subject to Section 7.2(d) of this Agreement, the Purchaser
Indemnifying Parties shall defend and indemnify the Seller Indemnified Parties
in respect of, and hold each of them harmless from and against, any and all
Losses suffered, incurred or sustained by any of them or to which any of them
becomes subject, resulting from, arising out of, or relating to (i) any breach
of or inaccuracy in any representation, warranty, covenant, obligation or
agreement on the part of Purchaser contained in this Agreement or
(ii) nonfulfillment of or failure to perform any covenant, obligation or
agreement on the part of Purchaser contained in this Agreement.

 

(c)                    Notwithstanding anything to the contrary contained in
this Agreement, no amounts of indemnity shall be payable to the Purchaser
Indemnified Parties as a result of any claim in respect of a Loss arising under
Section 7.2(a):

 

(i)                             unless and until the aggregate amount of Losses
incurred by the Purchaser Indemnified Parties pursuant to Section 7.2(a) exceeds
$1,500,000, in which event the Purchaser Indemnified Parties shall be entitled
to claim indemnity for the full amount of such Losses in excess of $1,000,000;
and

 

(ii)                          in excess of $20,000,000;

 

provided, however, that the limitations on indemnity of the Purchaser
Indemnified Parties in this Section 7.2(c) shall not apply to either a breach
of, inaccuracy in, nonfulfillment of or failure to perform any representation,
warranty, covenant, obligation or agreement contained in Sections 3.2, 3.5,
3.13, 3.14, 3.22, 3.25, 3.26, 5.2, 5.5, 5.6, 5.7, 5.9, 5.10, 5.12, 5.13, 5.18,
5.19 and 5.22 or any of the matters set forth in Section 7.2(a)(v); provided
that the Seller Indemnifying Parties shall not pay any indemnity amounts for
which insurance proceeds of the Purchaser Indemnified Parties are payable,
unless there is an increase in the Final Purchase Price equal to the indemnity
amount for which insurance proceeds of the Purchaser Indemnified Parties are
payable that is paid by the

 

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Seller Indemnifying Parties which amount shall be paid to Seller by the
Purchaser Indemnifying Parties concurrently with Seller making such
indemnification payment.  The Purchaser Indemnified Parties shall use their
Commercially Reasonable Efforts to pursue, furnish and deliver any documents,
instruments or writings required by their respective insurers to make an
insurance claim.

 

(d)                   Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable to the Seller Indemnified
Parties as a result of any claim in respect of a Loss arising under Section
7.2(b):

 

(i)                             unless and until the aggregate amount of Losses
incurred by the Seller Indemnified Parties pursuant to Section 7.2(b) exceeds
$1,500,000, in which event the Seller Indemnified Parties shall be entitled to
claim indemnity for the full amount of such Losses in excess of $1,000,000; and

 

(ii)                          in excess of $10,000,000 in the aggregate;

 

provided that the Purchaser Indemnifying Parties shall not pay any indemnity
amounts for which insurance proceeds of the Seller Indemnified Parties are
payable, unless there is a reduction in the Final Purchase Price equal to the
indemnity amount for which insurance proceeds of the Seller Indemnified Parties
are payable that is paid by the Purchaser Indemnifying Parties which amount
shall be paid to Purchaser by the Seller Indemnifying Parties concurrently with
Purchaser making such indemnification payment.  The Seller Indemnified Parties
shall use their Commercially Reasonable Efforts to pursue, furnish and deliver
any documents, instruments or writings required by their respective insurers to
make an insurance claim.

 

(e)                    In no event shall any Indemnifying Party be responsible
or liable to any Indemnified Party for any Losses or other amounts under this
Article VII that constitute multiple, exemplary, consequential, special,
indirect, punitive or other damages that are not compensatory in nature.

 

(f)                      In the event that an Indemnifying Party:

 

(i)                             consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such
consolidation or merger; or

 

(ii)                          transfers or conveys all or substantially all of
its properties and assets (whether in one transaction or a series of related
transactions) to any Person,

 

then, and in each such case, proper provision shall be made prior to the
consummation of any such transaction so that such successors and assigns shall
assume the obligations of such Indemnifying Party set forth in this Section 7.2.

 

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(g)                   No Indemnified Party hereunder shall have the right to
offset any sums it may otherwise owe to the Indemnifying Party against any sums
it may be entitled to receive under this Article VII.

 

Section 7.3                                      Indemnification Procedures. 
All claims for indemnification by an Indemnified Party under Section 7.2 shall
be asserted and resolved as follows:

 

(a)                    In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 7.2 is asserted against or
sought to be collected from such Indemnified Party by a Person other than a
Seller Indemnified Party or a Purchaser Indemnified Party (a “Third Party
Claim”), the Indemnified Party shall promptly deliver a Claim Notice to the
Indemnifying Party; provided that no delay on the part of the Indemnified Party
in giving any such Claim Notice shall relieve the Indemnifying Party of any
indemnification obligation hereunder unless (and then solely to the extent that)
the Indemnifying Party is materially prejudiced by such delay.  The Indemnifying
Party shall notify the Indemnified Party in writing as soon as practicable
within the Dispute Period whether or not the Indemnifying Party desires, at the
Indemnifying Party’s sole cost and expense and by counsel of its own choosing,
which shall be reasonably satisfactory to the Indemnified Party, to defend
against such Third Party Claim; provided further that if, under applicable
standards of professional conduct a conflict on any significant issue between
the Indemnifying Party and the Indemnified Party exists in respect of such Third
Party Claim, then the Indemnifying Party shall reimburse the Indemnified Party
for the reasonable fees and expenses of one additional counsel to be retained in
order to resolve such conflict, promptly upon presentation by the Indemnified
Party of invoices or other documentation evidencing such amounts to be
reimbursed.

 

(i)                             If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that it desires to defend against
such Third Party Claim, (i) the Indemnifying Party shall use its Commercially
Reasonable Efforts to defend and protect the interests of the Indemnified Party
with respect to such Third Party Claim, (ii) the Indemnified Party, prior to or
during the period in which the Indemnifying Party assumes the defense of such
matter, may take such reasonable actions as the Indemnified Party deems
necessary to preserve any and all rights with respect to such matter, without
such actions being construed as a waiver of the Indemnified Party’s rights to
defense and indemnification pursuant to this Agreement, (iii) the Indemnifying
Party shall not, without the prior written consent of the Indemnified Party,
consent to any settlement that (A) does not contain an unconditional release of
the Indemnified Party from the subject matter of the settlement, (B) imposes any
liabilities or obligations on the Indemnified Party and (C) with respect to any
non-monetary provision of such settlement, could, in the Indemnified Party’s
reasonable judgment, have a material adverse effect on the business, assets,
properties, condition (financial or otherwise), results of operations or
prospects of the Indemnified Party (for purposes of this subsection (iii) an
effect shall be deemed “material” if it involves $100,000 or more), (iv) the
Indemnified Party shall cooperate to the extent reasonable (during regular
business

 

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hours) with the Indemnifying Party and its counsel in the investigation, defense
and settlement thereof and (v) the Indemnifying Party shall be deemed to have
agreed that it will indemnify the Indemnified Party pursuant to, and subject to
the conditions and limitations set forth in, the provisions of this Article VII.

 

(ii)                          If the Indemnifying Party does not notify the
Indemnified Party within the Dispute Period that it desires to defend against
such Third Party Claim, then the Indemnifying Party shall have the right to
participate in any such defense at its sole cost and expense, but, in such case,
the Indemnified Party shall control the investigation and defense and may settle
or take any other actions the Indemnified Party deems reasonably advisable
without in any way waiving or otherwise affecting the Indemnified Party’s rights
to indemnification pursuant to this Agreement.

 

(iii)                       The Indemnified Party and the Indemnifying Party
agree to make available to each other, their counsel and other representatives,
all information and documents available to them which relate to such Third Party
Claim.  The Indemnified Party and the Indemnifying Party, the MGM Acquired
Entities and their respective employees also agree to render to each other such
assistance and cooperation as may reasonably be required to ensure the proper
and adequate defense of such Third Party Claim.

 

(iv)                      Notwithstanding the foregoing, in any event, if the
Indemnified Party desires to participate in any defense of a Third Party Claim
it may do so at its sole cost and expense, and the Indemnified Party shall have
the right to control, pay or settle any Third Party Claim which the Indemnifying
Party shall have undertaken to defend so long as the Indemnified Party shall
also waive any right to indemnification therefor by the Indemnifying Party.

 

(b)                   In the event that an Indemnified Party should have a claim
against the Indemnifying Party hereunder which it determines to assert, but
which does not involve a Third Party Claim, the Indemnified Party shall send an
Indemnity Notice with respect to such claim to the Indemnifying Party.  The
Indemnifying Party shall have the Dispute Period during which to notify the
Indemnified Party in writing of any good faith objections it has to the
Indemnified Party’s Indemnity Notice, setting forth in reasonable detail each of
the Indemnifying Party’s objections thereto.  If the Indemnifying Party does not
deliver such written notice of objection within the Dispute Period, the
Indemnifying Party shall be deemed to have accepted responsibility for the
prompt payment of the Indemnified Party’s claims for indemnification set forth
in the Indemnity Notice, and shall have no further right to contest the validity
of such indemnification claims.  If the Indemnifying Party does deliver such
written notice of objection within the Dispute Period, the Indemnifying Party
and the Indemnified Party shall attempt in good faith to resolve any such
dispute within the Resolution Period and if not resolved through

 

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negotiations within the Resolution Period, such dispute shall be resolved by
arbitration in accordance with Section 7.3(c).

 

(c)                    Any dispute submitted to arbitration pursuant to this
Section 7.3(c) shall be finally and conclusively determined by the decision of a
board of arbitration consisting of three members (hereinafter sometimes called
the “Board of Arbitration”) selected as hereinafter provided.  Each of the
Indemnified Party and the Indemnifying Party shall select one member and the
third member shall be selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third member within twenty days
after the selection of the second arbitrator, such third member shall thereafter
be selected by the American Arbitration Association upon application made to it
for a third member possessing expertise or experience appropriate to the dispute
jointly by the Indemnified Party and the Indemnifying Party.  The Board of
Arbitration shall meet in Las Vegas, Nevada or such other place as a majority of
the members of the Board of Arbitration determines more appropriate, and shall
reach and render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the amount, if any, which
the Indemnifying Party is required to pay to the Indemnified Party in respect of
the Indemnified Party’s claims for indemnification set forth in the Indemnity
Notice.  In connection with rendering its decision, the Board of Arbitration
shall adopt and follow such rules and procedures as a majority of the members of
the Board of Arbitration deems necessary or appropriate.  To the extent
practical, decisions of the Board of Arbitration shall be rendered no more than
thirty days following commencement of proceedings with respect thereto.  The
Board of Arbitration shall cause its written decision to be delivered to the
Indemnified Party and the Indemnifying Party.  Any decision made by the Board of
Arbitration (either prior to or after the expiration of such thirty day period)
shall be final, binding and conclusive on the Indemnified Party and the
Indemnifying Party and entitled to be enforced to the fullest extent permitted
by Law and entered in any court of competent jurisdiction.  Each party to any
arbitration shall bear its own expenses in relation thereto, including but not
limited to such party’s attorneys’ fees, if any, and the expenses and fees of
the Board of Arbitration shall be divided between the Indemnifying Party and the
Indemnified Party in the same proportion as the portion of the related claim
determined by the Board of Arbitration to be payable to the Indemnified Party
bears to the portion of such claim determined not to be so payable.

 

(d)                   Claims for indemnification pursuant to Section 7.2 shall
not be made after the expiration of the representations and warranties as
provided for in Section 7.1; provided, however, that in the event a Claim Notice
or an Indemnity Notice shall have been given within the applicable survival
period, the representation or warranty that is the subject of such
indemnification claim shall survive until such time as such claim is finally
resolved.

 

Section 7.4                                      Threshold for Materiality.  For
purposes of this Article VII, an event shall be deemed “material” or a “Material
Adverse Effect” (as such terms are used in any representation or warranty
contained in Article III or IV) and shall be deemed to have occurred, if the
aggregate of all Losses relating to any such representation or warranty shall
exceed $250,000; provided that if the amount of any Loss relating to a

 

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representation or warranty shall exceed $100,000, such amount in excess of
$100,000 shall count towards the threshold in Section 7.2(c)(i) in respect of
the Purchaser Indemnified Parties or Section 7.2(d)(i) in respect of the Seller
Indemnified Parties, as applicable; provided, however, that solely with respect
to the representations and warranties set forth in Section 3.12, an event shall
be deemed a “Material Adverse Effect” (as such term is used in Section 3.12) and
shall be deemed to have occurred, if the aggregate of all Losses relating to a
claim exceeds the dollar amount of the litigation reserve established in the
Final Statement for such claim; provided that if the amount of any Loss relating
to the representations and warranties set forth in Section 3.12 shall exceed the
litigation reserve established in the Final Statement for such claim, such
amount in excess of the litigation reserve established in the Final Statement
for such claim shall count towards the threshold in Section 7.2(c)(i) in respect
of the Purchaser Indemnified Parties.  Solely for purposes of Article III, the
term “Material Adverse Effect” shall apply to the non-disclosure or
qualification of a particular matter, and no such matter shall be aggregated
with any other matter in determining whether a Material Adverse Effect would
reasonably be expected to have occurred; provided, however, if any such matters,
when aggregated, total $1,000,000 or more, then all such matters shall be
aggregated in determining whether a Material Adverse Effect would reasonably be
expected to have occurred; provided that this sentence shall not modify or
interpret Section 6.3(a).

 

ARTICLE VIII

 

TAX MATTERS

 

Section 8.1                                      Tax Indemnification.

 

(a)                    Parent and Seller shall, jointly and severally,
indemnify, defend and hold harmless the Purchaser Indemnified Parties against,
and shall reimburse the Purchaser Indemnified Parties for, any and all Losses
arising out of, based upon or relating or attributable to (without duplication):

 

(i)                             all Taxes imposed on the MGM Acquired Entities
under Treasury Regulation Section 1.1502-6 (and corresponding provisions of
state, local or foreign Law) as a result of being a member of any federal,
state, local or foreign consolidated, unitary, combined or similar group for any
taxable period ending on or before, or that includes, the Closing Date;

 

(ii)                          all Taxes imposed on the MGM Acquired Entities
relating or attributable to taxable periods ending on or before the Closing Date
(“Pre-Closing Periods”) and, with respect to any period that includes but does
not end on the Closing Date (in each case, a “Straddle Period”), the portion of
such Straddle Period deemed to end on and include the Closing Date (in the
manner determined pursuant to Section 8.1(b)); provided, however, that Parent
and Seller shall be liable only to the extent that such Taxes are in excess of
the amount, if any, reserved for such Taxes on the

 

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financial statements of the MGM Acquired Entities and taken into account in
determining the Final Purchase Price;

 

(iii)                       all Taxes relating or attributable to the
transactions contemplated pursuant to this Agreement, including the
Distributions and the Elections;

 

(iv)                      any breach of or inaccuracy in any representation or
warranty contained in Section 3.7 of this Agreement; and

 

(v)                         the breach by the MGM Parties or the failure by any
such entity to perform (or cause to have performed) any of the covenants made by
them under this Agreement relating to Taxes.

 

(b)                   For purposes of this Section 8.1, the portion of any Taxes
that are allocable to the portion of the Straddle Period ending on the Closing
Date shall be:

 

(i)                             in the case of Taxes that are imposed on a
periodic basis, the amount of such Taxes for the entire period multiplied by a
fraction the numerator of which is the number of calendar days in the Straddle
Period ending on (and including) the Closing Date and the denominator of which
is the number of calendar days in the entire relevant Straddle Period; and

 

(ii)                          in the case of Taxes not described in (i) the
amount that would be payable if the taxable year or period ended on the Closing
Date based on an interim closing of the books.

 

Section 8.2                                      Preparation and Filing of Tax
Returns and Payment of Taxes.

 

(a)                    Parent and Seller shall prepare and timely file (or cause
to be prepared and timely filed) all Tax Returns required to be filed by the MGM
Acquired Entities for taxable years ending on or prior to the Closing Date (such
Tax Returns, the “Pre-Closing Period Tax Returns”).  All such Pre-Closing Period
Tax Returns shall be prepared and filed in a manner that is consistent with
prior practices, except as required by applicable Law.  If any such Pre-Closing
Tax Returns are due after the Closing, the Parent and Seller shall submit drafts
of such returns to the Purchaser for its review at least ten days prior to the
due date of any such Tax Return; provided, however, that such drafts of any such
Pre-Closing Period Tax Return shall be subject to Purchaser’s review and
approval, which approval shall not be unreasonably withheld or delayed. 
Purchaser shall cause each of the MGM Acquired Entities to furnish information
to Parent and Seller, as reasonably requested in writing by Parent or Seller, to
allow Parent and Seller to satisfy their respective obligations under this
Section 8.2(a) and Section 8.4(b).  Purchaser shall file such Pre-Closing Period
Tax Returns due after the Closing Date with the appropriate taxing authorities.

 

(b)                   Purchaser shall prepare and timely file or cause each of
the MGM Acquired Entities to prepare and timely file, all Tax Returns required
to be filed by such entities for all Straddle Periods (such Tax Returns, the
“Straddle Period Tax Returns”).  Purchaser

 

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shall deliver drafts of all such Straddle Period Tax Returns to Parent and
Seller for their review at least ten days prior to the due date of any such Tax
Return (taking into account valid extensions and shall notify Parent and Seller
of Purchaser’s calculation of their share of the Taxes for such Straddle Period
(determined in accordance with Section 8.1(b)); provided, however, that such
drafts of any such Straddle Period Tax Returns and such calculations of Parent
and Seller’s share of the Tax Liability for such Straddle Period (determined in
accordance with Section 8.1(b)) shall be subject to Parent and Seller’s review
and approval, which approval shall not be unreasonably withheld or delayed.  If
Parent or Seller disputes any item on such Tax Return, it shall notify Purchaser
(by written notice within ten days of receipt of Purchaser’s calculation) of
such disputed item (or items) and the basis for its objection.  If Parent and
Seller do not object by written notice within such period, Purchaser’s
calculation of Parent and Seller’s share of the Taxes for such Straddle Period
shall be deemed to have been accepted and agreed upon, and final and conclusive,
for all purposes hereof.

 

(c)                    The Parties shall act in good faith to resolve any
dispute prior to the date on which the Tax Return is required to be filed.  If
the Parties cannot resolve any disputed item, the item in question shall be
resolved by the Independent Accounting Firm as promptly as practicable.  The
fees and expenses of the Independent Accounting Firm shall be apportioned and
paid equally by Seller and Purchaser.

 

Section 8.3                                      Accounting and Tax Records. 
Parent and Seller shall provide Purchaser with all Tax Returns (and other
information relating to Taxes) of or relating to MGM Acquired Entities
reasonably requested by Purchaser.  Purchaser shall keep and maintain all such
Tax Returns (and other information relating to Taxes) and shall make available
to Parent and Seller such Tax Returns and information as reasonably required by
Parent or Seller to allow Parent and Seller to satisfy their respective
obligations under Section 8.2(a) and Section 8.4(b).

 

Section 8.4                                      Tax Audits.

 

(a)                    After the Closing, Purchaser, on the one hand, and
Seller, on the other hand (the “Recipient”), shall promptly notify the other
Person in writing upon receipt by the Recipient or any of its Affiliates of any
written notice of any pending or threatened audit or assessment, suit, proposed
adjustment, deficiency, dispute, administrative or judicial proceeding or other
similar claim (“Tax Claim”) received by the Recipient from any Tax authority or
any other Person with respect to Losses for which the Parent and Seller are
liable pursuant to Section 8.1 or Section 8.5; provided, however, that a failure
by the Purchaser to give such notice shall not affect the Purchaser Indemnified
Parties’ rights to indemnification under this Article VIII unless (and then
solely to the extent) that the Parent and Seller are materially prejudiced as a
consequence of such failure.

 

(b)                   Parent and Seller shall control the conduct, through their
own counsel at their sole expense and with the participation of Purchaser, of
any Tax Claim involving any asserted Liability with respect or relating solely
to any Pre-Closing Period.  Parent or Seller shall have all rights to settle,
compromise and/or concede such Tax Claim and Purchaser shall reasonably
cooperate and shall cause the MGM Acquired Entities to

 

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reasonably cooperate; provided, however, that Parent or Seller shall not settle,
compromise and/or concede such Tax Claim in a manner that would adversely affect
Purchaser or the MGM Acquired Entities without the consent of Purchaser, which
consent shall not be unreasonably withheld or delayed.

 

(c)                    With respect to any Tax Claim that involves any Straddle
Period, Purchaser shall control the conduct of any such Tax Claim, through
counsel of Purchaser’s own choosing with participation by the Parent and Seller
(at Parent or Seller’s expense) and Purchaser shall have all rights to settle,
compromise and/or concede such Tax Claim and Parent and Seller shall reasonably
cooperate; provided, however, that Purchaser shall not settle, compromise and/or
concede such Tax Claim in a manner that would adversely affect Parent or Seller
without the consent of Parent and Seller, which consent shall not be
unreasonably withheld or delayed.

 

Section 8.5                                      Transfer Taxes.  The Purchaser,
on the one hand, and Parent and Seller, on the other hand, shall, each pay or
cause to be paid one-half of all sales, use, real property transfer, real
property gains, transfer, stamp, registration, documentary, recording, filing or
similar Taxes, if any, together with any interest thereon, penalties, fines,
costs, fees, additions to Tax or additional amounts with respect thereto
(collectively, “Transfer Taxes”) incurred in connection with the purchase and
sale of the Shares.  The Person with primary responsibility under applicable Law
for filing Tax Returns relating to Transfer Taxes shall be responsible for
preparing and timely filing any Tax Returns required with respect to any such
Transfer Taxes.

 

Section 8.6                                      Section 338(h)(10) Election.

 

(a)                    Parent, on behalf of Seller, shall join Purchaser in
jointly making a timely election under Section 338(h)(10) of the Code (and any
comparable elections under state and local income Tax Law) with respect to GNLV
(the “Elections”).  Parent and Purchaser shall not make an election under
Section 338(h)(10) of the Code (or any comparable elections under state or local
Tax Law) with respect to GNL and no other election shall be made by or at the
request of Parent or Seller, on the one hand, or Purchaser on the other, with
respect to the purchase of the MGM Acquired Entities to the extent such election
would affect the Tax Liability of the other party without such party’s consent,
which consent shall not be unreasonably withheld or delayed.

 

(b)                   In connection with the Elections, reasonably promptly
after the Closing Date, Purchaser shall provide to Parent and Seller a proposed
allocation of the Final Purchase Price (as defined for federal income Tax
purposes) among the assets of GNLV, which allocations shall be made in
accordance with Sections 338 and 1060 of the Code and any applicable Treasury
Regulations (the “Allocation Statement”).  Within ten days following such
provision, Parent and Seller shall have the right to object to the Allocation
Statement (by written notice to the Purchaser), and if either so objects, it
shall notify Purchaser (in such written notice) of such disputed item (or items)
and the basis for its objection.  If Parent and Seller do not object by written
notice within such period, the Allocation Statement shall be deemed to have been
accepted and agreed upon, and final and conclusive, for all purposes of this
Agreement.  Parent, Seller and Purchaser shall act

 

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in good faith to resolve any such dispute prior to the date on which any of the
Elections is required to be filed with the appropriate Tax authority.  If
Parent, Seller and Purchaser cannot resolve any disputed item, the item in
question shall be resolved by the Independent Accounting Firm as promptly as
practicable.  The fees and expenses of the Independent Accounting Firm shall be
apportioned and paid equally by Seller and Purchaser.  Except with respect to
any subsequent adjustments to the Final Purchase Price (which shall be allocated
using the mechanism for allocating Final Purchase Price in this Section 8.6),
Parent, Seller and Purchaser, and their respective Affiliates, (i) shall be
bound by the determinations and the Allocation Statement determined pursuant to
this Section 8.6(b) consistently therewith for purposes of determining any
Taxes, (ii) shall prepare and file all Tax Returns to be filed with any Tax
authority in a manner consistent with the Allocation Statement and the Elections
and (iii) shall take no position inconsistent with the Allocation Statement or
any Election in any Tax Return, any proceeding before any Tax authority or
otherwise.  Except as agreed to by Parent, Seller and Purchaser, none of Parent,
Seller or Purchaser shall revoke or modify an Election.  In the event that the
Allocation Statement is disputed by any Tax authority, the Person receiving
notice of such dispute shall promptly notify and consult with the other Parties
concerning resolution of such dispute.

 

(c)                    Each of Parent, Seller and Purchaser shall cooperate in
the preparation and timely filing of (i) Form 8023 and any comparable state or
local forms or reports, and (ii) to the extent permissible by or required by
Law, any corrections, amendments, or supplements (or additional forms or
reports) thereto (including any supplements, amendments, forms or reports
arising as a result of any adjustments to the Final Purchase Price).

 

Section 8.7                                      Tax Sharing Contracts.  As of
the Closing, all Tax sharing Contracts, with respect to or involving the MGM
Acquired Entities shall be terminated as of the Closing Date and, after the
Closing Date, none of the MGM Acquired Entities shall have any further rights or
Liabilities under any such Contract.

 

Section 8.8                                      Payments.  Except as otherwise
provided in this Article VIII, any amounts owed by any Person to any other
Person under this Article VIII shall be paid in cash within five days’ notice
from such other Person.

 

Section 8.9                                      Conflicts; Survival. 
Notwithstanding any other provision of this Agreement to the contrary, the
obligations of the Parties set forth in this Article VIII shall (a) be
unconditional and absolute, (b) remain in full force and effect indefinitely and
(c) not be subject to any limitations in Article VII; provided that the
representations and warranties contained in Section 3.7 shall survive the
Closing until the expiration of the applicable statute of limitations; provided
further in the event notice for indemnification under Section 8.1(a)(iv) only
shall have been given within the applicable survival period, the representation
or warranty that is the subject of such indemnification claim shall survive
until such time as such claim is finally resolved.  In the event of a conflict
between this Article VIII and any other provision of this Agreement, this
Article VIII shall govern and control.

 

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Section 8.10                                Tax Treatment.  The Parties agree to
treat any payment made pursuant to Article VII or VIII as an adjustment to the
Final Purchase Price for all Tax purposes.

 

Section 8.11                                Refunds and Tax Benefits.  Any
income Tax refunds that are received by any of the MGM Acquired Entities, and
any amounts credited against Tax to which Purchaser or any of the MGM Acquired
Entities becomes entitled, that relate to Tax periods or portions thereof ending
on or before the Closing Date (but only to the extent such amounts are in excess
of the amount, if any, of Tax receivables and offsets to Tax reserves on the
financial statements of the MGM Acquired Entities) shall be for the account of
Parent, and the Purchaser shall pay over to Parent (a) any such cash refund
within fifteen days after receipt thereof and (b) the amount of Tax savings
realized by Purchaser or the MGM Acquired Entities at the time the Tax Return to
which such credit relates is filed by Purchaser or the MGM Acquired Entities. 
Any Tax refunds that are received by Parent or any of its Affiliates, and any
amounts credited against Tax to which Parent or any of its Affiliates becomes
entitled, that relate to Taxes of the MGM Acquired Entities for Tax periods or
portions thereof after the Closing Date shall be for the account of Purchaser,
and Parent or its Affiliates shall pay over to Purchaser (a) any such cash
refund within fifteen days after receipt thereof and (b) the amount of Tax
savings realized by Parent or any of its Affiliates at the time the Tax Return
to which such credit relates is filed by Parent or any of its Affiliates.

 

ARTICLE IX

 

TERMINATION

 

Section 9.1                                      Termination.  This Agreement
may be terminated and the transactions contemplated hereby may be abandoned at
any time prior to the Closing:

 

(a)                    by mutual written consent of the Parties; or

 

(b)                   by the MGM Parties, on the one hand, or Purchaser, on the
other hand, if the transactions contemplated hereby shall not have been
consummated on or prior to December 31, 2003; provided that if the only
condition to the Closing that remains unsatisfied (except for any condition that
by its terms can only be satisfied at the Closing) on December 31, 2003 is
Purchaser’s receipt of Governmental Approvals under the Gaming Laws, such date
shall automatically be extended to 5:00 p.m., New York City Time, on March 31,
2004 without further action by or consent of any of the Parties; provided
further that the right to terminate this Agreement under this Section 9.1(b)
shall not be available to any of the Parties whose willful breach or
nonfulfillment or failure to perform has prevented the consummation of the
transactions contemplated by this Agreement; or

 

(c)                    by Purchaser, if there has been a material breach or
violation by any of the MGM Parties of any of its representations and warranties
or covenants contained in this Agreement that has not been waived by Purchaser
in writing; or

 

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(d)                   by the MGM Parties, if there has been a material breach or
violation by Purchaser of any of its representations and warranties or covenants
contained in this Agreement that has not been waived by the MGM Parties in
writing; or

 

(e)                    by Purchaser if any of the conditions to the obligation
of Purchaser set forth in Section 6.3 shall have become incapable of fulfillment
and shall not have been waived by Purchaser in writing; provided, however, that
Purchaser shall not be entitled to terminate this Agreement pursuant to this
Section 9.1(e) if Purchaser is in breach in any material respect of its
representations and warranties or covenants contained in this Agreement; or

 

(f)                      by the MGM Parties if any of the conditions to the
obligation of the MGM Parties set forth in Section 6.2 shall have become
incapable of fulfillment and shall not have been waived by the MGM Parties in
writing; provided, however, that the MGM Parties shall not be entitled to
terminate this Agreement pursuant to this Section 9.1(f) if any of the MGM
Parties is in breach in any material respect of its representations and
warranties or covenants contained in this Agreement; or

 

(g)                   by the MGM Parties, on the one hand, or Purchaser, on the
other hand, if a Governmental Entity shall have issued a nonappealable, final
Governmental Order or taken any other nonappealable final action, in each case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Closing and the transactions contemplated by this Agreement.

 

Section 9.2                                      Effect of Termination.  In the
event of termination of this Agreement as provided in Section 9.1, this
Agreement shall immediately become void and there shall be no Liability or
obligation on the part of the Parties, or their respective directors, officers,
members, employees, stockholders or Affiliates, except that such termination
shall not limit Liability for a breach or violation of this Agreement prior to
the time of such termination; provided that the provisions of this Section 9.2
and Sections 5.5, 5.20, 10.1, 10.4, 10.5, 10.10 and 10.14 shall remain in full
force and effect and survive any termination of this Agreement.  The
Confidentiality Agreement shall terminate and be of no further force and effect
on the Closing Date.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.1                                Expenses.  Except as expressly
provided in this Agreement, each of the Parties shall pay its own legal,
accounting and other miscellaneous expenses incident to this Agreement whether
or not the Closing is consummated.

 

Section 10.2                                Notices.  All notices, requests,
demands and other communications made under or by reason of the provisions of
this Agreement shall be in writing and shall be given by hand delivery,
certified or registered mail, return receipt requested, facsimile or
next-Business Day courier to the affected Party at the address and facsimile
number set forth below.  Such notices shall be deemed given: at the time
personally delivered, if

 

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delivered by hand with receipt acknowledged; at the time received, if sent by
certified or registered mail; upon issuance by the transmitting machine of a
confirmation slip that the number of pages constituting the notice has been
transmitted without error and confirmed telephonically, if sent by facsimile;
and the first Business Day after timely delivery to the courier, if sent by
next-Business Day courier specifying next-Business Day delivery.

 

(a)                    if to Parent, to:

 

MGM MIRAGE

3600 Las Vegas Boulevard South

Las Vegas, Nevada  89109

Attention:        James J. Murren, President, Chief Financial Officer and
Treasurer

Gary N. Jacobs, Executive Vice President, General Counsel and Secretary

Facsimile No.:  (702) 693-7628

 

with a copy (which shall not constitute notice) to:

 

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP

2121 Avenue of the Stars

Eighteenth Floor

Los Angeles, California  90067

Attention:  Janet McCloud, Esq.

Facsimile No.: (310) 556-2920

 

(b)                   if to Seller, to:

 

Mirage Resorts, Incorporated

3600 Las Vegas Boulevard South

Las Vegas, Nevada  89109

Attention:  James J. Murren, Treasurer

Facsimile No.: (702) 693-7628

 

with a copy (which shall not constitute notice) to:

 

MGM MIRAGE

3600 Las Vegas Boulevard South

Las Vegas, Nevada  89109

Attention:  Gary N. Jacobs, Executive Vice President, General Counsel and
Secretary

Facsimile No.:  (702) 693-7628

 

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with a copy (which shall not constitute notice) to:

 

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP

2121 Avenue of the Stars

Eighteenth Floor

Los Angeles, California  90067

Attention:  Janet McCloud, Esq.

Facsimile No.: (310) 556-2920

 

(c)                    if to GNLV, to:

 

GNLV, CORP.

129 East Fremont Street

Las Vegas, Nevada  89101

Attention:  James J. Murren, Treasurer

Facsimile No.:  (702) 693-7628

 

with a copy (which shall not constitute notice) to:

 

MGM MIRAGE

3600 Las Vegas Boulevard South

Las Vegas, Nevada  89109

Attention:  Gary N. Jacobs, Executive Vice President, General Counsel and
Secretary

Facsimile No.:  (702) 693-7628

 

with a copy (which shall not constitute notice) to:

 

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP

2121 Avenue of the Stars

Eighteenth Floor

Los Angeles, California  90067

Attention:  Janet McCloud, Esq.

Facsimile No.: (310) 556-2920

 

(d)                   if to GNL, to:

 

GNL, CORP.

2300 South Casino Drive

Laughlin, Nevada  89029

Attention:  James J. Murren, Treasurer

Facsimile No.:  (702) 693-7628

 

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with a copy (which shall not constitute notice) to:

 

MGM MIRAGE

3600 Las Vegas Boulevard South

Las Vegas, Nevada  89109

Attention:        Gary N. Jacobs, Executive Vice President, General Counsel and
Secretary

Facsimile No.:  (702) 693-7628

 

with a copy (which shall not constitute notice) to:

 

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP

2121 Avenue of the Stars

Eighteenth Floor

Los Angeles, California  90067

Attention:  Janet McCloud, Esq.

Facsimile No.: (310) 556-2920

 

(e)                    if to GNELLC, to:

 

Golden Nugget Experience, LLC

3600 Las Vegas Boulevard

Las Vegas, Nevada  89109

Attention:  James J. Murren, Treasurer

Facsimile No.:  (702) 693-7628

 

with a copy (which shall not constitute notice) to:

 

MGM MIRAGE

3600 Las Vegas Boulevard South

Las Vegas, Nevada  89109

Attention:  Gary N. Jacobs, Executive Vice President, General Counsel and
Secretary

Facsimile No.:  (702) 693-7628

 

with a copy (which shall not constitute notice) to:

 

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP

2121 Avenue of the Stars

Eighteenth Floor

Los Angeles, California  90067

Attention:  Janet McCloud, Esq.

Facsimile No.: (310) 556-2920

 

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(f)                      if to Purchaser, to:

 

Poster Financial Group, Inc.

2960 West Sahara

Suite 200

Las Vegas, Nevada  89102

Attention:        Timothy Poster, Chairman and Chief Executive Officer

Thomas Breitling, President, Treasurer and Secretary

Facsimile No.:  (702) 367-6143

 

with a copy (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York  10036-6522

Attention:        Wallace L. Schwartz, Esq.

Howard L. Ellin, Esq.

Facsimile No.:  (212) 735-2000

 

Section 10.3                                Interpretation.  When a reference is
made in this Agreement to a Section or Sections, such reference shall be to a
Section or Sections of this Agreement unless otherwise indicated.  The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.  Whenever the words “include,” “includes” or “including” are used in
this Agreement they shall be deemed to be followed by the words “without
limitation.”  Words used in the singular form in this Agreement shall be deemed
to import the plural, and vice versa, as the sense may require.  The phrases
“the date of this Agreement”, “the date hereof,” and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to June 24,
2003.  As used in this Agreement, “knowledge” means with respect to a Person
other than an individual, the knowledge of any director, executive officer or
key employee of such Person.  Any such individual shall be deemed to have
“knowledge” of a particular fact or other matter if: (a) such individual is
actually aware of such fact or other matter; or (b) such individual could be
expected to discover or otherwise become aware of such fact or other matter in
the ordinary course of performing such individual’s employment duties in a
prudent manner.

 

Section 10.4                                Governing Law.  This Agreement shall
be governed and construed in accordance with the laws applicable to contracts
made and to be performed entirely in Nevada, without regard to any applicable
conflicts of Law, except to the extent the mandatory provisions of the Gaming
Laws apply.

 

Section 10.5                                Consent to Jurisdiction and Venue. 
Each of the Parties irrevocably submits to the exclusive jurisdiction of the
United States District Court for the District of Nevada or any court of the
State of Nevada located in Clark County in any action, suit or proceeding
arising out of or relating to this Agreement or any of the transactions
contemplated hereby, and agrees that any such action, suit or proceeding shall
be brought only in such court; provided, however, that such consent to
jurisdiction is solely for the

 

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purpose referred to in this Section 10.5 and shall not be deemed to be a general
submission to the jurisdiction of said courts or in the State of Nevada other
than for such purpose.  Each of the Parties hereby irrevocably waives, to the
fullest extent permitted by Law, any objection that it may now or hereafter have
to the laying of the venue of any such action, suit or proceeding brought in
such a court.  Each of the Parties further irrevocably waives and agrees not to
plead or claim that any such action, suit or proceeding brought in such a court
has been brought in an inconvenient forum.

 

Section 10.6                                Time of the Essence.  Time is of the
essence in performing covenants and agreements under this Agreement.

 

Section 10.7                                Assignment.  Neither this Agreement
nor any of the rights, interests or obligations under this Agreement shall be
assigned by any of the Parties (whether by operation of Law or otherwise)
without the prior written consent of each of the other Parties.  Notwithstanding
the foregoing, if the Purchaser reasonably determines that the assignment by the
Purchaser of its rights, interests and obligations under this Agreement to
another Person Affiliated with the Purchaser would (a) reduce the cost of
Financing to the Purchaser, (b) facilitate the placement of the Financing or (c)
reduce Taxes associated with the Purchaser’s ownership, operation or disposition
of the MGM Acquired Entities, Purchaser shall have the right to assign all of
its rights, interests and obligations under this Agreement, including the right
to enforce all of the terms of this Agreement to an Affiliate of the Purchaser
without the prior written consent of the MGM Parties; provided that such
assignee expressly agrees to be bound by the terms of this Agreement; provided
further no such assignment shall relieve Purchaser from its obligations
hereunder unless the MGM Parties expressly agree.  Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective assigns.

 

Section 10.8                                Amendment.  This Agreement may not
be amended or modified by the Parties except (a) by an instrument in writing
signed by each of the Parties and (b) by a waiver in accordance with Section
10.9.

 

Section 10.9                                Extension; Waiver.  At any time
prior to the Closing, the Parties, by action taken or authorized by their
respective boards of directors or similar governing body (may, to the extent
legally allowed), (a) extend the time for or waive the performance of any of the
covenants, obligations or other acts of the other Parties, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
conditions contained in this Agreement.  Any agreement on the part of any of the
Parties to any such extension or waiver shall be valid only if set forth in a
written instrument signed on its behalf.  The failure of any of the Parties to
assert any of its rights under this Agreement shall not constitute a waiver of
such rights.

 

Section 10.10                          No Third Party Beneficiaries.  Except for
the provisions of (a)  Article VII with respect to Indemnified Parties, (b)
Article VIII with respect to Purchaser Indemnified Parties and (c) Section
10.14, this Agreement is for the sole benefit of the Parties and their permitted
assigns and nothing herein expressed or implied shall give or

 

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be construed to give any Person, other than the Parties and such assigns, any
legal or equitable rights hereunder.  All references herein to the
enforceability of agreements with third parties, the existence or non-existence
of third-party rights, the absence of breaches or defaults by third parties, or
similar matters or statements, are intended only to allocate rights and risks
among the Parties and were not intended to be admissions against interests, give
rise to any inference or proof of accuracy, be admissible against any Party by
any non-Party, or give rise to any claim or benefit to any non-Party.

 

Section 10.11                          Entire Agreement.  This Agreement, the
Disclosure Schedule, the Schedules and the other writings referred to herein or
delivered pursuant hereto that form a part hereof constitute the entire
agreement with respect to the subject matter hereof and thereof and supersede
all prior agreements and undertakings, both written and oral, among the Parties
with respect to the subject matter hereof and thereof.

 

Section 10.12                          Severability.  If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any Law or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not effected in any
manner materially adverse to any of the Parties.  Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the Parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

 

Section 10.13                          Counterparts.  This Agreement may be
executed in two or more counterparts, including facsimile counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same agreement.

 

Section 10.14                          Limitation of Liability.  The Parties
acknowledge that neither Kirk Kerkorian nor Tracinda Corporation, individually
or collectively, is a party to this Agreement or any of the other documents
executed on the Closing Date.  The Parties further acknowledge that neither Mr.
Kerkorian nor Tracinda Corporation shall have any Liability whatsoever with
respect to this Agreement.  Accordingly, the Parties hereby agree that in the
event (a) there is any alleged breach or default or breach or default by any
Party under this Agreement or any such document or (b) any Party has or may have
any claim arising from or relating to the terms of this Agreement or any such
document, no Party shall commence any proceedings or otherwise seek to impose
any Liability whatsoever against Mr. Kerkorian or Tracinda Corporation by reason
of such alleged breach, default or claim.

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by
their respective duly authorized officers as of the date first written above.

 

 

MGM MIRAGE

 

 

 

By:

/s/ J. TERRENCE LANNI

 

 

 

Name:

J. Terrence Lanni

 

 

Title:

Chairman and Chief Executive Officer

 

 

 

MIRAGE RESORTS, INCORPORATED

 

 

 

By:

/s/ J. TERRENCE LANNI

 

 

 

Name:

J. Terrence Lanni

 

 

Title:

Chairman

 

 

 

 

 

GNLV, CORP.

 

 

 

By:

/s/ J. TERRENCE LANNI

 

 

 

Name:

J. Terrence Lanni

 

 

Title:

Chairman

 

 

 

GNL, CORP.

 

 

 

By:

/s/ J. TERRENCE LANNI

 

 

 

Name:

J. Terrence Lanni

 

 

Title:

Chairman

 

 

 

GOLDEN NUGGET EXPERIENCE, LLC

 

By its Sole Managing Member:

 

 

 

GNLV, CORP.

 

 

 

By:

/s/ J. TERRENCE LANNI

 

 

 

Name:

J. Terrence Lanni

 

 

Title:

Chairman

 

 

 

POSTER FINANCIAL GROUP, INC.

 

 

 

By:

/s/ TIMOTHY POSTER

 

 

 

Name:

Timothy Poster

 

 

Title:

Chairman and Chief Executive Officer

 

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