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


 

















 


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

  	
   

  



 


iii

















 


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.


 

















 


“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


 


2

















 


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


 


3

















 


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


 


4

















 


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.


 


5

















 


“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.


 


6

















 


“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.


 


7

















 


“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).


 


8

















 


“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.


 


9

















 


“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.


 


10

















 


“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).


 


11

















 


“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


 


12

















 


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).


 


13

















 


“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,


 


14

















 


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.


 


15

















 


“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);


 


16

















 


(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;


 


17

















 


(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;


 


18

















 


(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


 


19

















 


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


 


20

















 


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.


 


21

















 


(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


 


22

















 


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


 


23

















 


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


 


24

















 


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


 


25

















 


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


 


26

















 


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


 


27

















 


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.


 


28

















 


(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


 


29

















 


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


 


31

















 


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


 


32

















 


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.


 


33

















 


(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.


 


34

















 


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


 


35

















 


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.


 


36

















 


(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.


 


37

















 


(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.


 


38

















 


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


 


39

















 


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.


 


40

















 


(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;


 


41

















 


(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


 


42

















 


(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.


 


43

















 


(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.


 


44

















 


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.


 


45

















 


(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


 


46

















 


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.


 


47

















 


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 


 


48

















 


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,


 


49

















 


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


 


51

















 


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


 


53

















 


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;


 


54

















 


(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


 


55

















 


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


 


56

















 


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


 


57

















 


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


 


58

















 


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


 


59

















 


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


 


65

















 


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


 


66

















 


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


 


67

















 


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


 


74

















 


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


 


75

















 


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


 


76

















 


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


 


77

















 


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


 


78

















 


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


 


79

















 


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


 


83

















 


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


 


84

















 


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


 


85

















 


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


 


86

















 


(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


 


87

















 


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


 


88

















 


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.


 


89

















 


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

  
					



 


90