<PAGE>

                          PURCHASE AND SALE AGREEMENT


                                  dated as of


                               November 22, 2000


                                 by and among


                            MAJESTIC INVESTOR, LLC,
                     a Delaware limited-liability company,


                         FITZGERALDS LAS VEGAS, INC.,
                             a Nevada corporation,


                  101 MAIN STREET LIMITED LIABILITY COMPANY,
                     a Colorado limited-liability company
              doing business as "Fitzgeralds Casino Black Hawk",


                        FITZGERALDS MISSISSIPPI, INC.,
                          a Mississippi corporation,

                        FITZGERALDS GAMING CORPORATION,
                             a Nevada corporation,

                and certain affiliates of the foregoing parties

                                with respect to
                                 the assets of

                 FITZGERALDS LAS VEGAS, FITZGERALDS BLACK HAWK
                            AND FITZGERALDS TUNICA
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                      Page No.
<S>                                                                   <C>
ARTICLE I SALE OF ASSETS AND CLOSING................................      2
     1.01.   Assets.................................................      2
     1.02.   Liabilities............................................      6
     1.03.   Holdbacks..............................................      6
     1.04.   Purchase Price; Allocation.............................      7
     1.05.   Working Capital/Long Term Debt Adjustments.............      9
     1.06.   EBITDA Adjustments.....................................     10
     1.07.   Post-Closing Audit and Adjustment......................     11
     1.08.   Closing; Escrow........................................     12
     1.09.   "As Is" Condition......................................     13
     1.10.   Further Assurances; Post-Closing Cooperation...........     14
     1.11.   Insurance Proceeds.....................................     15
     1.12.   Third-Party Consent....................................     15
     1.13.   Black Hawk Business Expansion..........................     15
     1.14.   FSELLC Membership Interest.............................     15

ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLERS.....     16
     2.01.   Organization of Sellers, Parent and FFEC...............     16
     2.02.   Authority..............................................     17
     2.03.   Governmental Approvals and Filings.....................     17
     2.04.   Financial Statements...................................     17
     2.05.   Absence of Changes.....................................     18
     2.06.   No Undisclosed Liabilities.............................     19
     2.07.   Taxes..................................................     19
     2.08.   Real Property..........................................     20
     2.09.   Tangible Personal Property.............................     21
     2.10.   Intellectual Property Rights...........................     21
     2.11.   Contracts..............................................     22
     2.12.   Licenses...............................................     23
     2.13.   Foreign Person.........................................     24
     2.14.   Environmental Matters..................................     24
     2.15.   Brokers................................................     26
     2.16.   Labor Matters .........................................     26
     2.17.   No Other Agreements to Sell the Assets.................     26
     2.18.   Insurance..............................................     26
     2.19.   No Conflicts...........................................     27
     2.20.   Employee Plans.........................................     27
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                        <C>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.................   28
     3.01.   Organization...............................................   28
     3.02.   Authority..................................................   28
     3.03.   No Conflicts...............................................   28
     3.04.   Governmental Approvals and Filings.........................   29
     3.05.   Legal Proceedings..........................................   29
     3.06.   Brokers....................................................   29
     3.07.   Purchaser's Environmental Reports..........................   29
     3.08.   FSELLC Membership Interest.................................   29

ARTICLE IV COVENANTS OF PARENT AND SELLERS..............................   29
     4.01.   Regulatory and Other Approvals.............................   29
     4.02.   HSR Filings................................................   30
     4.03.   Investigation by Purchaser.................................   30
     4.04.   Conduct of Business........................................   30
     4.05.   Financial Statements and Reports; Filings..................   30
     4.06.   Certain Restrictions.......................................   31
     4.07.   Delivery of Books and Records, etc.; Removal of Property...   32
     4.08.   Non-Competition............................................   33
     4.09.   Title Insurance Policies and Exceptions....................   35
     4.10.   Notice and Cure............................................   36
     4.11.   Fulfillment of Conditions..................................   36
     4.12.   Baggage....................................................   36
     4.13.   Safe Deposits..............................................   36
     4.14.   Valet Parking..............................................   37
     4.15.   Notice of Developments.....................................   37
     4.16.   FSELLC Membership Interest.................................   37
     4.17.   Notice of Termination of Restructuring Agreement...........   37
     4.18.   Cure Obligations...........................................   37

ARTICLE V COVENANTS OF PURCHASER........................................   38
     5.01.   Regulatory and Other Approvals and Notifications...........   38
     5.02.   HSR Filings................................................   39
     5.03.   Financing Letter...........................................   39
     5.04.   Leased Employee Expenses...................................   39
     5.05.   Representations and Warranties.............................   40
     5.06.   Notice and Cure............................................   40
     5.07.   Fulfillment of Conditions..................................   41

ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER.......................   41
     6.01.   Representations and Warranties.............................   41
     6.02.   Performance................................................   41
     6.03.   Orders and Laws............................................   41
     6.04.   Regulatory Consents and Approvals..........................   42
     6.05.   Third Party Consents.......................................   42
     6.06.   Personal Property Leases...................................   42
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                     <C>
     6.07.   Deliveries..............................................   42
     6.08.   Financing...............................................   43
     6.09.   Black Hawk Business Environmental Matters...............   43
     6.10.   Tunica Business Access..................................   43
     6.11.   Las Vegas Business Compliance...........................   43

ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLERS AND PARENT..........   43
     7.01.   Representations and Warranties..........................   43
     7.02.   Performance.............................................   44
     7.03.   Orders and Laws.........................................   44
     7.04.   Regulatory Consents and Approvals.......................   44
     7.05.   Third Party Consents....................................   44
     7.06.   Deliveries..............................................   44
     7.07.   Proceedings.............................................   44

ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES......................   45
     8.01.   Taxes...................................................   45
     8.02.   Pre-Closing Tax Returns and Taxes.......................   45
     8.03.   Tax Indemnification.....................................   45
     8.04.   Tax Cooperation.........................................   46
     8.05.   Notification of Proceedings; Control ...................   46

ARTICLE IX POST-CLOSING EMPLOYMENT OBLIGATIONS OF PURCHASER..........   46
     9.01.   Hiring and Retaining Employees..........................   46
     9.02.   Purpose and Intent......................................   47
     9.03.   Certain Defined Terms...................................   47
     9.04.   Enforcement of Obligations..............................   47
     9.05.   Exception to Hiring Obligations.........................   48
     9.06.   Withdrawal Liability....................................   48
     9.07.   Bonus Program...........................................   48

ARTICLE X SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
     AND AGREEMENTS..................................................   49

ARTICLE XI  INDEMNIFICATION..........................................   49
     11.01.  Indemnification.........................................   49
     11.02.  Method of Asserting Claims..............................   50

ARTICLE XII TERMINATION..............................................   53
     12.01.  Termination.............................................   53
     12.02.  Effect of Termination...................................   56
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                        <C>
ARTICLE XIII DEFINITIONS.................................................  57
     13.01.  Defined Terms...............................................  57
     13.02.  Construction of Certain Terms and Phrases...................  70

ARTICLE XIV BANKRUPTCY PROCEEDINGS; BID PROTECTION.......................  70
     14.01.  Protections for Purchaser...................................  70
     14.02.  Conduct of the Bankruptcy Proceedings; Approval of
             Protections for Purchaser; Sale of Assets...................  72

ARTICLE XV MISCELLANEOUS.................................................  74
     15.01.  Notices.....................................................  74
     15.02.  Bulk Sales Act .............................................  75
     15.03.  Entire Agreement............................................  76
     15.04.  Expenses....................................................  76
     15.05.  Confidentiality.............................................  76
     15.06.  Certain Tunica Business Plans...............................  77
     15.07.  Computer Systems............................................  77
     15.08.  Authorized Pre-Closing Action and Activities................  78
     15.09.  Waiver; Remedies............................................  79
     15.10.  Amendment...................................................  79
     15.11.  No Third Party Beneficiary..................................  79
     15.12.  No Assignment; Binding Effect...............................  79
     15.13.  Directors and Officers......................................  79
     15.14.  Headings....................................................  79
     15.15.  Consent to Jurisdiction; Venue..............................  79
     15.16.  Invalid Provisions..........................................  80
     15.17.  Governing Law...............................................  80
     15.18.  Counterparts................................................  80
     15.19.  Employees...................................................  80
</TABLE>

EXHIBIT A      Proposed Form of Sales Order
EXHIBIT B      Adjusted Balance Sheet
EXHIBIT C      General Assignments and Bills of Sale
EXHIBIT D      Assumption Agreement
EXHIBIT E      Foreign Person Affidavit
EXHIBIT F      Preliminary Title Reports
EXHIBIT G      Deposit Escrow Agreement
EXHIBIT H      Escrow Agreement
EXHIBIT I      License Agreement
EXHIBIT J      Tunica Map
EXHIBIT K      Summary Terms of Black Hawk Business' Lease of Computer Systems
               and Related Services

                                      iv
<PAGE>

Disclosure Schedules
--------------------

Section 1.01(a)(i)       Real Property
Section 1.01(a)(ii)(A)   Real Property Leases - Sellers as Lessors
Section 1.01(a)(ii)(B)   Real Property Leases - Sellers as Lessee
Section 1.01(a)(iv)      Business Contracts
Section 1.01(a)(v)       Intangible Personal Property
Section 1.01(a)(vi)      Business Licenses
Section 1.01(a)(vii)     Vehicles
Section 1.0l(a)(xi)      Tenant Security Deposits
Section 1.01(a)(xii)     Prepaid Expenses
Section 1.01(c)          FLV/FR Real Property
Section 1.02             Assumed Liabilities
Section 2.03             Governmental Approvals and Filings
Section 2.04             Financial Statements
Section 2.05             Absence of Changes
Section 2.06             Undisclosed Liabilities
Section 2.07(a)          Tax Return Filings
Section 2.07(b)          Withholding Taxes
Section 2.07(e)          Taxes of Other Persons
Section 2.07(f)          Tax Proceedings
Section 2.08(a)          Real Property Title Matters
Section 2.08(c)          Violations of Law
Section 2.08(d)          Utilities
Section 2.08(h)          Other Real Property
Section 2.08(i)          Condition of Improvements
Section 2.09             Tangible Personal Property Title Matters
Section 2.10(a)          Intellectual Property Exceptions
Section 2.10(b)          Intellectual Property
Section 2.11(a)          Certain Contracts
Section 2.11(b)          Potential Termination or Modification of Contracts
Section 2.12             Licenses
Section 2.14             Environmental Matters
Section 2.14(f)          Waivers or Releases of Environmental Claims
Section 2.16(a)          Labor Matters
Section 2.16(b)          Employee Information
Section 2.18             Insurance
Section 2.19             Parent's and Sellers' Conflicts
Section 2.20(b)          Pension Plans
Section 3.03             Purchaser's Conflicts
Section 3.04             Governmental Approvals and Filings
Section 3.07             Purchaser's Environmental Reports
Section 4.06(h)          Bonus Program
Section 5.04             Contracted Employees

                                       v
<PAGE>

Section 6.05             Third Party Consents
Section 6.06             Personal Property Leases
Section 7.05             Third Party Consents

                                      vi
<PAGE>

                          PURCHASE AND SALE AGREEMENT

          This PURCHASE AND SALE AGREEMENT, dated as of November 22, 2000, is
entered into by and among MAJESTIC INVESTOR, LLC, a Delaware limited-liability
company ("Purchaser"); FITZGERALDS LAS VEGAS, INC., a Nevada corporation
("FLV"); 101 MAIN STREET LIMITED LIABILITY COMPANY, a Colorado limited-liability
company ("FBH"); FITZGERALDS MISSISSIPPI, INC., a Mississippi corporation ("FM"
and collectively with FLV and FBH, "Sellers" and each, a "Seller"); certain
Affiliates of Parent or Sellers named on the signature pages of this Agreement
only as to the limited matters specified thereon; and FITZGERALDS GAMING
CORPORATION, a Nevada corporation ("Parent"). Capitalized terms not defined
elsewhere herein have the meanings set forth in Section 13.01.
                                                -------------

          WHEREAS, FLV is engaged in the business of owning and operating the
hotel/casino known Fitzgeralds Las Vegas, located in Las Vegas, Nevada, and
conducting various related activities (collectively, the "Las Vegas Business");
and

          WHEREAS, FBH is engaged in the business of owning and operating the
casino known as Fitzgeralds Black Hawk, located in Black Hawk, Colorado, as well
as various related activities (collectively, the "Black Hawk Business"); and

          WHEREAS, FM is engaged in the business of owning and operating the
hotel/casino known as Fitzgeralds Tunica, located in Tunica, Mississippi, as
well as various related activities (the "Tunica Business" and, together with the
Las Vegas Business and the Black Hawk Business, the "Business"); and

          WHEREAS, Sellers are direct or indirect wholly-owned subsidiaries of
Parent; and

          WHEREAS, Sellers desire to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase and acquire from Sellers, certain of the assets of
Sellers relating to the Business and, in connection therewith, Purchaser has
agreed to assume certain of the liabilities of Sellers relating to the Business,
all on the terms set forth herein; and

          WHEREAS, Parent, Sellers and certain other Persons contemplate
entering into the Restructuring Agreement with the Consenting Noteholders; and

          WHEREAS, it is understood that following execution and delivery of
this Agreement, Sellers and Parent will become debtors and debtors-in-possession
under Title 11 of the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. "101
et seq. (the "Bankruptcy Code"), in proceedings (the "Bankruptcy Proceedings")
-- ----
before the United States Bankruptcy Court for the District of Nevada, Northern
Division (the "Bankruptcy Court"); and

          WHEREAS, it is anticipated that in the Bankruptcy Proceedings, the
Bankruptcy Court will enter an Order Approving Sale of Assets Free And Clear of
Liens, Claims And

                                       1
<PAGE>

Interests And Assumption And Assignment Of Certain Executory Contracts And
Unexpired Leases, providing for, among other things, the sale of the Business
and the assumption of this Agreement pursuant to a motion brought in accordance
with "363(f) of the Bankruptcy Code as contemplated by this Agreement ("363
Motion"); and

          WHEREAS, after commencement of the Bankruptcy Proceedings the
transactions contemplated by this Agreement will be subject to approval by an
Order of the Bankruptcy Court ("Sales Order"), the proposed form and content of
which are set forth in Exhibit A hereto or if not set forth therein, will be
                       ---------
satisfactory to Purchaser and Sellers; and

          WHEREAS, the Sales Order will be a Final Order;

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:


                                   ARTICLE I

                          SALE OF ASSETS AND CLOSING

          1.01.  Assets.
                 ------

          (a)    Assets Transferred. On the terms and subject to the conditions
                 ------------------
set forth in this Agreement, Sellers will, and Parent will cause Sellers to,
sell, transfer, convey, assign and deliver to Purchaser, and Purchaser will
purchase and pay for, at the Closing, all of Sellers" rights, title and
interests in, to and under all of the assets and properties of Sellers used or
held for use in connection with the Business, free and clear of all Liens,
except as otherwise provided in Section 1.01(b), as the same shall exist on the
                                ---------------
Closing Date (collectively with any proceeds and awards referred to in Section
                                                                       -------
1.11, the "Assets"), including, without limitation, the following:
----
                 (i)  Real Property.  The real property, legal descriptions of
                      -------------
     which are set forth in Section 1.01(a)(i) of the Disclosure Schedule, and
                            ---------------------------------------------
     all of the rights arising out of the ownership thereof or appurtenant
     thereto (including, without limitation, any and all easements relating
     thereto) (the "Real Property"), together with all buildings, structures,
     facilities, fixtures and other improvements thereon (collectively, the
     "Improvements");

                 (ii) Real Property Leases.  Subject to Section 1.12, (A) the
                      --------------------              ------------
     leases and subleases of real property described in Section 1.01(a)(ii)(A)
                                                        ----------------------
     of the Disclosure Schedule as to which  a Seller is the lessor or
     --------------------------
     sublessor and (B) the leases and subleases of real property described in
     Section 1.01(a)(ii)(B) of the Disclosure Schedule as to which a Seller is
     -------------------------------------------------
     the lessee or sublessee, together with any options held by any Seller to
     purchase the underlying property and leasehold improvements thereon, and in
     each case all other rights, subleases, licenses, permits, deposits and
     profits appurtenant to or related to such leases and subleases, all of the
     foregoing of which will be assumed by Sellers and assigned by Sellers to
     Purchaser pursuant to a Final Order under (S) 365 of the Bankruptcy

                                       2
<PAGE>

     Code that will be entered prior to, or contemporaneously with, the entry of
     the Sales Order (the leases and subleases described in subclauses (A) and
                                                            ------------------
     (B) are collectively referred to herein as the "Real Property Leases");
     ---
               (iii)  Tangible Personal Property.  All furniture, fixtures,
                      --------------------------
     equipment (including computer hardware, software and other computer-related
     equipment), supplies, parts, machinery and other tangible personal property
     (including, without limitation, any and all tangible "gaming devices" (as
     defined in NRS (S) 463.0155, C.R.S. (S) 12-47.1-103(10) and Miss. Code Ann.
     75-76-5(m)), gaming device parts inventory and other related gaming
     equipment and supplies used in connection with the operation of the casinos
     included in the Business, including, without limitation, slot machines,
     gaming tables, cards, dice and tangible "associated equipment" (as defined
     in NRS (S) 463.0136 and Miss. Code Ann. 75-76-5(c)) used or held for use by
     any Seller in the conduct of the Business, including any of the foregoing
     purchased subject to any conditional sales or title retention agreement in
     favor of any other Person (collectively, the "Tangible Personal Property");

               (iv)   Business Contracts. Subject to Section 1.12, all Contracts
                      ------------------             ------------
     (other than the Real Property Leases) listed in Section 1.01(a)(iv) of the
                                                     --------------------------
     Disclosure Schedule to which any Seller is a party, which are utilized in
     -------------------
     the conduct of the Business and which will be assumed by Sellers and
     assigned by Sellers to Purchaser pursuant to a Final Order under (S) 365 of
     the Bankruptcy Code that will be entered prior to, or contemporaneously
     with, the entry of the Sales Order, including, without limitation,
     contracts relating to suppliers, purchase orders and marketing arrangements
     (collectively, the "Business Contracts");

               (v)    Intangible Personal Property.  Subject to Section 1.12
                      ----------------------------              ------------
     and to the License Agreement, all Intellectual Property used or held for
     use and necessary to conduct the Business as presently conducted
     (including, without limitation, intangible "gaming devices" as defined in
     NRS (S) 463.0155, C.R.S. (S) 12-47.1-103(10) or Miss. Code Ann. (S) 75-76-
     5(m)), player tracking systems, "cashless wagering systems" (as defined in
     NRS (S) 463.014) and intangible "associated equipment" (as defined in NRS
     (S) 463.0136 or Miss. Code Ann. (S) 75-76-5(c)), internet web site domain
     names for the Business, and all goodwill associated therewith, and all
     rights, privileges, claims, causes of action and options relating or
     pertaining to the Intellectual Property, the Business or the Assets listed
     in Section 1.01(a)(v) of the Disclosure Schedule (with such listing to
        ---------------------------------------------
     include the application serial number or registration number, the class of
     goods covered and the expiration date of each registered trademark, trade
     name, service mark, service name, brand name or registered rights to any of
     the foregoing that are included in the Intellectual Property)
     (collectively, the "Intangible Personal Property");

               (vi)   Licenses.  To the extent their transfer or assignment to
                      --------
     Purchaser is permitted under applicable Laws including the Bankruptcy Code,
     and to the extent assumed and assigned pursuant to (S) 365 of the
     Bankruptcy Code and by the entry of the Sales Order, but subject to Section
                                                                         -------
     1.12, all Licenses (and applications therefor) utilized in and necessary to
     ----
     conduct and promote the Business as presently conducted, including those
     listed in Section 1.01(a)(vi) of the Disclosure Schedule (the "Business
               ----------------------------------------------
     Licenses");

                                       3
<PAGE>

               (vii)  Vehicles.  All motor vehicles owned or, subject to Section
                      --------                                           -------
     1.12, leased by any Seller and used or held for use in the conduct of the
     ----
     Business, as listed in Section 1.01(a)(vii) of the Disclosure Schedule (the
                            -----------------------------------------------
     "Vehicles");

               (viii) Advance Reservations and Similar Deposits.  All cash or
                      -----------------------------------------
     cash-equivalent deposits for advance reservations, bookings, room and
     banquet deposits applicable to any period following the Closing, and
     originals of casino credit files with respect to the casino operations, and
     any telephone numbers used exclusively in connection with the Business (the
     "Advance Reservations and Deposits");

               (ix)   Customer Lists.  All customer lists and databases relating
                      --------------
     specifically to the Business (the "Customer Lists");

               (x)    Books and Records.  All Books and Records used or held
                      -----------------
     for use in the conduct of the Business or otherwise relating to the Assets
     in all mediums of expression (including, without limitation, such books and
     records required by Gaming Authorities to be maintained at the Business),
     other than the Excluded Books and Records (collectively, the "Business
     Books and Records"). Purchaser shall cooperate and afford Sellers, their
     counsel, accountants and other representatives (subject to reasonable and
     customary requirements on their part), during normal business hours,
     reasonable access to the Business Books and Records after the Closing Date;

               (xi)   Security Deposits.  All security deposits deposited with
                      -----------------
     any Seller by or on behalf of lessees or sublessees under the Real Property
     Leases as of the Closing Date, as listed in Section 1.0l(a)(xi) of the
                                                 --------------------------
     Disclosure Schedule (the "Tenant Security Deposits"); and
     -------------------

               (xii)  Prepaid Expenses.  All prepaid expenses relating to the
                      ----------------
     Business which are transferable or assignable by any Seller, as listed in
     Section 1.01(a)(xii) of the Disclosure Schedule ("Prepaid Expenses").
     -----------------------------------------------

          Also at the Closing, but subject to Section 1.14, Purchaser will
                                              ------------
acquire from FFEC, and FFEC will transfer and deliver to Purchaser, the FSELLC
Membership Interest.

          To the extent any of the Business Books and Records are items
susceptible to duplication and are either (x) used or reasonably expected to be
used in connection with any of Sellers", Parent's or any of their Affiliates"
businesses other than the Business or (y) are required by Law to be retained by
any Seller, Parent or any of their Affiliates, Sellers may deliver photostatic
copies or other reproductions from which, in the case of Business Books and
Records referred to in clause (x) of this Section 1.01, information solely
                       -------------------------------
concerning Sellers", Parent's or any of their Affiliates" businesses other than
the Business has been deleted; provided, however, that to the extent that any
                               -----------------
evidentiary rules applicable to Purchaser would require Purchaser to produce the
original Business Books and Records, Sellers will make such originals available
to Purchaser for the purpose of compliance with such rules.

          (b)  Excluded Assets.  Notwithstanding anything in this Agreement to
               ---------------
the contrary, the following assets and properties of Sellers (the "Excluded
Assets") shall be excluded from and shall not constitute Assets:

                                       4
<PAGE>

               (i)    Insurance.  Life insurance policies of officers and other
                      ---------
     employees of Sellers, directors and officers liability insurance policies
     of directors and officers of Sellers and, subject to Section 1.11, all
                                                          ------------
     other insurance policies relating to the operation of the Business which
     are not by their terms transferable to Purchaser in connection with the
     transactions contemplated by this Agreement;

               (ii)   Employee Benefit Plans.  All assets owned or held by any
                      ----------------------
     employee benefit plans;

               (iii)  Tax Refunds.  All refunds or credits, if any, of federal,
                      -----------
     state, local or foreign income taxes due to any Seller or Parent;

               (iv)   Excluded Books and Records.  The minute books, stock
                      --------------------------
     transfer books and corporate seals of Sellers and any Books and Records
     relating solely to the Excluded Assets or the Retained Liabilities, other
     than any such Books and Records required by any Gaming Authority to be
     maintained at the Business (the "Excluded Books and Records");

               (v)    Litigation Claims.  Any Seller's rights (including
                      -----------------
     indemnification), claims and recoveries under litigation against third
     parties arising out of, or relating to, events prior to the Closing Date;

               (vi)   Excluded Rights.  The respective rights of Sellers in, to
                      ---------------
     and under all (A) Contracts (I) which are not assigned to Purchaser
     pursuant to clause (ii) or (iv) of Section 1.01(a) and (II) the obligations
                 --------------------------------------
     of Sellers under which are not assumed by Purchaser pursuant to Section
                                                                     -------
     1.02(a) and (B) Retained Liabilities;
     -------

               (vii)  Restricted Cash.  $500,000 of the amount reported as
                      ---------------
     "Restricted Cash" in the "Other Assets" section of the Adjusted Balance
     Sheet;

               (viii) Related Party Receivables.  Receivables owed to any Seller
                      -------------------------
     by any directors, officers or owners of more than ten percent of the
     outstanding stock of Parent or any Seller;

               (ix)   Other Rights.  Sellers" respective rights under this
                      ------------
     Agreement and the Operative Agreements.

          (c)  Las Vegas Business Real Property.  Prior to the Closing, Parent
               --------------------------------
shall cause FR to transfer, convey and assign to FLV, FLV shall acquire from FR,
and Parent shall cause FLV to acquire from FR, all of FR's rights, title and
interests in, to and under all Real Property that is used in the Las Vegas
Business (the "FLV/FR Real Property") including, without limitation, the Real
Property described in Section 1.01(c) of the Disclosure Schedule, for the
                      ------------------------------------------
purpose of having FLV, in turn, transfer, convey and assign all of such rights,
title and interests to Purchaser at the Closing pursuant to Section 1.01(a)(i).
                                                            ------------------

          (d)  Parent's and FR's Intellectual Property.  Prior to Closing,
               ---------------------------------------
Parent shall transfer to Sellers and shall cause FR to transfer and assign to
Sellers all of Parent's and FR's respective rights, title and interest in, to
and under all of the Intellectual Property listed in Section
                                                     -------

                                       5
<PAGE>

1.01(a)(v) of the Disclosure Schedule for the purpose of having (i) Sellers, in
-------------------------------------
turn, transfer and assign all of such rights, title and interest to Purchaser at
the Closing pursuant to Section 1.01(a)(v) and (ii) Purchaser grant to Parent
                        ------------------
and its Affiliates a license to use such Intellectual Property pursuant to the
License Agreement.

          1.02.  Liabilities.
                 -----------

          (a)    Assumed Liabilities.  In connection with the sale, transfer,
                 -------------------
conveyance, assignment and delivery of the Assets pursuant to this Agreement, at
the Closing Purchaser will assume and agree to pay, perform and discharge, as
and when due, all Liabilities of Sellers described in Section 1.02 of the
                                                      -------------------
Disclosure Schedule and any other Liabilities incurred by any Seller in the
-------------------
ordinary course of business between the date of this Agreement and the Closing
Date, as the same shall exist on or after the Closing Date, except contingent
Liabilities (collectively, the "Assumed Liabilities").

          (b)    Retained Liabilities.  Purchaser shall not assume any of the
                 --------------------
following Liabilities (collectively, the "Retained Liabilities") by virtue of
this Agreement or the transactions contemplated hereby:

                 (i)    intercompany Liabilities between Sellers or between
     Parent and any Seller;

                 (ii)   contingent Liabilities;

                 (iii)  Liabilities arising as a result of an acceleration of
     any Seller's obligations or a right to accelerate any Seller's obligations
     under any Contract due to a breach or default by such Seller prior to the
     Closing Date, to the extent that reserves for such Liabilities are not
     provided for in the Final Balance Sheet;

                 (iv)   Liabilities relating to Sellers" obligations to cure
     defaults, as provided in clause (i) of Section 1.12 and Section 4.18.
                              ----------    ------------     ------------

                 (v)    all Taxes for which Parent, any Seller or FFEC is
     liable, except to the extent provided in Section 8.03(b);
                                              ---------------

                 (vi)   Liabilities under any Employee Plan;

                 (vii)  the matters described in Section 15.08(e) and (f); and
                                                 ------------------------

                 (viii) Liabilities described in Section 2.06 of the Disclosure
                                                 ------------------------------
     Schedule.
     --------

          (c)    Sellers will not assign to Purchaser, and Purchaser will not
assume from Sellers, any employment Contracts to which any Seller is a party.

          1.03.  Holdbacks.
                 ---------

          (a)    There may be withheld from the Cash Component payable to
Sellers at the Closing such amounts necessary to comply with NRS (S)(S)360.525,
and 612.695; C.R.S. (S)(S)39-22-

                                       6
<PAGE>

604.5, 39-26-117 and 8-79-103; or Miss. Code Ann. (S)(S)27-65-55, 75-76-143 and
71-5-375 or to satisfy requirements to which any of the Real Property may be
subject pursuant to NRS (S)244.335, C.R.S. (S)24-35-109 or Miss. Code Ann.
(S)(S)27-15-215, 27-17-467 and 27-35-5 (collectively, the "Regulatory
Holdback"). The Regulatory Holdback shall be kept on deposit in the Escrow
Account until Sellers furnish the Escrow Agent with receipts or certificates
provided for in said statutes certifying that (i) the applicable obligations
have been paid or discharged, at which time the Regulatory Holdback shall be
released from the Escrow Account and paid to Sellers, or (ii) funds out of the
Cash Component sufficient for such purpose are held by the Escrow Agent as the
Regulatory Holdback, at which time the Escrow Agent shall pay such funds for
such purpose and release the balance of the Regulatory Holdback (if any) to
Sellers. If Sellers do not produce such receipts, certificates or evidence
within the time periods provided for in said statutes, or if any lien or other
claim therefor is asserted against Purchaser or the Real Property (or any
portion thereof), the Escrow Agent may pay out of the Regulatory Holdback such
sums as may be required by such statutes to the appropriate authority and shall
thereupon release the balance of the Regulatory Holdback (if any), together with
all interest on the Regulatory Holdback, to Sellers.

          (b)    There shall be withheld from the Cash Component payable to
Sellers at the Closing Three Million Five Hundred Thousand Dollars ($3,500,000)
(the "Purchaser's Holdback"), which amount shall be deposited by Purchaser and
held in the Escrow Account. From time to time prior to the date which is nine
months from the Closing Date (the "First Holdback Expiration Date"), in
accordance with the Escrow Agreement Purchaser may apply the Purchaser's
Holdback to pay, or to provide for the payment of, any liability of Parent or
Sellers to Purchaser resulting from (i) post-Closing adjustments of the Cash
Component or (ii) Parent's and Sellers" indemnification obligations under
Section 11.01. On the First Holdback Expiration Date, any portion of the
-------------
Purchaser's Holdback in excess of One Million Dollars ($1,000,000) remaining in
the Escrow Account shall be released to Sellers in accordance with the Escrow
Agreement or, in the event of a pending dispute, as provided in the Escrow
Agreement (the "First Release"). From time to time between the First Holdback
Expiration Date and the date which is 12 months from the First Holdback
Expiration Date (the "Final Holdback Expiration Date"), in accordance with the
Escrow Agreement and after giving effect to the First Release, Purchaser may
apply the remaining balance of the Purchaser's Holdback to pay, or to provide
for the payment of, any liability of Parent or Sellers to Purchaser resulting
from Parent's and Seller's indemnification obligations under Section 11.01 only
                                                             -------------
as they pertain to breaches of representations and warranties contained in
Sections 2.07 or 2.14 or breaches of covenants contained in Sections 8.01, 8.02
---------------------                                       -------------------
or 8.03. On the Final Holdback Expiration Date, any portion of the Purchaser's
-------
Holdback remaining in the Escrow Account shall be released to Sellers in
accordance with the Escrow Agreement or, in the event of a pending dispute, as
provided in the Escrow Agreement. There shall be added to each and every payment
to Purchaser or Sellers out of the Purchaser's Holdback pursuant to this Section
                                                                         -------
1.03(b) a proportionate share of the interest earned on the Purchaser's Holdback
-------
through the date of such payment.

          1.04.  Purchase Price; Allocation.
                 --------------------------

          (a)    The aggregate purchase price for the Assets and the FSELLC
Membership Interest minus the credit given to Purchaser for its agreement to
license to Parent and its

                                       7
<PAGE>

Affiliates (pursuant to the License Agreement) the Intellectual Property that is
being assigned to Purchaser under this Agreement (the "Purchase Price") shall
consist of the following:

               (i)   One Hundred Forty Nine Million Dollars ($149,000,000),
     subject to adjustment as provided in Sections 1.05, 1.06 and 1.07 (the
                                          ----------------------------
     "Cash Component"); plus

               (ii)  Purchaser's assumption of the Assumed Liabilities.

          (b)  Upon execution of this Agreement, Purchaser shall pay Two Million
Dollars ($2,000,000) of the Cash Component as a deposit (the "Earnest Money
Deposit") by wire transfer of immediately available funds to the Deposit Escrow
Account maintained by the Deposit Escrow Agent at the address or to the account
number specified in the Deposit Escrow Agreement, with the balance of the Cash
Component (including the portions of the Cash Component constituting the
Regulatory Holdback and the Purchaser's Holdback) due at the Closing, as
provided in Section 1.08.  Purchaser on one side, and Sellers on the other side,
            ------------
shall each pay directly to the Deposit Escrow Agent one half of the Deposit
Escrow Fees as and when due under the Deposit Escrow Agreement.

          (c)  Prior to the Closing Date Purchaser shall prepare a schedule
which sets forth an initial allocation of the Purchase Price among the Assets,
the FSELLC Membership Interest and the License Agreement credit and Purchaser
and Sellers shall negotiate in good faith to determine the final allocation of
the Purchase Price among the Assets, the FSELLC Membership Interest and the
License Agreement credit. Such allocation shall be made separately for the
Assets from each of the Las Vegas Business, the Black Hawk Business and the
Tunica Business. If the parties are unable to agree upon an allocation of the
Purchase Price prior to the Closing, the parties shall continue to cooperate in
the preparation of, and use their reasonable best efforts to agree upon, the
allocation, provided that any material issues with respect to the allocation
which have not been finally resolved within 30 days following the Closing shall
be referred for resolution to a nationally recognized independent public
accounting firm as to which Sellers and Purchaser mutually agree, whose
determination shall be final and binding upon the parties. The costs of such
accounting firm shall be shared equally by Purchaser on one side, and by Sellers
on the other side. Any subsequent adjustments to the Purchase Price shall be
allocated in a manner consistent with the final Purchase Price allocation and
(S)1060 of the Code. Each party hereto agrees (i) that any such allocation shall
be consistent with paragraph (a) of this Section and the requirements of (S)1060
                   -------------
of the Code and the regulations thereunder, (ii) to complete jointly and to file
separately IRS Form 8594 as part of such party's Federal Income Tax Return
consistently with such allocation for the tax year in which the Closing occurs,
and (iii) that no party will take a position on any income, transfer or gains
Tax Return, before any Governmental or Regulatory Authority charged with the
collection of any Tax or in any judicial or administrative proceeding, that is
in any manner inconsistent with the terms of any such allocation without the
written consent of the other parties unless required to do so pursuant to a
determination (as defined in (S)1313(a) of the Code or any similar provision of
applicable state, local or foreign law).

                                       8
<PAGE>

          1.05.  Working Capital/Long Term Debt Adjustments.
                 ------------------------------------------

          (a)    Set forth as Exhibit B hereto is a Balance Sheet as of July 2,
                              ---------
2000 (the "Adjusted Balance Sheet").  At the Closing, Parent will deliver to
Purchaser a Balance Sheet as of the end of Parent's most recently ended four-
/five-week accounting period preceding the Closing Date for which it is then
practicable to report the Business" results of operations (the "Updated Balance
Sheet").  Within 60 days after the Closing, Purchaser will deliver to Parent a
Balance Sheet as of the date immediately preceding the Closing Date (the "Final
Balance Sheet").  The Updated Balance Sheet and the Final Balance Sheet will be
prepared as if FLV, FBH and FM are going concerns and on a basis consistent with
the Adjusted Balance Sheet, as provided in Section 2.04; provided, however, that
                                           ------------  -----------------
the Updated Balance Sheet and the Final Balance Sheet shall exclude all Retained
Liabilities.  As calculated in accordance with paragraphs (b), (c) and (d) of
                                               ---------------------------
this Section, the respective differences between (x) the "Adjusted Totals" of
"Current Assets," "Current Liabilities" and "Long Term Debt, Net" (which
excludes intercompany debt) reported in the Updated Balance Sheet and the Final
Balance Sheet and (y) such amounts reported in the Adjusted Balance Sheet will
form the basis for dollar-for-dollar Closing and post-Closing adjustments of the
Cash Component.  For purposes of calculating such adjustments, "Working Capital"
means the amount by which the aggregate "Adjusted Total" of "Current Assets"
exceeds the aggregate "Adjusted Total" of "Current Liabilities" reported on a
Balance Sheet as of a specified date.

          (b)    At the Closing, the Cash Component will be (i) increased by the
increase, if any, in Working Capital reported on the Updated Balance Sheet
("Updated Working Capital") as compared to Working Capital reported on the
Adjusted Balance Sheet ("Adjusted Working Capital") or (ii) reduced by the
decrease, if any, in Updated Working Capital as compared to Adjusted Working
Capital.

          (c)    At the Closing, the Cash Component will be (i) increased by the
decrease, if any, in the aggregate "Adjusted Total" of "Long Term Debt, Net"
reported on the Updated Balance Sheet ("Updated Long Term Debt") as compared to
the aggregate "Adjusted Total" of "Long Term Debt, Net" reported on the Adjusted
Balance Sheet ("Adjusted Long Term Debt") or (ii) reduced by the increase, if
any, in Updated Long Term Debt as compared to Adjusted Long Term Debt.

          (d)    Within a mutually agreed time period after Purchaser delivers
the Final Balance Sheet to Parent, but in no event later than ten days after any
disagreements with the Final Balance Sheet or the calculation of Final EBITDA
are resolved pursuant to Section 1.07, the following post-Closing adjustments to
                         ------------
the Cash Component will be made through either a cash payment by Purchaser to
Sellers in the case of a net increase in the Cash Component or a cash payment on
behalf of Sellers to Purchaser out of the Purchaser's Holdback in the case of a
net decrease in the Cash Component:

                 (i)  The Cash Component will be (A) increased by the increase,
     if any, in Working Capital reported on the Final Balance Sheet ("Final
     Working Capital") as compared to Updated Working Capital or (B) decreased
     by the decrease, if any, in Final Working Capital as compared to Updated
     Working Capital.

                                       9
<PAGE>

                 (ii)  The Cash Component will be decreased by the amount of any
     prepaid expenses or other current assets relating to the Business which are
     included in Final Working Capital, but are not transferable or assignable
     to Purchaser.

                 (iii) The Cash Component will be (A) increased by the decrease,
     if any, in the aggregate "Adjusted Total" of "Long Term Debt, Net" reported
     on the Final Balance Sheet ("Final Long Term Debt") as compared to Updated
     Long Term Debt or (B) decreased by the increase, if any, in Final Long Term
     Debt as compared to Updated Long Term Debt.

          (e)    The parties hereto acknowledge that Adjusted Working Capital
equals $2,941,895 and Adjusted Long Term Debt equals $158,878.

          1.06.  EBITDA Adjustments.
                 ------------------

          (a)    At the Closing, Parent will deliver to Purchaser the EBITDA
Financial Statements prepared internally by Parent for the 12-month period
ending on the last day of Parent's last four-/five-week accounting period
preceding the Closing Date for which it is then practicable to report the
Business" results of operations (the "Interim EBITDA Financial Statements").
Within 60 days after the Closing and together with the Final Balance Sheet,
Purchaser will deliver to Parent the EBITDA Financial Statements for the 12-
month period ending on the last day of Parent's last four-/five-week accounting
period preceding the Closing Date (the "Final EBITDA Financial Statements").
The Interim EBITDA Financial Statements and the Final EBITDA Financial
Statements will be prepared as if FLV, FBH and FM are going concerns and on a
basis consistent with the manner in which Purchaser, Parent and Sellers mutually
calculated Benchmark EBITDA for the Business for purposes of this Agreement.  As
calculated in accordance with paragraphs (b) and (c) of this Section, the
                              ----------------------
respective variances between Adjusted EBITDA and Benchmark EBITDA, and between
Final EBITDA and Benchmark EBITDA, will form the basis for Closing and post-
Closing adjustments of the Cash Component.

          (b)    If EBITDA as reported on the Interim EBITDA Financial
Statements plus the Corporate Expense Adjustment ("Adjusted EBITDA") varies by
more than 5% from $30,400,000 ("Benchmark EBITDA"), then the Cash Component will
be adjusted at the Closing by an amount ("Interim Adjustment Amount") equal to
the product of (x) Adjusted EBITDA minus Benchmark EBITDA, multiplied by (y)
four. The Cash Component will be reduced by a negative Interim Adjustment Amount
or increased by a positive Interim Adjustment Amount, as the case may be. No
Cash Component adjustment will be made under this paragraph (b) if Adjusted
                                                  -------------
EBITDA does not vary by more than 5% from Benchmark EBITDA.

          (c)    Within a mutually agreed time period after Purchaser delivers
the Final EBITDA Financial Statements to Parent, but in no event later than ten
days after any disagreements with the Final Balance Sheet or the calculation of
Final EBITDA are resolved pursuant to Section 1.07, the following post-Closing
                                      ------------
adjustments to the Cash Component will be made through either a cash payment by
Purchaser to Sellers in the case of an increase in the Cash Component or a cash
payment on behalf of Sellers to Purchaser out of the Purchaser's Holdback in the
case of a decrease in the Cash Component:

                                      10
<PAGE>

                 (i)  If EBITDA as reported on the Final EBITDA Financial
     Statements plus the Corporate Expense Adjustment ("Final EBITDA") varies by
     more than 5% from Benchmark EBITDA, then the Cash Component will be
     adjusted by an amount ("Final Adjustment Amount") equal to (I) the product
     of (x) Final EBITDA minus Benchmark EBITDA, multiplied by (y) four, minus
     (II) the Interim EBITDA Adjustment Amount. The Cash Component will be
     reduced by a negative Final Adjustment Amount or increased by a positive
     Final Adjustment Amount, as the case may be.

                 (ii) If Final EBITDA does not vary by more than 5% from
     Benchmark EBITDA, then the only Cash Component adjustment that shall be
     made pursuant to clause (i) of this paragraph (c) shall be a reversal of
                      ----------         -------------
     the Cash Component adjustment that was made under paragraph (b) of this
                                                       -------------
     Section based on the Interim Adjustment Amount, with a reimbursement by the
     party that received the payment for such adjustment.

          1.07.  Post-Closing Audit and Adjustment. Parent will have the right
                 ---------------------------------
to review or audit the Final Balance Sheet and the calculation of Final EBITDA.
Any appropriate corrections or restatements resulting from such review or audit
that affect the Cash Component adjustments specified in Section 1.05 or Section
                                                        ------------    -------
1.06 will require a corresponding cash payment by Purchaser to Sellers in the
----
case of an increase in the Cash Component, or reimbursement by or on behalf of
Sellers to Purchaser in the case of a reduction of the Cash Component. If Parent
disagrees with the Final Balance Sheet or with the calculation of Final EBITDA,
it shall notify Purchaser of such disagreement in writing, specifying in detail
the particulars of such disagreement, within 15 Business Days after Parent's
receipt of the Final Balance Sheet and calculation of Final EBITDA (the "Dispute
Notice"). To the extent that any portion of the Final Balance Sheet or
calculation of Final EBITDA is not in dispute, within 15 Business Days after
Parent's receipt of the Final Balance Sheet and the calculation of Final EBITDA,
Sellers shall pay or cause to be paid to Purchaser or Purchaser shall pay or
cause to be paid to Sellers, as the case may be, that portion of the adjustment
to the Cash Component which is not in dispute. Any such payment owed by Sellers
shall be made from the Purchaser's Holdback as provided in Section 1.03(b), to
                                                           ---------------
the extent that the Purchaser's Holdback is sufficient for that purpose.
Purchaser and Sellers shall use commercially reasonable efforts for a period of
30 days after Parent's delivery of the Dispute Notice (or such longer period as
Purchaser and Sellers mutually agree upon) to resolve any disagreements raised
by Parent with respect to the Final Balance Sheet or the calculation of Final
EBITDA. If, at the end of such period, Purchaser and Sellers are unable to
resolve such disagreements, Deloitte & Touche and Price Waterhouse Coopers,
independent auditors of Sellers and Purchaser, respectively, shall jointly
select a third independent auditor from a recognized national standing "Big-5"
accounting firm to resolve any remaining disagreements. The determination by
such third independent auditor shall be final, binding and conclusive on
Purchaser, Parent and Sellers. Purchaser and Sellers shall use commercially
reasonable efforts to cause such third independent auditor to make its
determination within 30 days of accepting its selection. If Parent or any
Sellers determine that a delay in this dispute resolution mechanism threatens to
delay the closing of their cases in the Bankruptcy Proceedings, then Parent or
any Sellers may seek means from the Bankruptcy Court to enforce such independent
auditor's determination. The parties hereto, Sellers' and Purchaser's respective
independent auditors, and such third selected independent auditor shall agree to
be subject to the jurisdiction of the Bankruptcy Court for this purpose. Within
ten days after the date of determination of such third independent auditor,
Purchaser shall pay Sellers, or Sellers

                                      11
<PAGE>

shall pay Purchaser, as the case may be, the amount of the adjustment to the
Cash Component that is determined to be due and payable. Any such payment owed
by Sellers shall be made from the Purchaser's Holdback as provided in Section
                                                                      -------
1.03(b), to the extent that the Purchaser's Holdback is sufficient for that
-------
purpose. Fees and expenses of such third independent auditor shall be borne
equally by Purchaser on one side, and Sellers on the other side.

          1.08.  Closing; Escrow.
                 ---------------

          (a)    The Closing will commence at the office of Parent in Las Vegas,
Nevada, or at such other place as the parties hereto mutually agree in writing,
at 9:00 a.m. Nevada time, on the Closing Date and shall be deemed to have
occurred for each of the Las Vegas Business, the Black Hawk Business and the
Tunica Business at 11:59 p.m., Nevada time, on the Closing Date (the "Transfer
Time"), giving effect, retroactively to the Transfer Time, to tabulations of
Assets, Liabilities and income and expense amounts allocable to Sellers for the
period prior to the Transfer Time that will commence at 1:00 a.m., local time at
the respective Business locations on the day after the Closing Date.

          (b)    At the Closing, Purchaser will deliver the Cash Component (less
the Earnest Money Deposit), as adjusted pursuant to Sections 1.05(b) and (c) and
                                                    ----------------------------
1.06(b), by wire transfer of immediately available funds to the Escrow Account
-------
maintained by the Escrow Agent at the address or to the account number specified
in the Escrow Agreement.  The Cash Component, minus the Regulatory Holdback,
minus the Purchaser's Holdback, minus one half of the Escrow Fees, plus all
interest earned on the Earnest Money Deposit shall then be released from the
Escrow Account and the Deposit Escrow Account and paid to Sellers simultaneously
with the actions specified in paragraph (d) of this Section.  Also at the
                              -------------
Closing, one half of the Escrow Fees shall be paid to the Escrow Agent from the
Cash Component and the other half of the Escrow Fees shall be paid directly by
Purchaser to the Escrow Agent.

          (c)    The Regulatory Holdback and the Purchaser's Holdback shall
remain in the Escrow Account and shall be applied against the obligations
specified in paragraphs (a) and (b), respectively, of Section 1.03 during the
             ----------------------                   ------------
applicable periods specified therein, in accordance with Section 1.03 and the
                                                         ------------
Escrow Agreement. Upon satisfaction of the conditions specified in Section
                                                                   -------
1.03(a), any remaining balance of the Regulatory Holdback plus all interest
-------
earned on the Regulatory Holdback shall be released from the Escrow Account and
paid immediately to Sellers. On the First Holdback Expiration Date, any
remaining balance of the Purchaser's Holdback in excess of $1,000,000 shall be
released from the Escrow Account and paid immediately to Sellers unless a
dispute is pending, in which case the Escrow Agreement shall govern. On the
Final Holdback Expiration Date, any remaining balance of the Purchaser's
Holdback shall be released from the Escrow Account and paid immediately to
Sellers unless a dispute is pending, in which case the Escrow Agreement shall
govern. There shall be added to each and every payment out of the Purchaser's
Holdback a proportionate share of the interest earned on the Purchaser's
Holdback through the date of such payment.

          (d)    Simultaneously with the remittance by Purchaser of the Cash
Component (less the Earnest Money Deposit) to the Escrow Account pursuant to
paragraph (b) of this Section, (i) Sellers will, and Parent will cause Sellers
-------------
to, assign and transfer to Purchaser all of Sellers' rights, title and interests
in and to the Assets (free and clear of all Liens, other than

                                      12
<PAGE>

Permitted Liens) and FFEC will assign and transfer to Purchaser the FSELLC
Membership Interest by delivery of (A) General Assignments and Bills of Sale
substantially in the form of Exhibit C hereto (the "General Assignments"), duly
                             ---------
executed by Sellers, (B) grant, bargain and sale deeds (or the substantial
equivalent thereof in Colorado and Mississippi if grant, bargain and sale deeds
are not used in those jurisdictions) in proper statutory form for recording and
otherwise in form and substance reasonably satisfactory to Purchaser, conveying
title to the Real Property, (C) the documentation required by the FSELLC
Organizational Documents, duly executed by FFEC, for the transfer of the FSELLC
Membership Interest to Purchaser, and (D) subject to Section 1.12, such other
                                                     ------------
instruments of conveyance, assignment and transfer, in form and substance
reasonably acceptable to Purchaser, as shall be effective to vest in Purchaser
all of Sellers' rights, title and interests in and to the Assets and all of
FFEC's rights, title and interest in and to the FSELLC Membership Interest (the
General Assignments and the other instruments referred to in sub-clauses (B),
                                                             ---------------
(C) and (D) of this clause (i) are collectively referred to herein as the
-----------         ----------
"Assignment Instruments"), and (ii) Purchaser will assume from Sellers the due
payment, performance and discharge of the Assumed Liabilities and will acquire
and accept from FFEC the FSELLC Membership Interest by delivery of (A) an
Assumption Agreement substantially in the form of Exhibit D hereto (the
                                                  ---------
"Assumption Agreement"), duly executed by Purchaser, (B) such other instruments
of assumption, in form and substance reasonably acceptable to Sellers and
Parent, as shall be effective to cause Purchaser to assume the Assumed
Liabilities as provided in Section 1.02(a), and (C) the documentation required
                           ---------------
by the FSELLC Organizational Documents, duly executed by Purchaser, for
Purchaser's acquisition of all of FFEC's rights, title and interest in and to
the FSELLC Membership Interest (the Assumption Agreement and such other
instruments referred to in sub-clauses (B) and (C) of this clause (iii) are
                           -----------------------         ------------
collectively referred to herein as the "Assumption Instruments").
Notwithstanding the foregoing provisions of this paragraph (d) regarding the
                                                 -------------
FSELLC Membership Interest, the parties' respective obligations in this regard
are subject to the provisions of Section 1.14. If the consents specified in
                                 ------------
Section 1.14 have not been obtained prior to the Closing Date, this Agreement
------------
shall not require the transfer of the FSELLC Membership Interest to, or the
acquisition of the FSELLC Membership Interest by, Purchaser at the Closing.

          (e)    At the Closing, there shall also be delivered to Sellers,
Parent and Purchaser the certificates and other contracts, documents and
instruments required to be delivered under Articles VI and VII.
                                           -------------------

          1.09.  "As Is" Condition.  Except as specifically set forth in this
                 -----------------
Agreement to the contrary, all of the Assets are being sold to Purchaser in "as
is" condition, and neither Sellers nor Parent make any representations or
warranties of any kind and disclaim any and all implied warranties with respect
to any of the Assets. Without limiting the generality of the foregoing,
Purchaser acknowledges and agrees that: (a) neither Sellers nor Parent make any
representation or warranty with respect to the transferability of any Assets
other than the Real Property, Improvements, Real Property Leases, Tangible
Personal Property, Intangible Personal Property, Vehicles, Advance Reservation
Deposits, Customer Lists, and Business Books and Records or of the FSELLC
Membership Interest; (b) Purchaser has been given an adequate opportunity to
make such investigations as Purchaser deemed appropriate with respect to the
Business and the Assets; and (c) Purchaser has been provided with the Title
Reports, has reviewed the Title Reports, and has knowledge of all easements,
restrictions and other exceptions to title of record.

                                      13
<PAGE>

          1.10.  Further Assurances; Post-Closing Cooperation.
                 --------------------------------------------

          (a)    From time to time after the Closing, at Purchaser's request and
without further consideration, Sellers shall, and Parent shall cause Sellers to,
execute and deliver to Purchaser such other instruments of sale, transfer,
conveyance, assignment and confirmation, provide such materials and information
and take such other actions consistent with this Agreement as Purchaser may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Purchaser, and to confirm Purchaser's title to, the Assets
and, to the full extent permitted by Law, to put Purchaser in actual possession
and operating control of the Business and the Assets and to assist Purchaser in
exercising all rights with respect thereto, and otherwise to cause Sellers to
fulfill their obligations under this Agreement and the Operative Agreements.

          (b)    Following the Closing, each party will afford the other
parties, their counsel and their accountants, during normal business hours,
reasonable access to the books, records and other data relating to the Business
in its possession with respect to periods prior to the Closing and the right to
make copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) the determination or enforcement of rights or
obligations under this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or enforcement of
the rights or obligations of any party to this Agreement or any of the Operative
Agreements or (v) in connection with any actual or threatened Action or
Proceeding. Each party further agrees for a period of five years commencing on
the Closing Date not to destroy or otherwise dispose of any such books, records
and other data unless such party first offers in writing to surrender such
books, records and other data to the other parties and such other parties do not
agree in writing to take possession thereof within ten days after such offer is
made.

          (c)    If, in order to properly prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
a party needs to be furnished with additional information, documents or records
relating to the Business not referred to in paragraph (b) of this Section, and
                                            -------------
such information, documents or records are in the possession or control of
another party hereto, such other party shall make its best efforts to furnish or
make available such information, documents or records (or copies thereof) at the
recipient's request, cost and expense.

          (d)    Notwithstanding anything to the contrary in this Section, if
the parties are in an adversarial relationship in litigation or arbitration, the
furnishing of information, documents or records shall be governed by applicable
rules relating to discovery, rather than by paragraphs (b) and (c) of this
                                            ---------- -----------
Section.

          (e)    Each of Sellers and Purchaser acknowledge that if any of the
Sellers shall fail to take, or cause to be taken, any such action, fail to do,
or cause to be done, any such thing, or fail to execute any such documents,
instruments or conveyances within a reasonable time as reasonably requested by
Purchaser, Purchaser may move the Bankruptcy Court for an order directing the
provision of such items on an emergency basis upon not less than five Business
Days' notice by telecopy or other electronic facsimile transmission received by
Sellers. Sellers

                                      14
<PAGE>

agree not to oppose the scheduling of a hearing relating to such a motion on the
basis of shortened notice or method of notice, provided Sellers are permitted to
appear at such hearing telephonically. Sellers and Purchaser further agree that
the Bankruptcy Court shall retain jurisdiction to adjudicate any such motion of
Purchaser.

          1.11.  Insurance Proceeds.  If prior to the Closing any Assets are
                 ------------------
destroyed, damaged or taken in condemnation, the insurance proceeds or
condemnation award, or any transferable or assignable claim for insurance
proceeds or condemnation award with respect thereto shall constitute an Asset.
At the Closing, Sellers shall, and Parent shall cause Sellers to, pay or credit
to Purchaser any such insurance proceeds or condemnation awards received by any
of them on or prior to the Closing and shall assign to or assert for the benefit
of Purchaser all of their rights against any insurance companies, Governmental
or Regulatory Authorities and others with respect to such damage, destruction or
condemnation.

          1.12.  Third-Party Consent.  To the extent that any Real Property
                 -------------------
Lease, Business Contract or Business License is not assignable pursuant to the
Bankruptcy Code or otherwise without the consent of another party, this
Agreement shall not constitute an assignment or an attempted assignment thereof
if such assignment or attempted assignment would constitute a violation or
breach thereof or a default thereunder. Parent and Sellers shall make
commercially reasonable efforts (including, without limitation, prosecution of
appropriate motions pursuant to (S)365 of the Bankruptcy Code) to obtain the
consent of such other party to the assignment to Purchaser of any such Real
Property Lease, Business Contract or Business License in all cases in which such
consent is or may be required; provided, however, that to obtain any such
                               --------  -------
consent, Parent and Sellers shall not be required to pay or incur more than
nominal expenses plus (i) amounts required to cure any defaults under the Real
Property Lease, Business Contract or Business License in question; and (ii)
reasonable attorneys' fees. If any such consent is not obtained, Parent and
Sellers shall cooperate with Purchaser in any reasonable arrangement designed to
provide for Purchaser the benefits intended to be assigned to Purchaser under
the relevant Real Property Lease, Business Contract or Business License,
including enforcement at the cost and for the account of Purchaser of any and
all rights of Sellers against the other party thereto arising out of the breach
or cancellation thereof by such other party or otherwise. If and to the extent
that such arrangement cannot be made, Purchaser shall have no obligation with
respect to any such Real Property Lease, Business Contract or Business License.
Notwithstanding the provisions of this Section, Purchaser shall be obligated to
consummate the transactions contemplated by this Agreement if the condition to
its obligations hereunder contained in Section 6.05 has been fulfilled.
                                       ------------

          1.13.  Black Hawk Business Expansion.  No adjustment will be made to
                 -----------------------------
the Purchase Price for any costs incurred by or on behalf of Purchaser in
connection with securing or acquiring entitlements necessary for the
contemplated expansion of the Black Hawk Business. Sellers shall have no
obligation to secure or acquire any such entitlements or incur any costs or
expend any amounts in connection with such proposed expansion.

          1.14.  FSELLC Membership Interest.  The parties hereto acknowledge
                 --------------------------
that although a transfer of the FSELLC Membership Interest to Purchaser is an
appropriate incident to Purchaser's acquisition of the Las Vegas Business, such
transfer is subject to the prior consent of members of FSELLC and Purchaser's
agreement to be bound by the terms of the FSELLC

                                      15
<PAGE>

Organizational Documents, as provided therein. FLV, FFEC and Purchaser covenant
to make commercially reasonable efforts to satisfy all conditions and obtain all
consents required to transfer the FSELLC Membership Interest to Purchaser at the
Closing. If, notwithstanding such commercially reasonable efforts, any required
conditions have not been satisfied or any required consents have not been
obtained by the Closing Date, this Agreement shall not require the FSELLC
Membership Interest to be transferred to Purchaser at the Closing; provided,
                                                                   --------
however, that FLV, FFEC and Purchasers shall continue to make commercially
-------
reasonable efforts from and after the Closing Date to satisfy such conditions,
obtain such consents and effect such transfer as soon thereafter as practicable.


                                  ARTICLE II

             REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLERS

     Parent and Sellers represent and warrant to Purchaser as set forth in this
Article II.  To the extent that any representations or warranties are made by,
----------
or pertain to, a particular Seller or Sellers, such representations and
warranties are made by such particular Seller(s), and not by any of the other
Sellers.  To the extent that any representations or warranties by Parent or any
Seller relate, refer or pertain to the Bankruptcy Code or any aspect of the
Bankruptcy Proceedings, as to matters involving the Bankruptcy Code or the
Bankruptcy Proceedings such representations and warranties are not effective
until commencement of the Bankruptcy Proceedings and do not apply to any period
prior to such commencement.  To the extent that any representations or
warranties by Parent or any Seller relate, refer or pertain to the transfer of
the FSELLC Membership Interest to Purchaser, such representations and warranties
are made only as of the Closing Date.

          2.01.  Organization of Sellers, Parent and FFEC.
                 ----------------------------------------

          (a)    FLV is a corporation duly organized, existing and in good
standing under the Laws of the State of Nevada and subject to the Bankruptcy
Code, has full corporate power and authority to conduct the Las Vegas Business
as and to the extent now conducted and to own, use or lease the Assets that are
a part of the Las Vegas Business as and to the extent now owned, used or leased.

          (b)    FBH is a limited-liability company duly organized, existing and
in good standing under the Laws of the State of Colorado and subject to the
Bankruptcy Code, has full limited-liability company power and authority to
conduct the Black Hawk Business as and to the extent now conducted and to own,
use or lease the Assets that are a part of the Black Hawk Business as and to the
extent now owned, used or leased.

          (c)    FM is a corporation duly organized, existing and in good
standing under the Laws of the State of Mississippi and subject to the
Bankruptcy Code, has full corporate power and authority to conduct the Tunica
Business as and to the extent now conducted and to own, use or lease the Assets
that are a part of the Tunica Business as and to the extent now owned, used or
leased.

                                      16
<PAGE>

          (d)    Parent is a corporation duly organized, existing and in good
standing under the Laws of the State of Nevada and subject to the Bankruptcy
Code, has full corporate power and authority to conduct its business as and to
the extent now conducted.

          (e)    Parent, directly or through its wholly owned subsidiaries, is
the beneficial owner of all of the outstanding stock of Sellers.

          (f)    Parent, Sellers and FFEC represent and warrant that (i) FFEC
has full corporate power and authority to own the FSELLC Membership Interest and
(ii) as of the Closing Date and provided that the conditions specified in
Section 1.14 have been satisfied, waived or excused, FFEC will have full
------------
corporate power and authority to transfer the FSELLC Membership Interest to
Purchaser pursuant to this Agreement.

          2.02.  Authority.  Parent and each Seller have full corporate power
                 ---------
and authority to execute and deliver this Agreement. Subject to the Bankruptcy
Code and the Sales Order, Parent and each Seller have full corporate power and
authority to execute and deliver the Operative Agreements to which they are
parties, to perform their obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby, including, without limitation,
to sell and transfer (pursuant to this Agreement) the Assets. This Agreement has
been duly and validly executed and delivered by Parent and Sellers. Subject to
the Sales Order, this Agreement constitutes, and upon the execution and delivery
by Parent and Sellers of the Operative Agreements to which they are parties,
such Operative Agreements will constitute, legal, valid and binding obligations
of Parent and Sellers enforceable against Parent and Sellers in accordance with
their terms.

          2.03.  Governmental Approvals and Filings.  Except as disclosed in
                 ----------------------------------
Section 2.03 of the Disclosure Schedule, no consent, approval or action of,
---------------------------------------
filing with or notice to any Governmental or Regulatory Authority on the part of
Parent or Sellers is required in connection with the execution, delivery and
performance of this Agreement or any of the Operative Agreements to which they
are parties or the consummation of the transactions contemplated hereby or
thereby.

          2.04.  Financial Statements.  Prior to the execution of this
                 --------------------
Agreement, Parent and Sellers have delivered to Purchaser true and complete
copies of the following financial statements:

          (a)    the audited consolidated balance sheets of Parent as of
December 31, 1998 and 1999 and the related audited consolidated statement of
operations for each of the fiscal years then ended, together with a true and
complete copy of the report on such audited information by Deloitte & Touche
LLP, and all letters from such firm with respect to the results of such audits,
along with Balance Sheets as of December 31, 1998 and 1999 supporting such
audited financial statements; and

          (b)    the Adjusted Balance Sheet.

Except as set forth in the notes thereto, the accompanying accountants' reports
(if any), or as disclosed in Section 2.04 of the Disclosure Schedule, all such
                             ---------------------------------------
financial statements (i) were prepared in accordance with GAAP, (ii) fairly
present the financial condition and results of

                                      17
<PAGE>

operations of Parent or Sellers, as the case may be, as of the respective dates
thereof and for the respective periods covered thereby, and (iii) were compiled
from books and records of Parent and Sellers regularly maintained by management
and used to prepare the financial statements of Parent or Sellers, as the case
may be, in accordance with the principles stated therein. Each Seller has
maintained the Business Books and Records in a manner sufficient to permit the
preparation of financial statements in accordance with GAAP, except as set forth
in Section 2.04 of the Disclosure Schedule.
   ---------------------------------------

          2.05.  Absence of Changes.  Except for the execution and delivery of
                 ------------------
this Agreement, the anticipated Bankruptcy Proceedings, the Restructuring
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date, and except as disclosed in Section 2.05 of the Disclosure
                                         ------------------------------
Schedule, since the date of the Adjusted Balance Sheet there has not been any
--------
material adverse change, event or development relating in particular to the Las
Vegas Business, the Black Hawk Business or the Tunica Business or, to the
Knowledge of Sellers, any other material adverse change, event or development
which, individually or together with other such events, could reasonably be
expected to result in a material adverse change in the Condition of the
Business. In all material respects, Sellers have operated the Business in the
ordinary course since the date of the Adjusted Balance Sheet, except as required
by the Bankruptcy Proceedings, authorized under Section 15.08, or permitted
                                                -------------
under Section 4.06. Without limiting the foregoing, except as disclosed in
      ------------
Section 2.05 of the Disclosure Schedule, there has not occurred, between the
---------------------------------------
date of the Adjusted Balance Sheet and the date of this Agreement, any of the
following:

                 (i)   incurrences by Sellers of Indebtedness with respect to
     the conduct of the Business in an aggregate principal amount exceeding
     $500,000 (net of any amounts discharged during such period and excluding
     any refinancing of existing Indebtedness);

                 (ii)  physical damage, destruction or other casualty loss
     (whether or not covered by insurance) affecting any of the plant, real or
     personal property or equipment of any Seller used or held for use in the
     conduct of the Business in an aggregate amount exceeding $100,000;

                 (iii) material change in (A) any pricing, investment,
     accounting, financial reporting, inventory, credit, allowance or Tax
     practice or policy of the Business or (B) any method of calculating any bad
     debt, contingency or other reserve of the Business for accounting,
     financial reporting or Tax purposes;

                 (iv)  (A) disposition of any Assets and Properties used or held
     for use in the conduct of the Business, other than Inventory in the
     ordinary course of business consistent with past practice and other
     dispositions not exceeding in either case $1,000,000 in the aggregate; or
     (B) creation or incurrence of a Lien, other than a Permitted Lien, on any
     Assets and Properties used or held in the conduct of the Business; or

                 (v)   capital expenditures or commitments for additions to
     property, plant or equipment used or held for use in the conduct of the
     Business constituting capital

                                      18
<PAGE>

     assets in an aggregate amount exceeding $2,000,000, excluding capital
     expenditures or commitments with respect to the expansion of the Black Hawk
     Business in connection with the Rohling Inn acquisition and the parking
     garage at the Tunica Business;

          2.06.  No Undisclosed Liabilities. Except as reflected in Section 2.06
                 --------------------------                         ------------
of the Disclosure Schedule, the financial statements specified in Section 2.04,
--------------------------                                        ------------
the Adjusted Balance Sheet or the Bankruptcy Schedules and Pleadings and except
as authorized under Section 15.08 or permitted under Section 4.06, there are no
                    -------------                    ------------
Liabilities against, relating to or affecting the Business or any of the Assets,
other than Liabilities (i) incurred in the ordinary course of business
consistent with past practice subsequent to the date of the Adjusted Balance
Sheet or (ii) which, individually or in the aggregate, are not material to the
Condition of the Business.

          2.07.  Taxes.
                 -----

          (a)    Tax Return Filings and Taxes Paid.  Except as disclosed in
                 ---------------------------------
Section 2.07(a) of the Disclosure Schedule, Parent, each Seller and FFEC have
------------------------------------------
filed all Tax Returns (or such Tax Returns have been filed on their behalf)
required to be filed by applicable law with the proper Governmental or
Regulatory Authorities. All Tax Returns were true, complete and correct in all
material respects. Parent and Sellers have delivered or made available to
Purchaser complete and accurate copies of all such Tax Returns for all open tax
years of each Seller and FFEC. Except as otherwise provided by the Bankruptcy
Code or the Sales Order, Parent, each Seller and FFEC have timely paid or will
timely pay, or have made provision for the payment of, all Taxes that have or
may become due in respect of periods (or portions thereof) ending on or before
the Closing Date, except such Taxes, if any, as are listed in Section 2.07(a) of
                                                              ------------------
the Disclosure Schedule or as to which adequate financial statement reserves
-----------------------
(other than any reserves for deferred Taxes established to reflect timing
differences between book and tax income) have been determined in accordance with
GAAP.

          (b)    Withholding Taxes.  Except as disclosed in Section 2.07(b) of
                 -----------------                          ------------------
the Disclosure Schedule, each Seller and FFEC have complied with all applicable
-----------------------
laws, rules, and regulations relating to the payment and withholding of Taxes
and has, within the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper Governmental or Regulatory
Authorities all required amounts.  Each Seller and FFEC have properly requested,
received and retained all necessary exemption certificates and other
documentation supporting any claimed exemption or waiver of sales, use or other
similar Taxes as to which such entity would have otherwise been obligated to
collect or withhold Taxes.

          (c)    Lien.  There are no liens for Taxes (other than for current
                 ----
Taxes not yet due and payable) on the Assets. None of the Assets is property
that is required to be treated for Tax purposes as being owned by any other
Person.

          (d)    The transactions contemplated herein are not subject to the Tax
withholding provisions of (S)3406 or of Subchapter A of Chapter 3 of the Code or
of any other tax withholding provisions of federal, state, local or foreign law.

          (e)    Except as disclosed in Section 2.07(e) of the Disclosure
                                        ---------------------------------
Schedule and except with respect to any group of which Parent is the common
--------
parent for tax purposes, neither

                                      19
<PAGE>

Parent, Sellers nor FFEC have any liability for the Taxes of any other Person
under Treasury Regulation (S)1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract (including any Tax
sharing or allocation agreement) or otherwise.

          (f)    Except as set forth in Section 2.07(f) of the Disclosure
                                        ---------------------------------
Schedule, (i) there is no claim, action, audit or other proceeding now pending
--------
or threatened relating to the Taxes of Parent, any Seller or FFEC and (ii) no
extension or waiver of a statute of limitations relating to Taxes is in effect
with respect to Parent, any Seller or FFEC.

          2.08.  Real Property.
                 -------------

          (a)    Except as disclosed in Section 2.08(a) of the Disclosure
                                        ---------------------------------
Schedule, (i) Sellers collectively have good and marketable fee simple title to
--------
the Real Property other than the FLV/FR Real Property and FR has good and
marketable fee simple title to the FLV/FR Real Property, free and clear of all
Liens other than Permitted Liens and (ii) as of the Closing Date, FLV will have
good and marketable fee simple title to the FLV/FR Real Property, free and clear
of all Liens other than Permitted Liens. Subject to the Real Property Leases
described in Section 1.01(a)(ii)(A) of the Disclosure Schedule, Sellers are in
             -------------------------------------------------
possession of the Real Property with adequate rights of ingress and egress. To
the Knowledge of Sellers, neither the Real Property nor the Improvements
contravene or violate any applicable Law in any material respect.

          (b)    Each Real Property Lease is a legal, valid and binding
agreement of the applicable Seller and of each other Person that is a party
thereto, enforceable in accordance with its terms. There is no default or
condition or event which, after notice or lapse of time or both, would
constitute a default by Sellers, other than defaults prior to or resulting from
commencement of the Bankruptcy Proceedings. Sellers have not received written
notice of any default by any other Person that is a party to any of the Real
Property Leases. No tenant or other party in possession of any of the real
properties subject to the Real Property Leases described in Section
                                                            -------
1.01(a)(ii)(A) of the Disclosure Schedule has any right to purchase, or holds
-----------------------------------------
any right of first refusal to purchase, such properties.

          (c)  Except as disclosed in Section 2.08(c) of the Disclosure
                                      ---------------------------------
Schedule, to the Knowledge of Sellers, none of the Real Property or the
--------
Improvements, or the use and operation thereof, contravene or violate any
building, zoning, subdivision, land use, administrative, occupational safety and
health, environmental or other applicable Law in any material respect. No Seller
has received any written notice from any Governmental or Regulatory Authority
advising Seller of (i) a violation of any such Laws or (ii) any action which
must be taken to avoid a violation thereof.

          (d)    All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required by law for Purchaser's use and
operation of the Real Property as hotels and/or casinos as presently used and
operated are installed across public property or valid easements to the boundary
lines of the Real Property, except as disclosed in Section 2.08(d) of the
                                                   ----------------------
Disclosure Schedule.
-------------------

          (e)    Sellers collectively have obtained all licenses, permits,
easements, and rights-of-way, including a use permit, required from all
governmental authorities having

                                      20
<PAGE>

jurisdiction over the Real Property or from private parties for the use and
operation of the Real Property as hotels and/or casinos with all of the
amenities necessary for the operation of the Business, and to assure vehicular
and pedestrian ingress to and egress from the Real Property.

          (f)    There are no pending or, to the Knowledge of Sellers,
threatened condemnation proceedings relating to the Real Property.

          (g)    Sellers have not received written notice of any special tax
assessment relating to the Real Property or any portion thereof and, to the
Knowledge of Sellers, there is no pending or threatened special assessment.

          (h)    The Real Property and the Improvements constitute all of the
real property and buildings, structures, facilities, fixtures and other
improvements thereon in which Sellers own any rights, title or interests, except
as disclosed in Section 2.08(h) of the Disclosure Schedule.
                ------------------------------------------

          (i)    As of the Closing Date, except as disclosed in Section 2.08(i)
                                                                ---------------
of the Disclosure Schedule, the Improvements will be structurally sound with no
--------------------------
material defects, in good operating condition and in a state of good maintenance
and repair in all material respects, ordinary wear and tear excepted, and will
be adequate and suitable for the purposes for which they are presently being
used.

          2.09.  Tangible Personal Property.  As of the Closing Date, Sellers
                 --------------------------
collectively will be in possession of, and will have good and valid fee title
to, all Tangible Personal Property free and clear of Liens other than Permitted
Liens, except as disclosed in Section 2.09 of the Disclosure Schedule. Sellers'
                              ---------------------------------------
respective use of the Tangible Personal Property complies in all material
respects with all applicable Laws.

          2.10.  Intellectual Property Rights.
                 ----------------------------

          (a)    Sellers or Parent have interests in or use only the
Intellectual Property disclosed in Section 1.01(a)(v) of the Disclosure Schedule
                                   ---------------------------------------------
in connection with the conduct of the Business. No other Intellectual Property
is used by any Seller or necessary for use by any Seller in the conduct of the
Business. Sellers are not, nor have they received any written notice that they
are, in default (or with the giving of notice or lapse of time or both, would be
in default) under any contract to use such Intellectual Property. To the
Knowledge of Sellers, no such Intellectual Property is being infringed by any
other Person, except as disclosed in Section 2.10(a) of the Disclosure Schedule.
                                     ------------------------------------------
Sellers have not received written notice that Sellers are infringing any
Intellectual Property of any other Person in connection with the conduct of the
Business, no claim is pending or, to the Knowledge of Sellers, has been made to
such effect that has not been resolved and, to the Knowledge of Sellers, Sellers
are not infringing any Intellectual Property of any other Person in connection
with the conduct of the Business.  To the extent any of the Intellectual
Property disclosed in Section 1.01(a)(v) of the Disclosure Schedule is owned by
                      ---------------------------------------------
Parent, Parent hereby covenants and agrees to transfer or contribute to Sellers
all such Intellectual Property owned by Parent (other than Excluded Intangible
Personal Property) prior to the Closing.

                                      21
<PAGE>

          (b)    Intellectual Property.  Except as disclosed in Section 2.10(b)
                 ---------------------                          ---------------
of the Disclosure Schedule, no Seller has any obligation to compensate any
--------------------------
Person for the use of any Intellectual Property nor has any Seller granted to
any Person any license, option or other rights to use in any manner any of its
Intellectual Property, whether requiring the payment of royalties or not.

          (c)    Sellers own or have a valid right to use the Intellectual
Property, and except for the transfer of the Intellectual Property to Purchaser
as contemplated by this Agreement, the Intellectual Property will not cease to
be valid rights of the respective Sellers by reason of the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby.

          2.11.  Contracts.
                 ---------

          (a)    Section 2.11(a) of the Disclosure Schedule (with paragraph
                 ------------------------------------------
references corresponding to those set forth below) contains a true and complete
list of each of the following Business Contracts or other arrangements (true and
complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to Purchaser prior to the
execution of this Agreement) to which any Seller is a party as of the Closing
and by which any Assets are bound (other than such Business Contracts or other
arrangements that are entered into after the date of this Agreement, are
thereafter promptly disclosed to Purchaser, and are permitted under Section 4.04
                                                                    ------------
or Section 4.06).
---------------

                 (i)   (A) all Contracts (excluding employee benefit plans)
     providing for a commitment of employment or consultation services for a
     specified or unspecified term to, or otherwise relating to employment or
     the termination of employment of, any Employee, the name, position and rate
     of compensation of each Employee party to such a Contract and the
     expiration date of each such Contract; and (B) any written or unwritten
     representations, commitments, promises, communications or courses of
     conduct (excluding employee benefit plans and any such Contracts referred
     to in clause (A)) involving an obligation of Seller to make payments in any
     year, other than with respect to salary or incentive compensation payments
     in the ordinary course of business, to any Employee exceeding $50,000 or
     any group of Employees exceeding $200,000 in the aggregate;

                 (ii)  all Contracts with any Person containing any provision or
     covenant prohibiting or limiting the ability of any Seller to engage in any
     business activity or compete with any Person in connection with the
     Business or prohibiting or limiting the ability of any Person to compete
     with any Seller in connection with the Business;

                 (iii) all partnership, joint venture, shareholders' or other
     similar Contracts with any Person in connection with the Business;

                 (iv)  all Contracts with distributors, dealers, manufacturer's
     representatives, sales agencies or franchises with whom any Seller deals in
     connection with the Business;

                                      22
<PAGE>

                 (v)    all Contracts relating to the future disposition or
     acquisition of any Assets, other than dispositions or acquisitions of
     Inventory in the ordinary course of business consistent with past practice;

                 (vi)   the Restructuring Agreement;

                 (vii)  all collective bargaining or similar labor Contracts
     covering any Employee; and

                 (viii) all other Contracts (other than employee benefit plans
     and the Real Property Leases) with respect to the Business that (A) involve
     the payment or potential payment, pursuant to the terms of any such
     Contract, by or to any Seller of more than $100,000 annually and (B) cannot
     be terminated within 30 days after giving notice of termination without
     resulting in any material cost or penalty to any Seller.

          (b)    Except as disclosed in Section 2.11(b) of the Disclosure
                                        ---------------------------------
Schedule or as otherwise disclosed below in this paragraph (b), the execution,
--------                                         -------------
delivery and performance by Sellers of this Agreement and the Operative
Agreements to which they are parties, and the consummation of the transactions
contemplated hereby and thereby, will not (A) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, (B) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments under,
or (C) result in the creation or imposition of any Lien upon Sellers or any of
their respective Assets and Properties under, any Business Contract. Not later
than six months after the Closing, FR's lease of its computer systems and
provision of MIS administrative support and maintenance to the Black Hawk
Business will terminate, as provided in Section 15.07.
                                        -------------

          2.12.  Licenses.  Section 1.01(a)(vi) of the Disclosure Schedule
                 --------   ----------------------------------------------
contains a true and complete list of all material Licenses used or held for use
in the Business (and all pending applications for any such Licenses), setting
forth the grantor, the grantee, the function and the expiration and renewal date
of each. Prior to the execution of this Agreement, Sellers have delivered to
Purchaser true and complete copies of all such Licenses. Except as disclosed in
Section 2.12 of the Disclosure Schedule:
---------------------------------------

                 (i)    Sellers collectively own or validly hold in their
     respective names all Licenses that are material, individually or in the
     aggregate, to the Business;

                 (ii)   each Business License is valid, binding and in full
     force and effect;

                 (iii)  Sellers are not, nor have they received any written
     notice that they are, in default (or with the giving of notice or lapse of
     time or both, would be in default) under any Business License; and

                 (iv)   the execution, delivery and performance by Sellers of
     this Agreement and the Operative Agreements to which they are parties, and
     the consummation of the transactions contemplated hereby and thereby, will
     not (A) result in or give to any Person any right of termination,
     cancellation, acceleration or modification in or with respect to, (B)
     result in or give to any Person any additional rights or

                                      23
<PAGE>

     entitlement to increased, additional, accelerated or guaranteed payments
     under, or (C) result in the creation or imposition of any Lien upon Sellers
     or any of their respective Assets and Properties under, any Business
     License.

          2.13.  Foreign Person.  Neither any Seller nor FFEC is a "foreign
                 --------------
person" within the meaning of (S)1445(f)(3) of the Code, and Sellers and FFEC
will furnish to Purchaser prior to the Closing an affidavit to that effect, in
substantially the form of Exhibit E hereto.
                          ---------

          2.14.  Environmental Matters.
                 ---------------------

          (a)    Definitions.  The following terms, when used in this Section,
                 -----------
shall have the following meanings.  Any of these terms may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.

                 (i)   "Sellers." For purposes of this Section only, the term
     "Sellers" shall include (i) all Affiliates of any Seller, (ii) all
     partnerships, joint ventures and other entities or organizations in which
     any Seller was at any time or is a partner, joint venturer, member of
     participant, and (iii) all predecessor or former corporations,
     partnerships, joint ventures, organizations, businesses or other entities,
     whether in existence as of the date hereof or at any time prior to the date
     hereof, the assets or obligations of which have been acquired or assumed by
     any Seller or to which any Seller has succeeded.

                 (ii)  "Release" shall mean and include any spilling, leaking,
     pumping, pouring, emitting, emptying, discharging, injecting, escaping,
     leaching, dumping or disposing into the environment or the workplace of any
     Hazardous Substance, and otherwise as defined in any Environmental Laws.

                 (iii) "Hazardous Substance" shall mean any pollutant,
     contaminant, chemical, waste and any toxic, infectious, carcinogenic,
     reactive, corrosive, ignitable or flammable chemical or chemical compound
     or hazardous substance, material or waste, whether solid, liquid or gas,
     including, without limitation, any quantity of asbestos in any form, urea
     formaldehyde, PCB's, radon gas, crude oil or any fraction thereof, all
     forms of natural gas, petroleum products or by-products or derivatives,
     radioactive substance or material, pesticide waste waters, sludges, slag
     and any other substance, material or waste that is subject to regulation,
     control or remediation under any Environmental Laws.

                 (iv)  "Environmental Laws" shall mean all regulations of any
     Governmental or Regulatory Authority which regulate or relate to the
     protection or clean-up of the environment, the use, treatment, storage,
     transportation, generation, manufacture, processing, distribution, handling
     or disposal of, or emission, discharge or other release or threatened
     release of, Hazardous Substances or otherwise dangerous substances, wastes,
     pollution or materials (whether gas, liquid or solid), the preservation or
     protection of waterways, groundwater, drinking water, air, wildlife, plants
     or other natural resources, or the health and safety of persons or
     property, including, without limitation, protection of the health and
     safety of employees.  Environmental Laws shall include, without limitation,
     the Federal Insecticide, Fungicide, Rodenticide Act, Resource

                                      24
<PAGE>

     Conservation & Recovery Act, Clean Water Act, Safe Drinking Water Act,
     Atomic Energy Act, Occupational Safety and Health Act, Toxic Substances
     Control Act, Clean Air Act, Comprehensive Environmental Response,
     Compensation and Liability Act, Emergency Planning and Community Right-to-
     Know Act, Hazardous Materials Transportation Act and all analogous or
     related federal, state or local law, each as amended.

                 (v)  "Environmental Conditions" means a Release on the Real
     Property or the Leased Real Property.

          (b)    Real Property and Leased Real Property.  To the Knowledge of
                 --------------------------------------
Sellers and except as set forth in the  Environmental Reports or in Section 2.14
                                                                    ------------
of the Disclosure Schedule, during the period that any Sellers have owned the
--------------------------
Real Property or leased the Leased Real Property, in all material respects the
Real Property and the Leased Real Property have been, owned, leased or operated
by Sellers in compliance with all Environmental Laws and in a manner that will
not give rise to any Liability under any Environmental Laws. Without limiting
the foregoing, to the Knowledge of Sellers and except as disclosed in the
Environmental Reports, during the period that Sellers have owned the Real
Property or leased the Leased Real Property, (i) there is not and has not been
any Hazardous Substance used, generated, treated, stored, transported, disposed
of, handled or otherwise existing on, under, about or emanating from the Real
Property or the Leased Real Property, except for quantities of any such
Hazardous Substances stored or otherwise held on, under or about the Real
Property or the Leased Real Property in compliance with all Environmental Laws
in all material respects and necessary for the operation of the Business, (ii)
in all material respects Sellers have at all times used, generated, treated,
stored, transported, disposed of or otherwise handled their Hazardous Substances
in compliance with all Environmental Laws and in a manner that will not result
in Liability of any Seller under any Environmental Law, and (iii) there is not
now and has not been at any time in the past any underground or above-ground
storage tank or pipeline at the Real Property where the installation, use,
maintenance, repair, testing, closure or removal of such tank or pipeline was
not in compliance with all Environmental Laws in all material respects and there
has been no Release from or rupture of any such tank or pipeline, including,
without limitation, any Release from or in connection with the filling or
emptying of such tank.

          (c)    Notice of Violation.  Except as set forth in Section 2.14 of
                 -------------------                          ---------------
the Disclosure Schedule, no Seller has received any written notice of alleged,
-----------------------
actual or potential responsibility for, or any written inquiry or investigation
regarding, (i) any Release or threatened Release of any Hazardous Substance at
any location, whether at the Real Property, the Leased Real Property or
otherwise or (ii) an alleged violation of or non-compliance with the conditions
of any Permit required under any Environmental Law or the provisions of any
Environmental Law.

          (d)    Environmental Conditions.  To the Knowledge of Sellers and
                 ------------------------
except as set forth in the Environmental Reports or in Section 2.14 of the
                                                       -------------------
Disclosure Schedule, there are no Environmental Conditions at the Real Property
-------------------
or the Leased Real Property.

          (e)    Environmental Audits or Assessments.  Sellers have delivered to
                 -----------------------------------
Purchaser true, complete and correct copies of any Environmental Reports and
updates thereto

                                      25
<PAGE>

obtained by Sellers which have been conducted at the Real Property and the
Leased Real Property within five years from the date of this Agreement.

          (f)    No Seller has released any other Person from any claim under
any Environmental Law or waived any rights concerning any Environmental
Condition, except as set forth in Section 2.14(f) of the Disclosure Schedule.
                                  ------------------------------------------

          2.15.  Brokers.  All negotiations relative to this Agreement and the
                 -------
transactions contemplated hereby have been carried out by Parent and Sellers
with Purchaser without the intervention of any Person on behalf of Parent or
Sellers in such manner as to give rise to any valid claim by any Person against
Purchaser for a finder's fee, brokerage commission or similar payment, other
than as provided for in the Sales Order.

          2.16.  Labor Matters.
                 -------------

          (a)    No Seller is a party to any labor agreement with respect to its
Employees with any labor organization, union, group or association, except as
listed in Section 2.16(a) of the Disclosure Schedule.  In the past five years,
          ------------------------------------------
no Seller has experienced any attempt by organized labor or its representatives
to make such Seller conform to demands of organized labor relating to its
employees or to enter into a binding agreement with organized labor that would
cover the employees of such Seller, except as listed in Section 2.16(a) of the
                                                        ----------------------
Disclosure Schedule.  There is no labor strike or labor disturbance pending or,
-------------------
to the best of each Seller's knowledge, threatened against such Seller nor is
any grievance currently being asserted, and in the past five years no Seller has
experienced a work stoppage or other labor difficulty or engaged in any unfair
labor practice.

          (b)    Section 2.16(b) of the Disclosure Schedule lists the names and
                 ------------------------------------------
titles of all salaried Employees as of November 1, 2000.

          2.17.  No Other Agreements to Sell the Assets. Except as may be
                 --------------------------------------
required under the Restructuring Agreement or as recognized under Section 14.02
                                                                  -------------
regarding future events that may occur in the Bankruptcy Proceedings, neither
any Seller nor Parent has any commitment or legal obligation, absolute or
contingent, (i) to any other person or firm other than Purchaser, to sell,
assign, transfer or effect a sale of all or substantially all of the Assets,
(ii) to sell or effect a sale of the capital stock of any Seller to any Person
other than Parent or an Affiliate of Parent, (iii) to effect any merger,
consolidation, liquidation, dissolution or other reorganization of any Seller,
or (iv) to enter into any agreement or cause the entering into of an agreement
with respect to any of the foregoing. Notwithstanding the foregoing, Purchaser
acknowledges and accepts that transactions described in those clauses could be
required in the Bankruptcy Proceedings. The representations and warranties in
this Section shall not be deemed to have been breached as a result of any such
requirements in the Bankruptcy Proceedings.

          2.18.  Insurance.  Section 2.18 of the Disclosure Schedule contains a
                 ---------   ---------------------------------------
complete and accurate list of any and all policies or binders of fire,
liability, title, worker's compensation, product liability (which list shall be
for five years) and other forms of insurance (showing as to each policy or
binder the carrier, policy number, coverage limits, expiration dates, annual
premiums, a general description of the type of coverage provided, loss
experience history by line

                                      26
<PAGE>

of coverage) maintained by each Seller on the Business, the Assets or its
employees which, to the Knowledge of Sellers, are transferable to Purchaser
pursuant to this Agreement (the "Transferable Policies"). To the Knowledge of
Sellers, there is no default under any such coverage nor has there been any
failure to give notice or present any claim under any such coverage in a due and
timely fashion. There are no outstanding unpaid premiums except in the ordinary
course of business and no notice of cancellation or non-renewal of any such
coverage has been received with respect to the Transferable Policies. There are
no outstanding performance bonds covering or issued for the benefit of any
Seller. No insurer has advised Sellers that it intends to reduce coverage,
increase premiums or fail to renew any existing policy or binder with respect to
the Transferable Policies.

          2.19.  No Conflicts. The execution and delivery by Parent and Sellers
                 ------------
of this Agreement do not, and the execution and delivery by Parent and Seller of
the Operating Agreements to which each is a party, the performance by Parent and
Sellers of their obligations contemplated hereby and thereby will not, in any
manner that would have a material adverse effect on the assets, the Business or
the ability of Parent or any Seller to consummate the transactions contemplated
hereby and thereby:

          (a)    conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or by-laws (or
other comparable corporate charter documents) of Parent or any Seller;

          (b)    subject to obtaining the consents, approvals and actions,
making the filings and giving the notices described in Section 2.03 of the
                                                       -------------------
Disclosure Schedule, conflict with or result in a violation or breach of any
-------------------
term or provision of any Law or Order applicable to Parent or any Seller;

          (c)  except as disclosed in Section 2.11(b) or 2.19 of the Disclosure
                                      -----------------------------------------
Schedule, (i) conflict with or result in a violation or breach of, (ii)
--------
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Parent or any Seller to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, or (iv) result in the creation or imposition of any Lien on the Assets
under, any Contract or License to which Parent or any Seller is a party or by
which any of the Assets and Properties of Parent or any Seller are bound.

          2.20.  Employee Plans.
                 --------------

          (a)    Each Employee Plan has in all material respects been maintained
in compliance with its terms and all material provisions of ERISA and the Code.

          (b)    Each Pension Plan which is intended to be "qualified" within
the meaning of (S)(S) 401(a) and 501(a) of the Code has been determined by the
IRS to be so qualified and, to Sellers" Knowledge, there are no facts indicating
that the qualified status of each such Pension Plan or the tax exempt status of
each trust created thereunder has been adversely affected. To Sellers"
Knowledge, no Employee Plan is currently subject to an audit or other
investigation by the IRS, the Department of Labor, the Pension Benefit Guaranty
Corporation or any other Governmental or Regulatory Authority or subject to any
lawsuits, complaints, claims or legal

                                      27
<PAGE>

proceedings or any kind. No Pension Plan is subject to Title IV of ERISA or the
funding requirements of (S) 412 of the Code, or is a Multiemployer Plan, except
as set forth in Section 2.20(b) of the Disclosure Schedule.
                ------------------------------------------


                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF PURCHASER

          Purchaser represents and warrants to Parent and Sellers as follows:

          3.01.  Organization.  Purchaser is a limited-liability company duly
                 ------------
organized, existing and in good standing under the Laws of the State of
Delaware. Purchaser has full limited-liability company power and authority to
enter into this Agreement and the Operative Agreements to which it is a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.

          3.02.  Authority.  The execution and delivery by Purchaser of this
                 ---------
Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have been
duly and validly authorized by the members, owners and managers of Purchaser, no
other company action on the part of Purchaser or its members, owners or managers
being necessary. This Agreement has been duly and validly executed and delivered
by Purchaser and constitutes, and upon the execution and delivery by Purchaser
of the Operative Agreements to which it is a party, such Operative Agreements
will constitute, legal, valid and binding obligations of Purchaser enforceable
against Purchaser in accordance with their terms.

          3.03.  No Conflicts.  The execution and delivery by Purchaser of this
                 ------------
Agreement do not, and the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, the performance by Purchaser of its
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:

          (a)    conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of organization, operating
agreement or other comparable organizational document of Purchaser;

          (b)    subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 3.03 of the
                                                       -------------------
Disclosure Schedule, conflict with or result in a violation or breach of any
-------------------
term or provision of any Law or Order applicable to Purchaser, its Affiliates or
any of their respective Assets and Properties; or

          (c)    except as disclosed in Section 3.03 of the Disclosure Schedule,
                                        ---------------------------------------
(i) conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require
Purchaser or any of its Affiliates to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, or (iv) result in the creation or imposition of any Lien upon
Purchaser, its Affiliates or any of their respective Assets or Properties under,
any Contract or License to which Purchaser

                                      28
<PAGE>

or any of its Affiliates is a party or by which any of their respective Assets
and Properties are bound.

          3.04.  Governmental Approvals and Filings.  Except as disclosed in
                 ----------------------------------
Section 3.04 of the Disclosure Schedule, no consent, approval or action of,
---------------------------------------
filing with or notice to any Governmental or Regulatory Authority on the part of
Purchaser is required in connection with the execution, delivery and performance
of this Agreement or the Operative Agreements to which it is a party or the
consummation of the transactions contemplated hereby or thereby.

          3.05.  Legal Proceedings.  There are no Actions or Proceedings pending
                 -----------------
or, to the Knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could reasonably be expected
to result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements.

          3.06.  Brokers.  All negotiations relative to this Agreement and the
                 -------
transactions contemplated hereby have been carried out by Purchaser or its
Affiliates with Parent and Sellers without the intervention of any Person on
behalf of Purchaser or its Affiliates in such manner as to give rise to any
valid claim by any Person against Parent or any Seller for a finder's fee,
brokerage commission or similar payment, other than as provided for in the Sales
Order.

          3.07.  Purchaser's Environmental Reports.  Section 3.07 of the
                 ---------------------------------   -------------------
Disclosure Schedule contains true and complete copies of all of the Purchaser's
-------------------
Environmental Reports.

          3.08.  FSELLC Membership Interest.  Purchaser is acquiring the FSELLC
                 --------------------------
Membership Interest solely for its own account and not with a view to
distribution or resale of the FSELLC Membership Interest. Purchaser acknowledges
and agrees that the FSELLC Membership Interest will be deemed "restricted
securities" and that Purchaser will be deemed an "affiliate" of FSELLC, as those
two terms are defined in Rule 144(a) promulgated by the Securities and Exchange
Commission under the Securities Act, and that the FSELLC Membership Interest can
not be transferred, resold or otherwise disposed of by Purchaser without
registration under the Securities Act, unless pursuant to an applicable
exemption from such registration, and compliance with the FSELLC Organizational
Documents.

                                  ARTICLE IV

                        COVENANTS OF PARENT AND SELLERS

          Parent and each Seller jointly and severally covenant and agree with
Purchaser that, at all times from and after the date hereof until the Closing
and, with respect to any covenant or agreement by its terms to be performed in
whole or in part after the Closing, for the period specified therein, Parent and
each Seller will comply with all covenants and provisions of this Article IV and
                                                                  ----------
will cause FFEC to comply with Section 4.16, except to the extent Purchaser may
                               ------------
otherwise consent in writing.

          4.01.  Regulatory and Other Approvals.  Parent and each Seller will,
                 ------------------------------
as promptly as practicable, (i) take all commercially reasonable steps necessary
or desirable to obtain all

                                      29
<PAGE>

consents, approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person required of Parent or
such Seller to consummate the transactions contemplated hereby and by the
Operative Agreements, including, without limitation, those described in Sections
                                                                        --------
2.03 of the Disclosure Schedule, (ii) provide such other information and
-------------------------------
communications to such Governmental or Regulatory Authorities or other Persons
as Purchaser or such Governmental or Regulatory Authorities or other Persons may
reasonably request in connection therewith and (iii) cooperate with Purchaser in
connection with the performance of its obligations under Sections 5.01 and 5.02.
                                                         ----------------------

          4.02.  HSR Filings.  In addition to and not in limitation of Parent's
                 -----------
and Sellers" covenants in Section 4.01, Parent and Sellers will (i) take
                          ------------
promptly all actions necessary to make the filings required of Parent, Sellers
or their Affiliates under the HSR Act, (ii) comply at the earliest practicable
date with any request for additional information received by Parent, Sellers or
their Affiliates from the FTC or the DOJ pursuant to the HSR Act and (iii)
cooperate with Purchaser in connection with Purchaser's filing under the HSR Act
and in connection with resolving any investigation or other inquiry concerning
the transactions contemplated by this Agreement commenced by either the FTC or
the DOJ or state attorneys general.

          4.03.  Investigation by Purchaser.  Parent and Sellers will (i)
                 --------------------------
provide Purchaser and any Person who is considering providing financing to
Purchaser to finance all or any portion of the Purchase Price and their
respective officers, directors, employees, agents, counsel, accountants,
financial advisors, consultants and other representatives (collectively,
"Representatives") with reasonable access, upon reasonable prior notice, during
normal business hours and subject to reasonable scheduling, to such Employees
and agents of Sellers who have significant responsibility for the conduct of the
Business, to Parent's and Sellers" accountants and to the Assets, and (ii)
furnish Purchaser and such other Persons with all such information and data
(including, without limitation, copies of Business Contracts, Business Licenses,
and other Business Books and Records) concerning the Business, the Assets and
the Assumed Liabilities as Purchaser or any of such other Persons reasonably may
request in connection with such investigation.

          4.04.  Conduct of Business.  Until the Closing Date, Sellers will
                 -------------------
operate, and Parent will cause Sellers to operate, the Business in the ordinary
course and consistent with past practice, except as required under the
Bankruptcy Proceedings or under Section 1.01(c) or as authorized under Section
                                ---------------                        -------
15.08. Sellers will not book blocks of rooms or conventions or banquet
-----
facilities with respect to the Business for any date later than July 6, 2001,
other than in the ordinary course of business consistent with past practices and
at reasonable and customary rates.

          4.05.  Financial Statements and Reports; Filings.
                 -----------------------------------------

          (a)    As promptly as practicable and in any event not later than 90
days after the end of each fiscal year ending after the date hereof and before
the Closing Date, Parent shall deliver to Purchaser true and complete copies of
the (i) unaudited consolidated balance sheet of the Business derived from the
audited consolidated balance sheet of Parent and (ii) related unaudited
consolidated statement of operations for each such fiscal year then ended
derived from the audited consolidated statement of operations of Parent for each
such fiscal year, together with a true and complete copy of the report on such
audited information by Parent's independent

                                      30
<PAGE>

public accountants, and all letters from such accountants with respect to the
results of such audits, along with Balance Sheets supporting such unaudited
consolidated financial statements of the Business. As promptly as practicable
and in any event not later than 45 days after the end of each of the first three
quarters of each fiscal year ending after the date hereof and before the Closing
Date, Parent shall deliver to Purchaser true and complete copies of the
unaudited consolidated balance sheet of the Business and the related unaudited
consolidated statement of operations of the Business as of and for such quarter,
the portion of the fiscal year then ended and the 12-month period then ended,
together with the notes, if any, relating thereto and Balance Sheets supporting
such unaudited financial statements. Such audited and unaudited financial
statements shall be prepared on a basis consistent with the audited financial
statements specified in Section 2.04(a). In addition, Sellers shall, and Parent
                        ---------------
shall cause Sellers to, make Representatives of Sellers' management reasonably
available upon request of Purchaser to discuss Sellers' operation of the
Business.

          (b)    Sellers will deliver, and Parent will cause Sellers to deliver,
to Purchaser true and complete copies of such other financial statements,
reports and analyses relating to the Business as may be prepared or received by
Sellers, or as Purchaser may otherwise reasonably request. Purchaser shall
reimburse Sellers for actual out-of-pocket costs incurred for fees and expenses
of outside professionals in the preparation of such items as are requested by
Purchaser.

          (c)    Sellers will deliver, and Parent will cause Sellers to deliver,
copies of all License applications and other filings made by Sellers in
connection with the operation of the Business after the date hereof and before
the Closing Date with any Governmental or Regulatory Authority (other than
routine, recurring filings made in the ordinary course of business consistent
with past practice).

          4.06.  Certain Restrictions.  Except as (i) required by applicable
                 --------------------
Laws, the Bankruptcy Proceedings or Section 1.01(c), (ii) authorized under
                                    ---------------
Section 15.08, or (iii) provided in Section 15.06 with respect to the Tunica
-------------                       -------------
Business, Sellers will refrain from, and Parent will cause Sellers to refrain
from:

          (a)    disposing of any Assets and Properties used or held for use in
the conduct of the Business, other than Inventory in the ordinary course of
business consistent with past practice and other dispositions not exceeding
$100,000 in the aggregate for each of the Las Vegas Business, the Black Hawk
Business and the Tunica Business, or creating or incurring any Lien, other than
a Permitted Lien, on any Assets and Properties used or held for use in the
conduct of the Business;

          (b)    entering into, amending, modifying, terminating, granting any
waiver under or giving any consent with respect to any Business Contract or any
material Business License without Purchaser's prior written consent, which
consent shall not be unreasonably withheld or delayed;

          (c)    violating, breaching or defaulting under in any material
respect, or taking or failing to take any action that would constitute a
material violation or breach of, or default under, any term or provision of any
Business Contract or any Business License;

                                      31
<PAGE>

          (d)    incurring, purchasing, canceling, prepaying or otherwise
providing for a complete or partial discharge in advance of a scheduled payment
date with respect to, or waiving any right of any Seller under, any Liability of
or owing to any Seller in connection with the Business, other than in the
ordinary course of business consistent with past practice;

          (e)    engaging with any Person in any Business Combination;

          (f)    engaging in any transaction with respect to the Business with
any officer, director or Affiliate of any Seller, either outside the ordinary
course of business consistent with past practice or other than on an arm's-
length basis;

          (g)    making capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets on behalf of the
Business in an aggregate amount exceeding the greater of (i) $2,000,000 or (ii)
if the period between the date of this Agreement and the Closing Date exceeds 12
months, $2,000,000 plus $166,667 per month for each month after such 12-month
                   ----
period (and prorated for any such partial month), other than gaming equipment,
devices and products acquired in the ordinary course of business, except upon
receipt of the written consent of Purchaser;

          (h)    increasing the Employees' cash compensation or severance pay
entitlements, or making any other material changes in Sellers' respective
compensation and personnel policies, except (i) for reasonable and customary
periodic compensation increases and bonuses based on performance and consistent
with past practice or in accordance with the bonus programs applicable generally
to Employees, as described in Section 4.06(h) of the Disclosure Schedule
                              ------------------------------------------
(collectively, the "Bonus Program"), or (ii) as specifically authorized by the
Restructuring Agreement;

          (i)    making any material changes in the operation of Sellers'
promotional and marketing program, commonly referred to as the "Fitzgeralds
Players Card," available to gaming patrons at each Business location including,
without limitation, material changes in the methods of calculating or canceling
points and issuing awards to participants in the program who have accumulated
designated point levels or shortening the expiration periods for points;
provided, however, that the foregoing limitations shall not restrict Sellers
-----------------
from making periodic changes to such program in the ordinary course and
consistent with past practice;

          (j)    exchanging or trading equipment or machinery with FR; or

          (k)    entering into any Contract to do or engage in any of the
foregoing.

          4.07.  Delivery of Books and Records, etc.; Removal of Property.
                 --------------------------------------------------------

          (a)    On the Closing Date, Sellers will deliver or make available,
and Parent will cause Seller to deliver or make available, to Purchaser at the
respective locations at which the Business is conducted all of the Business
Books and Records and such other Assets as are in any Seller's possession at
other locations, and if at any time after the Closing any Seller discovers in
its possession or under its control any other Business Books and Records or
other Assets, it will forthwith deliver such Business Books and Records or other
Assets to Purchaser.

                                      32
<PAGE>

Purchaser shall cooperate and afford Sellers, their counsel and their
accountants, during normal business hours, reasonable access to the Business
Books and Records.

          (b)    Within 60 days after the Closing Date, Sellers shall remove,
and Parent shall cause Sellers to remove, all Assets and Properties not being
sold to Purchaser hereunder from the Real Property and Improvements.

          4.08.  Non-Competition.
                 ---------------

          (a)    Provided that the Restructuring Agreement has not been
terminated prior to or within 30 days after the Petition Date and except as
permitted in this Section 4.08, during the period commencing on the Closing Date
                  ------------
and ending on the 18-month anniversary of the Closing Date with respect to the
following clauses (i) and (ii) and ending on the 12-month anniversary of the
          --------------------
Closing Date with respect to the following clause (iii), Parent, Sellers, Philip
                                           ------------
D. Griffith, Michael E. McPherson, Max L. Page and Paul H. Manske (collectively,
the "Subject Parties") each agree not to, directly or indirectly through any of
their present or future Affiliates, (i) engage in the operation of any Competing
Business (as defined in paragraph (e) of this Section) within Downtown Las Vegas
                        -------------
(as defined in paragraph (e) of this Section) or within a 75-mile radius of the
               -------------
Black Hawk Business or the Tunica Business (in each case, a "Territory," and
collectively, the "Territories"), (ii) acquire, lease, be a controlling owner,
controlling shareholder, controlling partner, controlling member or controlling
equity holder of, exercise management control over, provide consulting services
for, or acquire or maintain a controlling interest in, any Competing Business
that is located in any of the Territories or (iii), except as provided in
paragraph (b) of this Section, hire, seek to hire, or recommend or solicit the
-------------
hiring of, any Employees who are hired by Purchaser as of the Closing or
encourage any of such Persons to terminate their employment with Purchaser
unless Purchaser has first terminated such Persons" employment. This Section
                                                                     -------
4.08 shall continue to apply to Parent and each Seller if any of them are
----
acquired by or merged with or into any other Person who owns or operates a
Competing Business (provided that the Restructuring Agreement has not been
terminated prior to or within 30 days after the Petition Date), but shall not
apply to the Competing Business (including Persons who own or operate the
Competing Business). Notwithstanding the foregoing, this Section 4.08 shall not
                                                         ------------
apply to any Person who succeeds to a substantial portion of Parent's or any
Seller's or any of their Affiliates" assets. As used herein, "controlling" means
having possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

          (b)    The obligations of the Subject Parties specified in clause
(iii) of paragraph (a) of this Section regarding Employees shall not apply to
         -------------
hiring such Employees for other than hotel or casino employment. Furthermore,
such obligations shall not apply to any business establishments in which Philip
D. Griffith, Michael E. McPherson, Max L. Page or Paul H. Manske are employed or
to which they provide services after the Closing Date if such establishments are
not, directly or indirectly, under the control of the Subject Parties (however,
the obligations will be applicable to these four individuals even if not
applicable to the business establishments).

                                      33
<PAGE>

          (c)    Each Subject Party recognizes that the covenants in this
Section 4.08 and the territorial, time and other limitations with respect
------------
thereto are reasonable and properly required for the adequate protection of the
acquisition of the Assets by Purchaser, and agrees that such limitations are
reasonable with respect to its activities, business and public purpose. Each
Subject Party agrees and acknowledges that the violation of the covenants or
agreements in this Section 4.08 would cause irreparable injury to Purchaser and
                   ------------
that the remedy at law for any violation or threatened violation thereof would
be inadequate and that, in addition to whatever other remedies may be available
against the violating Subject Party at law or in equity, Purchaser shall be
entitled to temporary and permanent injunctive or other equitable relief against
the violating Subject Party without the necessity of proving actual damages or
posting bond. Each Subject Party also waives any requirement of proving actual
damages in connection with the obtaining of any such injunctive or other
equitable relief.

          (d)    Nothing herein shall be deemed to prevent or limit the right of
any Subject Party or any of its Affiliates to engage in any of the activities
otherwise prohibited by clause (i) or (ii) of paragraph (a) of this Section if
                        -----------------------------------
the applicable Competing Business is being constructed, operated, leased, owned,
managed or consulted to by any Subject Party or its Affiliates as of the Closing
Date (after giving effect to the sale of Assets contemplated hereby).  In
addition, the covenants in paragraph (a) of this Section will not apply to (x)
                           -------------
any Persons or hotel or casino assets or facilities that cease to be owned,
directly or indirectly, by Parent or any Seller, including hotel or casino
assets or facilities that may be divested or spun off by any Subject Party or
any of its Affiliates, (y) any services (including consulting services) provided
by or on behalf of any Subject Party to (I) any such Person or assets or
facilities referred to in clause (x) above or (II) any Persons in which any
                          ----------
Subject Party or its Affiliates have, directly or indirectly, any minority
ownership interest or (z) reasonable expansions and extensions of existing
exempt operations of the type referred to in this paragraph (d).
                                                  -------------

          (e)    It is the intention of each party hereto that the provisions of
this Section shall be enforced to the fullest extent permissible under the laws
and the public policies of the States of Colorado, Mississippi and Nevada,
respectively, and of any other jurisdiction in which enforcement may be sought,
but that the unenforceability (or the modification to conform with such laws or
public policies) of any provisions hereof shall not render unenforceable or
impair the remainder of this Agreement. Accordingly, if any term or provision of
this Section is determined to be illegal, invalid or unenforceable, either in
whole or in part, this Agreement shall be deemed amended to delete or modify, as
necessary, the offending provisions and to alter the balance of this Agreement
in order to render the same valid and enforceable to the fullest extent
permissible as aforesaid.

          (f)    For purposes of this Section 4.08, "Competing Business" means
                                      ------------
the business of owning or operating one or more establishments conducting a
"gaming" (as defined in NRS (S)463.0153) or race book or sports book business,
and "Downtown Las Vegas" means the area commonly known as Downtown Las Vegas,
which consists of the area of the City of Las Vegas, Nevada bounded by Stewart
Avenue on the north, Bridger Avenue on the south, Sixth Street on the east and
Main Street on the west.

                                      34
<PAGE>

          (g)    Notwithstanding anything in this Agreement to the contrary,
this Section 4.08 shall be of no force or effect if the Restructuring Agreement
     ------------
has been terminated prior to or within 30 days after the Petition Date.

          4.09.  Title Insurance Policies and Exceptions.
                 ---------------------------------------

          (a)    Exhibit F hereto contains preliminary title reports for the
                 ---------
Real Property and the Real Property Leases (the "Title Reports").  All title
exceptions shown on the Title Reports are hereinafter referred to as the
"Permitted Exceptions."  The Permitted Exceptions shall also include those other
title exceptions which are disclosed or become apparent to Purchaser after the
date hereof, which are not already Permitted Exceptions, which cannot be removed
by the payment of a sum of money, which are not caused by the intentional act of
a Seller or any Affiliate of a Seller after the date hereof, and which do not
materially adversely affect the value of the Real Property or Improvements, or
the continued use thereof as currently conducted, or as to which Purchaser has
not timely objected.

          (b)    Sellers shall cause all title exceptions shown on the Title
Reports (other than Permitted Exceptions) not approved by Purchaser to be
removed on or before the Closing. Sellers, however, shall have the right to (i)
cause the Title Companies to remove any Liens by bonding over such Liens or (ii)
obtain the commitment of the appropriate Title Companies to insure Purchaser
against loss or damage that may be occasioned by such exceptions that are not
Permitted Exceptions.

          (c)    Prior to the Closing, Purchaser shall obtain ALTA extended
owner's policies of title insurance covering the Real Property owned by any
Seller (the "Owned Real Property") and lessee's policies of title insurance
covering Real Property in which any Seller has a leasehold interest (the "Leased
Real Property") (Forms B-1970) (Amended 4-6-90), with gap coverage for any Real
Property that will be conveyed to Purchaser at the Closing before the
corresponding deeds or Real Property Leases are recorded with the appropriate
local recording office, issued by title insurance companies reasonably
acceptable to Purchaser and Sellers in their respective reasonable discretion
(the "Title Companies"), insuring that Purchaser has fee title to the Owned Real
Property and Improvements thereon and valid leasehold interests in the Leased
Real Property and Improvements thereon, subject only to (i) the Permitted
Exceptions, (ii) liens for taxes not yet due and payable, (iii) all standard
exceptions, exclusions, conditions and stipulations from coverage for the Title
Companies" Extended Coverage Form ALTA Owner's Policy of Title Insurance or
Lessee's Policy of Title Insurance, as the case may be, including any and all
endorsements (excluding zoning endorsements) and affirmative coverage customary
in real estate sale transactions involving the magnitude and type of the Assets
as Purchaser shall reasonably request, and (iv) those exceptions arising after
the Transfer Time and approved by Purchaser as provided above (the "Title
Policies"). The aggregate coverage amount of the Title Policies for the Real
Property and Improvements shall be the Purchase Price.

          (d)    Sellers and Purchaser shall share equally the cost of the
premiums for the Title Policies and the endorsements up to the aggregate
coverage amount specified in paragraph (c) of this Section and the cost of the
surveys specified in paragraph (e) of this Section. Sellers and Purchaser shall
                     -------------
cooperate diligently to provide customary documents required by the Title
Companies as condition to the issuance of the Title Policies.

                                      35
<PAGE>

          (e)    If reasonably required in order for Purchaser to obtain the
Title Policies, Sellers shall order surveys to be prepared and be certified as
having been prepared in accordance with "Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys" jointly established and adopted by the ALTA
and ACSM in 1997 and including all ALTA optional items except No. 5 (Contour
Maps) and No. 12 (Governmental Agency Survey Requirements). Any such surveys
shall include a certification as to whether any of the Real Property and
Improvements are located in a floodplain or designated floodway and such
information as may be required by any of the Title Companies to issue extended
coverage (consistent with all matters shown on the survey) over all general
printed exceptions to title.

          4.10.  Notice and Cure.  Sellers shall notify, and Parent shall cause
                 ---------------
Sellers to notify, Purchaser in writing (where appropriate, through updates to
the Disclosure Schedule) of, and contemporaneously will provide Purchaser with
true and complete copies of any and all information or documents relating to,
and will use all commercially reasonable efforts to cure before the Closing, any
development, event, transaction or circumstance occurring after the date of this
Agreement that causes any covenant or agreement of Parent or Sellers under this
Agreement to be breached in any material respect or that renders untrue in any
material respect any representation or warranty of Parent or Sellers contained
in this Agreement as if the same were made on or as of the date of such
development, event, transaction or circumstance. The notification required by
this Section (the "Development Notification") shall be given to Purchaser within
ten days after each such development, event, transaction or circumstance comes
to the Knowledge of Sellers.

          4.11.  Fulfillment of Conditions.  Subject to Parent's and Sellers'
                 -------------------------
obligations in the Bankruptcy Proceedings, Parent and Sellers shall execute and
deliver, and Parent shall cause Sellers to execute and deliver, at the Closing
each Operative Agreement that Parent or Sellers are required hereby to execute
and deliver as a condition to the Closing, shall take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each other condition to the obligations of Purchaser contained in
this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
This Agreement shall not obligate Parent or Sellers collectively to incur more
than $50,000 of costs and expenses to satisfy the conditions specified in
Section 6.09; provided, however, that regardless of the amount of costs and
------------  -----------------
expenses necessary to satisfy the conditions specified in Section 6.09.
                                                          ------------
Purchaser's obligations to proceed with the Closing shall be subject to the
satisfaction of those conditions.

          4.12.  Baggage.  At the Transfer Time, authorized representatives of
                 -------
Sellers shall perform, and Parent shall cause Sellers to perform, the following
functions for all baggage, trunks and other property that were checked and
placed in the care of a Seller at the Property: (i) seal all pieces of baggage
with tape; (ii) prepare an inventory ("Inventoried Baggage") of such items
indicating the check number applicable thereto; and (iii) deliver the
Inventoried Baggage to an authorized representative of Purchaser and secure a
receipt for the Inventoried Baggage. Thereafter, Purchaser shall be responsible
for such Inventoried Baggage.

          4.13.  Safe Deposits.  On or before the Transfer Time, Sellers shall
                 -------------
remove, and Parent shall cause Sellers to remove, all items stored by any
Seller, Parent or any of their respective Affiliates in safe deposit boxes
located at the Property, and all such safe deposit boxes

                                      36
<PAGE>

shall be made available for Purchaser's use thereafter. Safe deposit boxes in
use by customers at the Property at the Transfer Time will be sealed in a
reasonable manner mutually agreeable to Purchaser and Sellers. At the Transfer
Time, Purchaser and Sellers shall designate in writing their initial safe
deposit representatives. Representatives of both Sellers and Purchaser are to be
present when a seal is broken. Sellers will make a representative available
within one (1) hour after Purchaser notifies Sellers that the representative is
required. Purchaser shall have no responsibility for loss or theft from a safe
deposit box whose seal was broken in the presence of Sellers' representatives.
All safe deposit keys, combinations and records shall be delivered at the
Transfer Time to Purchaser.

          4.14.  Valet Parking.  At the Transfer Time, authorized
                 -------------
representatives of Sellers shall perform, and Parent shall cause Sellers to
perform, the following functions for all motor vehicles that were checked and
placed in the care of any Seller at the Property: (i) mark all motor vehicles
with a sticker or tape; (ii) prepare an inventory of such vehicles ("Inventoried
Vehicles") indicating the check number applicable thereto; and (iii) transfer
control of the Inventoried Vehicles to an authorized representative of Purchaser
and secure a receipt for the Inventoried Vehicles. Thereafter, Purchaser shall
be responsible for the Inventoried Vehicles.

          4.15.  Notice of Developments.  If Parent or Sellers give Purchaser a
                 ----------------------
Development Notification with respect to a development, event, transaction or
circumstance that causes a breach of any of their respective representations and
warranties in Sections 2.04 through 2.11, 2.16, 2.18 and 2.19, then unless
              -----------------------------------------------
Purchaser has the right to terminate this Agreement pursuant to Section 12.01(c)
                                                                ----------------
by reason thereof and exercises that right within 30 days after such Development
Notification is given, such Development Notification will be deemed to have
amended the Disclosure Schedule, to have qualified the representations and
warranties contained in Sections 2.04 through 2.11, 2.16, 2.18 and 2.19, and to
                        -----------------------------------------------
have cured any misrepresentation or breach of representation or warranty that
otherwise might have existed hereunder by reason of such development, event,
transaction or occurrence.

          4.16.  FSELLC Membership Interest.  Except as required by applicable
                 --------------------------
Laws, the Bankruptcy Proceedings or this Agreement, FFEC will refrain from
disposing of the FSELLC Membership Interest, transferring or granting any rights
or interest therein that will not terminate as of the Closing, or entering into
any Contract to do any of the foregoing.

          4.17.  Notice of Termination of Restructuring Agreement.  If the
                 ------------------------------------------------
Restructuring Agreement is terminated prior to or within 30 days after the
Petition Date, then by not later than the next Business Day after such
termination Parent or Sellers shall deliver to Purchaser written notice of such
termination.

          4.18.  Cure Obligations.  Prior to the Closing Parent and Sellers
                 ----------------
shall comply with their respective obligations under Section 1.12 including,
                                                     ------------
without limitation, payment of amounts required to cure defaults as provided in
clause (i) of Section 1.12.
----------    ------------

                                      37
<PAGE>

                                   ARTICLE V

                            COVENANTS OF PURCHASER

          Purchaser covenants and agrees with Sellers and Parent that, at all
times from and after the date hereof until the Closing and, with respect to any
covenant or agreement by its terms to be performed in whole or in part after the
Closing, for the period specified therein, Purchaser will comply with all
covenants and provisions of this Article V, except to the extent Sellers and
                                 ---------
Parent may otherwise consent in writing.

          5.01.  Regulatory and Other Approvals and Notifications.
                 ------------------------------------------------

          (a)    Purchaser will, as promptly as practicable, (i) take all
commercially reasonable steps necessary or desirable to obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person required of Purchaser
to consummate the transactions contemplated hereby and by the Operative
Agreements, including, without limitation, those described in Sections 3.03 and
                                                              -----------------
3.04 of the Disclosure Schedule (each, a "Regulatory Action"), (ii) provide such
-------------------------------
other information and communications to such Governmental or Regulatory
Authorities or other Persons as Sellers or such Governmental or Regulatory
Authorities or other Persons may reasonably request in connection therewith and
(iii) cooperate with Parent and Sellers in connection with the performance of
their obligations under Sections 4.01 and 4.02.
                        ----------------------

          (b)    Purchaser will provide reasonably descriptive written
notification to Sellers within ten days after the occurrence of any of the
following events:

                 (i)   Purchaser makes any filing or submits any application,
     notice or similar document (or any amendment or supplement to any of the
     foregoing) necessary for any Regulatory Action to be obtained, taken, made
     or given;

                 (ii)  Purchaser withdraws any filing, application, notice or
     similar document referred to in clause (i) of this paragraph (b);
                                     ----------         -------------

                 (iii) any Regulatory Action is obtained, taken, made or given;

                 (iv)  any Governmental or Regulatory Authority notifies
     Purchaser that its application, notice, filing or other request for a
     Regulatory Action has been placed on an agenda or schedule for hearing or
     consideration (which notification from Purchaser to Sellers shall specify
     the date of such hearing or consideration) or removed from such agenda or
     schedule; or

                 (v)   any Governmental or Regulatory Authority (A) issues a
     decision not to take, make or give any Regulatory Action, as the case may
     be, or (B) withdraws, revokes, cancels or nullifies any Regulatory Action
     that was previously taken, made or given, as the case may be.

                                      38
<PAGE>

          5.02.  HSR Filings.  In addition to and without limiting Purchaser's
                 -----------
covenants in Section 5.01, Purchaser will (i) take promptly all actions
             ------------
necessary to make the filings required of Purchaser or its Affiliates under the
HSR Act, (ii) comply at the earliest practicable date with any request for
additional information received by Purchaser or its Affiliates from the FTC or
the DOJ pursuant to the HSR Act, (iii) cooperate with Parent and Sellers in
connection with their filing under the HSR Act and in connection with resolving
any investigation or other regulatory inquiry concerning the transactions
contemplated by this Agreement commenced by either the FTC or the DOJ or state
attorneys general, and (iv) pay any and all filing fees due and payable in
connection therewith.

          5.03.  Financing Letter.  Concurrently with Purchaser's execution and
                 ----------------
delivery of this Agreement to Parent and Sellers, Purchaser shall deliver to
Parent and Seller the following letters addressed to them:

                 (i)   a letter executed by Jefferies & Company, Inc.
     ("Jefferies"), as financial advisor to Purchaser and Purchaser's Parent,
     stating to Parent's and Sellers" reasonable satisfaction, with normal and
     customary wording for letters of such a nature, that Jefferies is "highly
     confident" that Purchaser will satisfy the conditions specified in Section
                                                                        -------
     6.08 by not later than 60 days after all conditions specified in Article
     ----                                                             -------
     VI, other than in Section 6.08, have been satisfied, waived or excused; and
     --                ------------

                 (ii)  a commitment letter from Don H. Barden stating to
     Parent's and Sellers" reasonable satisfaction that the other funds needed
     for Purchaser to pay the Purchase Price and related costs (besides the
     funds to be obtained through the financing specified in Section 6.08) will
                                                             ------------
     come from an infusion of equity capital into Purchaser's Parent or
     Purchaser by or on behalf of Mr. Barden or related parties.

          5.04.  Leased Employee Expenses.
                 ------------------------

          (a)    The provisions of this Section 5.04 shall apply only with
                                        ------------
respect to Employees who have entered into employment Contracts with Sellers
that expire after the date of this Agreement, as disclosed in Section 5.04 of
                                                              ---------------
the Disclosure Schedule ("Contracted Employees").
-----------------------

          (b)    Within 85 days after the entry of the Petition Date, Purchaser
shall deliver to Sellers a true and complete list of those Contracted Employees
whose services Purchaser desires to lease from Sellers ("Leased Employees") for
the period beginning on the Closing Date and ending on December 31 of the
calendar year in which the Closing takes place (the "Lease Period"). The number
of Leased Employees shall not exceed 15. Purchaser's obligation to provide
Sellers with the list of Leased Employees pursuant to this paragraph (b) shall
                                                           -------------
be subject to Sellers" providing Purchaser with reasonable access to the
Contracted Employees after December 4, 2000.

          (c)    Sellers shall continue to employ the Leased Employees following
the Closing Date and for the term of the Lease Period and the Leased Employees
shall at all times during the Lease Period be employees of Sellers and not
Purchaser, subject to any rights of (i) the Leased Employees to terminate their
employment with Sellers or (ii) Sellers to terminate

                                      39
<PAGE>

the employment of the Leased Employees under the applicable employment
Contracts. Sellers shall be responsible to the Leased Employees for all
salaries, wages, bonuses and other obligations under their employment Contracts
and Purchaser shall have no liability to the Leased Employees for any of these
items or for any other benefits provided under their respective employment
Contracts with Sellers. Purchaser shall not be required to offer employment to
any Leased Employees as otherwise may be required under Section 9.01 either on
                                                        ------------
the Closing Date or after expiration of the Lease Period. During the Lease
Period Purchaser shall provide work places for the Leased Employees that are
consistent with their respective job descriptions or, alternatively, shall
advise the Leased Employees that they are not required to report to Purchaser
for work at all.

          (d)    During the Lease Period, but only for so long as such Leased
Employees are employed by Sellers during the Lease Period, Purchaser shall
reimburse Sellers for all salaries, wages, Bonus Program payments, related
employment taxes, employee benefits and workers compensation incurred by Sellers
with respect to the Leased Employees pursuant to their employment Contracts and
the Bonus Program.  Purchaser shall not be directly responsible for, nor
reimburse Sellers with respect to, any bonus, severance or other termination pay
which may be payable to any Leased Employees pursuant to their respective
employment Contracts.

          (e)    Sellers covenant and agree to pay the Leased Employees, as and
when due, all amounts to which the Leased Employees become entitled pursuant to
their employment Contracts for the Lease Period.

          (f)    Amounts payable by Purchaser under this Section shall be paid
to the respective Sellers within five Business Days after Purchaser's receipt of
reasonable documentary support for Sellers' request for such payment, which
Sellers may deliver within five Business Days of the end of each payroll period
of Sellers during the Lease Period.

          5.05.  Representations and Warranties.  Purchaser shall not, directly
                 ------------------------------
or indirectly through any of its Affiliates, take any actions or obligate itself
to take any actions that would make it impossible or impracticable with
Purchaser's use of commercially reasonable efforts for any of Purchaser's
representations or warranties in this Agreement to be true and correct in all
material respects on and as of the Closing Date as though such representations
or warranties were made on and as of the Closing Date.

          5.06.  Notice and Cure.  Purchaser will notify Parent and Sellers in
                 ---------------
writing of, and contemporaneously will provide Parent and Sellers with true and
complete copies of any and all information or documents relating to, and will
use all commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance, as soon as practicable after it comes to the
Knowledge of Purchaser, occurring after the date of this Agreement that causes
any covenant or agreement of Purchaser under this Agreement to be breached or
that renders untrue in any material respect any representation or warranty of
Purchaser contained in this Agreement as if the same were made on or as of the
date of such event, transaction or circumstance. No notice given pursuant to
this Section shall have any effect on the representations, warranties, covenants
or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein or shall in any way limit
Sellers' Indemnified Parties' right to seek indemnity under Article XI.
                                                            ----------

                                      40
<PAGE>

          5.07.  Fulfillment of Conditions.  Purchaser will execute and deliver
                 -------------------------
at the Closing each Operative Agreement that Purchaser is hereby required to
execute and deliver as a condition to the Closing. Purchaser will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy (i) each condition to the obligations of Parent and
Sellers contained in this Agreement and (ii) the conditions specified in Section
                                                                         -------
6.08, and will not take or fail to take any action that could reasonably be
----
expected to result in the nonfulfillment of any conditions specified in clauses
                                                                        -------
(i) or (ii) of this Section. Purchaser will provide prompt written notification
-----------
to Sellers when the conditions specified in Section 6.08 have been satisfied (or
                                            ------------
waived).


                                  ARTICLE VI

                    CONDITIONS TO OBLIGATIONS OF PURCHASER

          The obligations of Purchaser hereunder to purchase the Assets and to
assume and to pay, perform and discharge the Assumed Liabilities are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Purchaser in its sole
discretion):

          6.01.  Representations and Warranties.  Subject to Section 4.15, each
                 ------------------------------              ------------
of the representations and warranties made by Parent and Sellers in this
Agreement (other than those made as of a specified date earlier than the Closing
Date) shall be true and correct in all material respects on and as of the
Closing Date as though such representation or warranty was made on and as of the
Closing Date; provided, however, that this condition shall not apply to the
              -----------------
extent that Article IV or other provisions of this Agreement authorize Parent or
            ----------
Sellers to take certain actions or authorize certain events to occur between the
date of this Agreement and the Closing Date and such actions or events render
any representations or warranties of Parent or Sellers untrue, incorrect or
incomplete as of the Closing Date. Any representation or warranty made as of a
specified date earlier than the Closing Date shall have been true and correct in
all material respects on and as of such earlier date.

          6.02.  Performance.  Parent and Sellers shall have performed and
                 -----------
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by them at or
before the Closing.

          6.03.  Orders and Laws.  On the Closing Date, the Sales Order or an
                 ---------------
Order confirming a Plan of Reorganization shall be a Final Order and shall not
be subject to any Order or law restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement or any of the Operative Agreements or which could reasonably be
expected to result in a material diminution of the benefits of the transactions
contemplated by this Agreement or any of the Operative Agreements to Purchaser,
and there shall not be pending on the Closing Date any Action or Proceeding in,
before or by any Governmental or Regulatory Authority which could reasonably be
expected to result in the issuance of any such Order or the enactment,
promulgation or deemed applicability to Purchaser or the transactions
contemplated by this Agreement or any of the Operative Agreements of any such
Law.

                                      41
<PAGE>

          6.04.  Regulatory Consents and Approvals.
                 ---------------------------------

          (a)    All consents, approvals and actions of, filings with, and
notices to, any Governmental or Regulatory Authority (including, without
limitation, the Gaming Authorities exercising jurisdiction over Purchaser and
its Affiliates) necessary to permit Purchaser, Parent and Sellers to perform
their respective obligations under this Agreement and the Operative Agreements
and to consummate the transactions contemplated hereby and thereby (i) shall
have been duly obtained, made or given, (ii) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived, and (iii)
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements, including under the HSR Act, shall have occurred.

          (b)    All consents, approvals and actions of, filings with and
notices to any Governmental or Regulatory Authority necessary to permit
Purchaser to perform its obligations under this Agreement and the Operative
Agreements and to consummate the transactions contemplated hereby and thereby,
(i) shall have been duly obtained, made or given, (ii) shall not be subject to
the satisfaction of any condition that has not been satisfied or waived, and
(iii) shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions by Purchaser contemplated by this
Agreement and the Operative Agreements shall have occurred.

          6.05.  Third Party Consents.  If not otherwise provided by Order of
                 --------------------
the Bankruptcy Court, in all material respects the consents (or in lieu thereof
waivers) (i) listed in Section 6.05 of the Disclosure Schedule and (ii) all
                       ---------------------------------------
other consents (or in lieu thereof waivers) to the performance by Purchaser,
Parent and Sellers of their obligations under this Agreement and the Operative
Agreements or to the consummation of the transactions contemplated hereby and
thereby as are required under any Contract to which Purchaser or any Seller is a
party or by which any of their respective Assets and Properties are bound shall
(A) have been obtained, (B) not be subject to the satisfaction of any condition
that has not been satisfied or waived and (C) be in full force and effect,
except (in the case of clause (ii) above) where the failure to obtain any such
                       -----------
consent (or in lieu thereof waiver) could not reasonably be expected,
individually or in the aggregate with other such failures, to materially
adversely affect Purchaser, the Assets, the Assumed Liabilities or the Business
or otherwise result in a material diminution of the benefits of the transactions
contemplated by this Agreement and the Operative Agreements to Purchaser.

          6.06.  Personal Property Leases.  For any leases of personal property
                 ------------------------
and equipment described in Section 6.06 of the Disclosure Schedule, prior to the
                           ---------------------------------------
Closing Date Sellers shall, and Parent shall cause Sellers to, pay in full and
take any and all actions necessary to perform all payment obligations under such
leases and to effect the complete discharge, termination and release of all such
leases as are necessary to convey to Purchaser at the Closing good and valid fee
title to all such personal property subject to such leases, free and clear of
all Liens (other than Permitted Liens), in good working order and condition,
ordinary wear and tear excepted.

          6.07.  Deliveries.  Parent and Sellers shall have executed and
                 ----------
delivered to Purchaser all of the Operative Agreements required hereunder to be
executed and delivered by

                                      42
<PAGE>

Parent and Sellers and all necessary forms and certificates (including the
affidavits described in Section 2.13 and IRS Forms W-9), duly executed,
                        ------------
certifying that the transactions contemplated hereunder are exempt from
withholding under the tax laws (except to the extent that Section 1.03(a)
                                                          ---------------
provides for such withholding).

          6.08.  Financing.  Purchaser or Purchaser's Affiliate shall have
                 ---------
obtained financing, in the form of senior secured notes, of an aggregate
principal amount not exceeding $137,000,000, on terms reasonably acceptable to
Purchaser or Purchaser's Parent with reasonableness standards based on (i) the
consolidated financial position, results of operations, cash flow, present
capital and debt structure, and credit rating of Purchaser's Parent; and (ii)
interest rates and other general conditions in the relevant financial markets.

          6.09.  Black Hawk Business Environmental Matters.  If the results of
                 -----------------------------------------
the most recent radon tests that were performed on Purchaser's behalf at the
Black Hawk Business and are disclosed in the Purchaser's Environmental Reports
are 4 pCi/L or greater, Sellers shall have conducted, constructed and performed
prior to the Closing, at their sole expense, any and all work and improvements
necessary to mitigate the radon to levels below 4 pCi/L and such work and
improvements shall have been performed and constructed in accordance with all
applicable Environmental Laws in all material respects.

          6.10.  Tunica Business Access.  Purchaser shall be satisfied, in its
                 ----------------------
reasonable discretion, that as of the Closing there exists adequate access
allowing ingress to and egress from the Tunica Business, either by the Title
Company providing an access endorsement or otherwise insuring as to such access,
Sellers providing documentary evidence reasonably satisfactory to Purchaser that
a perpetual easement allowing such access exists in favor of the Real Property
comprising the Tunica Business, or otherwise.

          6.11.  Las Vegas Business Compliance.  As of the Closing, Sellers
                 -----------------------------
shall have expanded the Las Vegas Business restroom facilities described in
Section 2.08(c) of the Disclosure Schedule to achieve compliance with the
------------------------------------------
applicable regulations of the City of Las Vegas Building Department in all
material respects.

                                  ARTICLE VII

                CONDITIONS TO OBLIGATIONS OF SELLERS AND PARENT

          The obligations of Sellers hereunder to sell the Assets and the
obligations of Parent to cause Sellers to take such action are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Sellers and Parent in their
sole discretion):

          7.01.  Representations and Warranties.  Each of the representations
                 ------------------------------
and warranties made by Purchaser in this Agreement shall be true and correct in
all material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date.

                                      43
<PAGE>

          7.02.  Performance.  Purchaser shall have performed and complied with,
                 -----------
in all material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by Purchaser at or before the
Closing, including, without limitation, payment of the Purchase Price.

          7.03.  Orders and Laws.  On the Closing Date, the Sales Order or an
                 ---------------
Order confirming a Plan of Reorganization shall be a Final Order and shall not
be subject to any Order or law restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement or any of the Operative Agreements or which could reasonably be
expected to result in a material diminution of the benefits of the transactions
contemplated by this Agreement or any of the Operative Agreements to Parent or
Sellers. There shall not be in effect on the Closing Date any Order or Law that
became effective after the date of this Agreement restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Agreements.

          7.04.  Regulatory Consents and Approvals.  All consents, approvals and
                 ---------------------------------
actions of, filings with, and notices to, any Governmental or Regulatory
Authority (including, without limitation, the Gaming Authorities) necessary to
permit Parent and Sellers to perform their respective obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby (i) shall have been duly obtained, made or
given, (ii) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived, (iii) shall be in full force and effect, and (iv)
all terminations or expirations of waiting periods imposed under the HSR Act
shall have occurred.

          7.05.  Third Party Consents.  All consents (or in lieu thereof
                 --------------------
waivers) to the performance by Sellers and Parent of their obligations hereunder
and to the consummation of the transactions contemplated hereby as are required
under the Contracts listed in Section 7.05 of the Disclosure Schedule shall, if
                              ---------------------------------------
not otherwise provided by Order of the Bankruptcy Court, (i) have been obtained,
(ii) not be subject to the satisfaction of any condition that has not been
satisfied or waived and (iii) be in full force and effect.

          7.06.  Deliveries.  Purchaser shall have executed and delivered to
                 ----------
Parent and Sellers the Assumption Agreement and the other Assumption
Instruments.

          7.07.  Proceedings.  All proceedings to be taken on the part of
                 -----------
Purchaser in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Sellers and Parent, and Sellers and Parent shall have received
copies of all such documents and other evidences as they may reasonably request
in order to establish the consummation of such transactions and the taking of
all proceedings in connection therewith.

                                      44
<PAGE>

                                 ARTICLE VIII

                      TAX MATTERS AND POST-CLOSING TAXES

          8.01.  Taxes.
                 -----

          (a)    Except as otherwise provided by the Bankruptcy Code or the
Sales Order, Sellers shall pay, and Parent shall cause Sellers to pay, all
sales, use, withholding, gaming, transfer, real property transfer, recording,
gains, stock transfer and other similar taxes and fees relating to the pre-
Closing period or accruing upon the Closing Date ("Transfer Taxes") arising out
of or in connection with the transactions effected pursuant to this Agreement,
and shall indemnify, defend, and hold harmless Purchaser on an after-Tax basis
with respect to such Transfer Taxes. Sellers shall file, and Parent shall cause
Sellers to file, all necessary documentation and Tax Returns with respect to
such Transfer Taxes.

          (b)    Except as otherwise provided by the Bankruptcy Code or the
Sales Order, Sellers shall be and remain liable for any fees or taxes due
pursuant to NRS Chapter 463, C.R.S. Title 12, Article 47.1, and Miss. Code Ann.
Title 75, Chapter 76, (S)(S) 177-189 which accrue prior to the Closing,
including, without limitation, liability for payment of any fees or taxes due
pursuant to any subsequent deficiency determinations made under such statutes
which relate to any period of time prior to the Closing.

          8.02.  Pre-Clo sing Tax Returns and Taxes.  Sellers shall, and Parent
                 ---------------------------------
shall cause Sellers to, timely prepare and file all Tax Returns of Parent,
Sellers and FFEC for taxable periods ending on or before the Closing Date ("Pre-
Closing Tax Returns"). Parent, Sellers and FFEC shall timely pay or cause to be
paid all Taxes related to Pre-Closing Tax Returns or otherwise relating to a
period ending on or before the Closing Date ("Pre-Closing Taxes").

          8.03.  Tax Indemnification.
                 -------------------

          (a)    After the Closing Date, and subject to Article XI, Parent,
                                                        ----------
Sellers and FFEC will indemnify and hold harmless Purchaser from and against any
and all claims, actions, causes of action, liabilities, losses, damages, and
reasonable out-of-pocket expenses and costs resulting from, arising out of or
relating to (i) Pre-Closing Taxes of Parent, each Seller and FFEC; (ii) any
Taxes of Parent, any Seller or FFEC measured by net or gross income (including,
without limitation, any Tax liability that arises solely by reason of any Seller
or FFEC being severally liable for any Tax of any current or former Affiliate of
such Seller or FFEC pursuant to Treasury Regulation "1.1502-6 or any analogous
state or local Tax provision) and all other Taxes of any Seller or FFEC except
those described in Section 8.03(b); and (iii) all Taxes described in Section
                   ---------------                                   -------
8.01.
----

          (b)    Purchaser will be responsible for and, subject to Article XI,
                                                                   ----------
Purchaser will indemnify and hold Sellers harmless against any all liabilities
with respect to Taxes arising out of the ownership of the Assets for any taxable
year or period that begins after the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period beginning after the Closing
Date.  For purposes of the preceding sentence, in the case of any Taxes that are
imposed

                                      45
<PAGE>

on a periodic basis and are payable for a tax period that includes (but does not
end on) the Closing Date, the portion of such Tax which relates to the portion
of such tax period ending on the Closing Date shall (i) in the case of any Tax
not based upon or related to income or receipts, be deemed the amount of such
Tax for the entire tax period multiplied by a fraction the numerator of which is
the number of days in the tax period ending on the Closing Date and the
denominator of which is the number of days in the entire tax period, and (ii) in
the case of any Tax based upon or related to income or receipts, be deemed the
amount of Tax which would be payable if the relevant tax period ended on the
Closing Date. Any credits arising out of the ownership of the Assets relating to
a tax period that begins before and ends after the Closing Date shall be taken
into account as though the relevant tax period ended on the Closing Date. All
determinations necessary to give effect to the foregoing allocations shall be
made in a manner consistent with the prior practices of Sellers.

          8.04.  Tax Cooperation.  After the Closing Date, Parent and Sellers
                 ---------------
will, and Parent will cause Sellers to, cooperate with Purchaser, and Purchaser
will cooperate with Sellers and Parent, in the preparation of all Tax Returns
and will provide (or cause to be provided) any records and other information the
other so requests, and will provide access to, and the cooperation of its
auditors. Parent and Sellers will, and Parent will cause Sellers to, cooperate
with Purchaser and Purchaser will cooperate with Sellers and Parent in
connection with any Tax investigation, audit or other proceeding.

          8.05.  Notification of Proceedings; Control.  Sellers and Parent shall
                 ------------------------------------
have the right to control any audit or examination by any taxing authority,
initiate any claim for refund, file any amended return, contest, resolve and
defend against any assessment, notice of deficiency or other adjustment or
proposed adjustment relating or with respect to all Taxes, other than any Taxes
for which Purchaser shall be liable after the Closing, and shall be entitled to
all refunds with respect to such Taxes other than any Taxes for which Purchaser
shall be liable after the Closing. Purchaser shall have the right to control any
audit or examination by any taxing authority for any taxes which Purchaser shall
be liable after the Closing, and shall have the right to initiate any claim for
refund, file any amended returns, contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed adjustment
relating or with respect to any taxes which Purchaser shall be liable after the
Closing, and shall be entitled to all refunds with respect to such Taxes;
provided that Purchaser will consult in good faith with Sellers and Parent with
respect to any Taxes for periods that include the Closing Date, and Sellers or
Parent shall be entitled to any refunds for such period to the extent the refund
is allocable, in accordance with the principles of Section 8.03(a) and (b) to
                                                   ---------------
that portion of such period ending on the Closing Date.

                                  ARTICLE IX

               POST-CLOSING EMPLOYMENT OBLIGATIONS OF PURCHASER

          9.01.  Hiring and Retaining Employees.
                 ------------------------------

          (a)    Effective as of the Closing, Purchaser shall make bona fide,
good faith offers of employment to all of the Employees, other than executive
officers of Parent or of any

                                      46
<PAGE>

Sellers, probationary Employees or Leased Employees, for employment at the same
Business locations where they were employed in the ordinary course prior to the
Closing. Such offers of employment may be on terms and conditions as Purchaser
shall determine in its sole discretion; provided, however, that Purchaser's
                                        -----------------
offers of employment to Contracted Employees who are not Leased Employees shall
be on substantially equal economic terms (combined salary, wages and bonus) as
are available to such Contracted Employees under their respective employment
Contracts with Sellers. All Employees hired by Purchaser pursuant to this
Article IX shall be credited by Purchaser for their periods of employment with
----------
any Sellers through the day immediately preceding the Closing Date for purposes
of determining seniority and eligibility for employee benefits (other than
pension plans) provided generally by Purchaser's Parent or subsidiaries of
Purchaser's Parent to their employees performing the same or substantially
similar duties. For at least 90 days after the Closing, Purchaser shall not,
directly or indirectly, take any actions that would cause more than either of
the following two numbers of Covered Employees, specified in clauses (i) and
                                                             ---------------
(ii), at the Las Vegas Business, the Black Hawk Business or the Tunica Business
----
to incur an "Employment Loss," as defined in Section 9.03:
                                             ------------

                 (i)   The greater of (A) 49 or (B) 32.9% of all Covered
     Employees; or

                 (ii)  499.

          (b)    For the period between the Closing Date and the end of the
calendar year in which the Closing takes place, Purchaser shall adopt and
maintain in effect the Bonus Plan for Employees that Purchaser hires pursuant to
paragraph (a) of this Section.
-------------

          (c)    From time to time after the execution of this Agreement,
Sellers shall be entitled to notify Employees of Purchaser's obligations under
paragraphs (a) and (b) of this Section.
----------------------

          9.02.  Purpose and Intent.  The provisions of this Article IX are
                 ------------------                          ----------
intended to, among other things, effect a smooth transition of the ownership of
the Business from Sellers to Purchaser and of the employment of the Employees
such that in connection with the transactions contemplated by this Agreement,
Employees at each of the three Business locations will not be deemed to have
incurred an Employment Loss for which any Sellers had or will have obligations,
Liabilities or responsibilities under WARN. Purchaser shall perform its
obligations under this Article IX in a spirit of cooperation and utmost good
                       ----------
faith with a view towards achieving this intent.

          9.03.  Certain Defined Terms.  For purposes of this Article IX, the
                 ---------------------                        ----------
following terms have the following meanings:

          (a)    "Covered Employees" means all Employees other than "part-time
employees," as defined under WARN.

          (b)    "Employment Loss" has the meaning ascribed to such term under
WARN.

          9.04.  Enforcement of Obligations.  Purchaser acknowledges and agrees
                 --------------------------
that a violation of any covenants or agreements in this Article IX would cause
                                                        ----------
irreparable injury to Parent, Sellers and their Affiliates and that the remedy
at law for any violation or threatened

                                      47
<PAGE>

violation thereof would be inadequate and that, in addition to whatever other
remedies may be available at law or in equity, Parent and Sellers shall be
entitled to temporary and permanent injunctive or other equitable relief without
the necessity of proving actual damages or posting bond. Purchaser also waives
any requirement of proving actual damages in connection with the obtaining of
any such injunctive or other equitable relief.

          9.05.  Exception to Hiring Obligations.  This Article IX shall not
                 -------------------------------        ----------
require Purchaser to hire any Employees who freely and voluntarily choose not to
be employed by Purchaser, so long as Purchaser has neither taken actions nor
expressed an intention to take actions with respect to such Employees that would
reasonably be expected to cause such Employees to incur an Employment Loss if
they were to accept employment by Purchaser. This Section 9.05 shall not,
                                                  ------------
however, limit or otherwise affect Purchaser's obligations under Section 5.04
                                                                 ------------
with respect to Leased Employees.

          9.06.  Withdrawal Liability.  It is the intention of Parent, Sellers
                 --------------------
and Purchaser to satisfy the provisions of " 4204 of ERISA with respect to any
obligation that Sellers may have under any Multiemployer Pension Plan with
respect to Employees. Therefore, Parent, Sellers and Purchaser agree as follows:

                 (i)    Purchaser shall continue making contributions to each
     Multiemployer Plan in accordance with the terms of any applicable
     collective bargaining agreement obligating Parent or Sellers to make
     contributions to such Multiemployer Plan for substantially the same number
     of contribution base units for which Parent or Sellers or both had an
     obligation to contribute to the Multiemployer Plan as of the Closing Date;
     and

                 (ii)   unless exempt under Pension Benefit Guaranty Corporation
     Regulations (S)(S) 4204.11 or 4204.21, Purchaser shall post a bond or hold
     in escrow in favor of the Multiemployer Plan for a period of five plan
     years commencing with the first plan year beginning after the Closing Date
     in an amount and form that satisfies the requirements of (S) 4204(a)(1)(B)
     or ERISA; and

                 (iii)  in the event that Purchaser withdraws in a complete or
     partial withdrawal under (S) 4201 of ERISA from a Multiemployer Plan during
     the first five years beginning after the Closing Date, and Purchaser fails
     to make any withdrawal liability payments when due, Sellers shall be
     secondarily liable for any withdrawal liability that Sellers would have had
     to the Multiemployer Plan but for the provisions of this Section 9.06 and
                                                              ------------
     (S) 4204 of ERISA subject, however, for any limitations on such liability
     under the Bankruptcy Code or any applicable bar Orders of the Bankruptcy
     Code.

     Nothing in this Section 9.06 shall constitute or be construed as a post-
                     ------------
Bankruptcy Court petition assumption or reaffirmation of any withdrawal or other
Liabilities.

          9.07.  Bonus Program.
                 -------------

          (a)    For the calendar year in which the Closing takes place,
Purchaser shall pay directly to the Employees hired by Purchaser the amounts
payable to them under the Bonus

                                      48
<PAGE>

Program for the period between the Closing Date and the end of such calendar
year. Purchaser shall make such payments as and when due under the Bonus
Program.

          (b)    For purposes of Purchaser's post-Closing obligations under this
Section 9.07, the Bonus Program shall be deemed applicable to the Business, and
------------
shall take into account the results of operations of the Business, as owned by
Purchaser.

                                   ARTICLE X

                   SURVIVAL OF REPRESENTATIONS, WARRANTIES,
                           COVENANTS AND AGREEMENTS

          Notwithstanding any right of Purchaser (whether or not exercised) to
investigate the Business or any right of any party (whether or not exercised) to
investigate the accuracy of the representations and warranties of any other
party or parties contained in this Agreement, Sellers and Parent on one side and
Purchaser on the other side have the right to rely fully on the representations,
warranties, covenants and agreements of each other contained in this Agreement.
The representations, warranties, covenants and agreements of Sellers, Parent and
Purchaser contained in this Agreement will survive the Closing until, and
terminate on, the First Holdback Expiration Date with respect to all matters
except representations and warranties contained in Sections 2.07 or 2.14 and
                                                   ---------------------
covenants and agreements contained in Article VIII, which will survive the
                                      ------------
Closing until, and terminate on, the Final Holdback Expiration Date; provided
that any representation, warranty, covenant or agreement that would otherwise
terminate in accordance with the above provisions of this Article X will
                                                          ---------
continue to survive if a Claim Notice or Indemnity Notice (as applicable) shall
have been timely given under Article XI on or prior to such termination date,
                             ----------
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in Article XI.
                        ----------

                                  ARTICLE XI

                                INDEMNIFICATION

          11.01. Indemnification.
                 ---------------

          (a)    Subject to paragraph (c) of this Section and the other Sections
                            -------------
of this Article XI, Parent and Sellers shall 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 representation or warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of Parent or Sellers contained in this
Agreement, (ii) any and all other Liabilities, obligations and costs of Sellers
arising prior to the Closing Date other than the Assumed Liabilities and (iii)
any and all other Liabilities, obligations and costs of Sellers arising prior to
the Closing Date (other than the Assumed Liabilities) but which are brought
against Purchaser prior to or after the Closing Date.

                                      49
<PAGE>

          (b)    Subject to the other Sections of this Article XI, Purchaser
                                                       ----------
shall indemnify Sellers 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 representation or warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part of Purchaser
contained in this Agreement or (ii) after the Closing, any Assumed Liability.

          (c)    Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable as a result of any claim in
respect of a Loss arising under Section 11.01(a) unless and until (i) the
                                ----------------
Closing has occurred and (ii) Purchaser Indemnified Parties have suffered,
incurred, sustained or become subject to Losses referred to in this Section
                                                                    -------
11.01 in excess of $200,000 in the aggregate (except as provided in the next
-----
sentence), in which event Purchaser Indemnified Parties shall, to the extent
provided in Section 1.03(b) and the Escrow Agreement, be entitled to claim
            ---------------
indemnity (including all related fees and costs) solely from the balance of the
Purchaser's Holdback, if any, then remaining in the Escrow Account.  The
$200,000 threshold specified in the preceding sentence for entitlement to claim
indemnity shall not apply to a breach of a representation or warranty contained
in Sections 2.02, 2.03, 2.07 or 2.14, or to a breach of a covenant contained in
   ---------------------------------
Sections 8.01, 8.02, 8.03, 15.04 or 15.05; however, such indemnity claims shall
-----------------------------------------
be limited to the remaining balance of the Purchaser's Holdback, as provided in
the preceding sentence.

          11.02. Method of Asserting Claims.  All claims for indemnification by
                 --------------------------
any Indemnified Party under Section 11.01 shall be asserted and resolved only as
                            -------------
follows:

          (a)    In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 11.01 is asserted against
                                             -------------
or sought to be collected from such Indemnified Party by a Person other than a
Seller or any Affiliate of a Seller or of Purchaser (a "Third Party Claim"), the
Indemnified Party shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice
with reasonable promptness after the Indemnified Party receives notice of such
Third Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under Section
                                                                         -------
11.01 and whether the Indemnifying Party desires, at its sole cost and expense,
-----
to defend the Indemnified Party against such Third Party Claim.

                 (i)  If the Indemnifying Party notifies the Indemnified Party
     within the Dispute Period that the Indemnifying Party desires to defend the
     Indemnified Party with respect to the Third Party Claim pursuant to this
     Section 11.02(a), then the Indemnifying Party will have the right to
     ----------------
     defend, with counsel reasonably satisfactory to the Indemnified Party, at
     the sole cost and expense of the Indemnifying Party, such Third Party Claim
     by all appropriate proceedings, which proceedings will be vigorously and
     diligently prosecuted by the Indemnifying Party to a final conclusion or
     will be settled at the discretion of the Indemnifying Party (but only with
     the consent of the Indemnified Party, which consent will not be
     unreasonably withheld, in the case of any settlement that

                                      50
<PAGE>

     provides for any relief other than the payment of monetary damages as to
     which the Indemnified Party will be indemnified in full). The Indemnifying
     Party will be deemed to have waived its right to dispute its liability to
     the Indemnified Party under Section 11.01 with respect to any Third Party
                                 -------------
     Claim as to which it elects to control the defense. The Indemnifying Party
     will have full control of such defense and proceedings, including any
     compromise or settlement thereof; provided, however, that the Indemnified
                                       --------  -------
     Party may, at the sole cost and expense of the Indemnified Party, at any
     time prior to the Indemnifying Party's delivery of the notice referred to
     in the first sentence of this Section 11.02(a)(i), file any motion, answer
                                   -------------------
     or other pleadings or take any other action that the Indemnified Party
     reasonably believes to be necessary or appropriate to protect its
     interests; and provided further, that if requested by the Indemnifying
     Party, the Indemnified Party will, at the sole cost and expense of the
     Indemnifying Party, provide reasonable cooperation to the Indemnifying
     Party in contesting any Third Party Claim that the Indemnifying Party
     elects to contest. The Indemnified Party may retain separate counsel to
     represent it in, but not control, any defense or settlement of any Third
     Party Claim controlled by the Indemnifying Party pursuant to this Section
                                                                       -------
     11.02(a)(i), and the Indemnified Party will bear its own costs and expenses
     -----------
     with respect to such separate counsel except as provided in the preceding
     sentence and except that the Indemnifying Party will pay the costs and
     expenses of such separate counsel if (x) in the Indemnified Party's good
     faith judgment, it is advisable, based on advice of counsel, for the
     Indemnified Party to be represented by separate counsel because a conflict
     or potential conflict exists between the Indemnifying Party and the
     Indemnified Party which makes representation of both parties inappropriate
     under applicable standards of professional conduct or (y) the named parties
     to such Third Party Claim include both the Indemnifying Party and the
     Indemnified Party and the Indemnified Party determines in good faith, based
     on advice of counsel, that defenses are available to it that are
     unavailable to the Indemnifying Party. Notwithstanding the foregoing, the
     Indemnified Party may retain or take over the control of the defense or
     settlement of any Third Party Claim the defense of which the Indemnifying
     Party has elected to control if the Indemnified Party irrevocably waives
     its right to indemnity under Section 11.01 with respect to such Third Party
                                  -------------
     Claim.

               (ii)  If the Indemnifying Party fails to notify the Indemnified
     Party within the Dispute Period that the Indemnifying Party desires to
     defend the Third Party Claim pursuant to Section 11.02(a), or if the
                                              ----------------
     Indemnifying Party gives such notice but fails to prosecute vigorously and
     diligently or settle the Third Party Claim, then the Indemnified Party will
     have the right to defend, at the sole cost and expense of the Indemnifying
     Party, the Third Party Claim by all appropriate proceedings, which
     proceedings will be prosecuted by the Indemnified Party in good faith or
     will be settled at the discretion of the Indemnified Party (with the
     consent of the Indemnifying Party, which consent will not be unreasonably
     withheld).  The Indemnified Party will have full control of such defense
     and proceedings, including any compromise or settlement thereof; provided,
     however, that if requested by the Indemnified Party, the Indemnifying Party
     will, at the sole cost and expense of the Indemnifying Party, provide
     reasonable cooperation to the Indemnified Party and its counsel in
     contesting any Third Party Claim which the Indemnified Party is contesting.
     Notwithstanding the foregoing provisions of this Section 11.02(a)(ii), if
                                                      --------------------
     the Indemnifying Party has notified the Indemnified Party within the
     Dispute Period that the Indemnifying Party disputes its liability hereunder
     to

                                      51
<PAGE>

     the Indemnified Party with respect to such Third Party Claim and if such
     dispute is resolved in favor of the Indemnifying Party in the manner
     provided in clause (iii) below, the Indemnifying Party will not be required
                 ------------
     to bear the costs and expenses of the Indemnified Party's defense pursuant
     to this Section 11.02(a)(ii) or of the Indemnifying Party's participation
             --------------------
     therein at the Indemnified Party's request, and the Indemnified Party will
     reimburse the Indemnifying Party in full for all reasonable costs and
     expenses incurred by the Indemnifying Party in connection with such
     litigation.  The Indemnifying Party may participate in, but not control,
     any defense or settlement controlled by the Indemnified Party pursuant to
     this Section 11.02(a)(ii), and the Indemnifying Party will bear its own
          --------------------
     costs and expenses with respect to such participation.

               (iii) If the Indemnifying Party notifies the Indemnified Party
     that it does not dispute its liability to the Indemnified Party with
     respect to the Third Party Claim under Section 11.01 or fails to notify the
                                            -------------
     Indemnified Party within the Dispute Period whether the Indemnifying Party
     disputes its liability to the Indemnified Party with respect to such Third
     Party Claim, the Loss arising from such Third Party Claim will be
     conclusively deemed a liability of the Indemnifying Party under Section
                                                                     -------
     11.01 and the Indemnifying Party shall pay the amount of such Loss to the
     -----
     Indemnified Party on demand following the final determination thereof.  If
     the Indemnifying Party has timely disputed its liability with respect to
     such claim, the Indemnifying Party and the Indemnified Party will proceed
     in good faith to negotiate a resolution of such dispute, and if not
     resolved through negotiations within the Resolution Period, such dispute
     shall be resolved by arbitration in accordance with Section 11.02(c).
                                                         ----------------

          (b)  In the event any Indemnified Party has a claim under Section
                                                                    -------
11.01 against any Indemnifying Party that does not involve a Third Party Claim,
-----
the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that an Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss arising from the claim specified in such Indemnity Notice will
be conclusively deemed a liability of the Indemnifying Party under Section 11.01
                                                                   -------------
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof.  If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by the Bankruptcy
Court.

                                      52
<PAGE>

                                  ARTICLE XII

                                  TERMINATION

          12.01. Termination.  This Agreement may be terminated, and the
                 -----------
transactions contemplated hereby may be abandoned before the Closing:

          (a)    by Sellers and Parent if (i) Purchaser materially breaches this
Agreement and fails to cure such breach within 20 Business Days after receipt of
written notice thereof from Sellers and Parent and (ii) at the time of such
termination each Seller and Parent are neither materially in breach of, nor
materially in default under, this Agreement, in which case Sellers shall be
entitled to the Earnest Money Deposit and all interest earned thereon and
Purchaser shall not be entitled to the Expense Reimbursement or the Breakup Fee;

          (b)    by Purchaser if (i) any Seller or Parent materially breaches
this Agreement and fails to cure such breach within 20 Business Days after
receipt of written notice thereof from Purchaser and (ii) at the time of such
termination Purchaser is neither materially in breach of, nor materially in
default under, this Agreement, in which case Purchaser shall be entitled to the
Earnest Money Deposit and all interest earned thereon, but not the Expense
Reimbursement or the Breakup Fee (except as provided in Section 14.01(c)(iv);
                                                        --------------------
provided, however, that with respect to any development, event, transaction or
--------  -------
circumstance of which Parent or Sellers have given to Purchaser a Development
Notification specified in Section 4.15, Purchaser's right to terminate this
                          ------------
Agreement and abandon the transactions contemplated hereby shall be governed
exclusively by Section 12.01(c);
               ----------------

          (c)    by Purchaser if (i) within 30 days immediately preceding such
termination, Parent or Sellers have given Purchaser a Development Notification
specified in Section 4.15, (ii) the development, event, transaction or
             ------------
circumstance that is the subject of such Development Notification has had a
material adverse effect on the Condition of the Business, and (iii) at the time
of such termination Purchaser is neither materially in breach of, nor materially
in default under, this Agreement, in which case Purchaser shall be entitled to
the Earnest Money Deposit and all interest earned thereon, but not the Expense
Reimbursement or the Breakup Fee (except as provided in Section 14.01(c)(iv);
                                                        --------------------

          (d)    by Sellers and Parent upon notification to Purchaser that the
satisfaction of any condition specified in Section 7.02 to Parent's or Sellers'
                                           ------------
obligations under this Agreement has become impossible or impracticable with the
use of commercially reasonable efforts, but only if (i) the failure to satisfy
any such condition is not caused by a breach, active participation or deliberate
nonfeasance by any Sellers or Parent, and (ii) at the time of such termination
each Seller and Parent are neither materially in breach of, nor materially in
default under this Agreement, in which case Sellers shall be entitled to the
Earnest Money Deposit and all interest earned thereon, and Purchaser shall not
be entitled to the Expense Reimbursement or the Breakup Fee;

          (e)    by Sellers and Parent if (i) Purchaser withdraws, without
demonstrating an intention to amend and refile or resubmit promptly, any
applications, notices or other documents

                                      53
<PAGE>

previously filed with, or submitted to, any Governmental or Regulatory Authority
that are necessary for the conditions specified in Section 6.04 or Section 7.04
                                                   ------------    ------------
to be satisfied or (ii) any Governmental or Regulatory Authority (A) issues a
decision not to give any consents or approvals or not to take any actions
specified in Section 6.04 or Section 7.04 or (B) withdraws, revokes, cancels or
             ------------    ------------
nullifies any such consents or approvals that were previously given or any such
actions that were previously taken, but only if the occurrence of any of the
events specified in clauses (i) and (ii) of this paragraph (e) is not caused by
                    --------------------         -------------
a breach, active participation or deliberate nonfeasance by any Sellers or
Parent and at the time of such termination each Seller and Parent are neither
materially in breach of, nor materially in default under, this Agreement, in
which case Sellers shall be entitled to the Earnest Money Deposit and all
interest earned thereon, and Purchaser shall not be entitled to the Expense
Reimbursement or the Breakup Fee;

          (f)  by Purchaser upon notification to Sellers and Parent that the
satisfaction of any condition to Purchaser's obligations under this Agreement
specified in Article VI other than Section 6.03 has become impossible or
             ----------            ------------
impracticable with the use of commercially reasonable efforts, but only if (i)
the failure to satisfy any such condition is not caused by a breach, active
participation or deliberate nonfeasance by Purchaser, and (ii) at the time of
such termination Purchaser is neither materially in breach of, nor materially in
default under, this Agreement, in which case Sellers shall be entitled to the
Earnest Money Deposit and all interest earned thereon, and Purchaser shall not
be entitled to the Expense Reimbursement or the Breakup Fee;

          (g)  by Sellers and Parent on one side, or by Purchaser on the other
side, if the conditions specified in Section 6.03 or Section 7.03 have not been
                                     ------------    ------------
satisfied, but only if (i) the failure to satisfy any such conditions is not
caused by a breach, active participation or deliberate nonfeasance by the
terminating side and (ii) at the time of such termination the terminating side
is neither materially in breach of, nor materially in default under, this
Agreement, in which case Purchaser shall be entitled to the Earnest Money
Deposit and all interest earned thereon, and Purchaser's entitlement to the
Expense Reimbursement and the Breakup Fee shall be determined under Section
                                                                    -------
14.01;
-----

          (h)  by Sellers and Parent on one side, or by Purchaser on the other
side, if the Closing has not occurred within 21 months after the entry of the
Sales Order or an Order confirming a Plan of Reorganization, provided that (i)
such failure of the Closing to occur is not caused by (A) a breach, active
participation or deliberate nonfeasance by the terminating side, or (B) delays
in obtaining Gaming Authorities approvals that are caused by the terminating
side, and (ii) the terminating side is neither materially in breach of, nor
materially in default under, this Agreement, in which case Sellers shall be
entitled to the Earnest Money Deposit and all interest earned thereon, and
Purchaser shall not be entitled to the Expense Reimbursement or the Breakup Fee;

          (i)  by Parent or Sellers pursuant to (i) their acceptance of an offer
or offers by another Person or Persons (other than Purchaser or an Affiliate of
Purchaser) to acquire all or substantially all of the Assets at one or more of
the three Business locations or (ii) the entry of an Order or Orders approving
the acquisition of all or substantially all of the Assets at one or more of the
three Business locations by another Person or Persons (other than Purchaser or
an Affiliate of Purchaser), in which case Purchaser shall be entitled to the
Earnest Money Deposit and all

                                      54
<PAGE>

interest earned thereon, and Purchaser's entitlement to the Expense
Reimbursement and the Breakup Fee shall be determined under Section 14.01; or
                                                            -------------

          (j)  by Purchaser if a Termination Event occurs, but only if at the
time of such termination Purchaser is neither materially in breach of, nor
materially in default under, this Agreement, in which case Purchaser shall be
entitled to the Earnest Money Deposit and all interest earned thereon, but not
the Expense Reimbursement or the Breakup Fee;

          (k)  by Purchaser if the provisions of Section 4.08 will not become
                                                 ------------
effective due to termination of the Restructuring Agreement, but only if (i)  at
the time of such termination Purchaser is neither materially in breach of, nor
materially in default under, this Agreement and (ii) Purchaser exercises this
termination right within ten Business Days after Parent or Sellers have
delivered to Purchaser written notice of termination of the Restructuring
Agreement, in which case Purchaser shall be entitled to the Earnest Money
Deposit, all interest earned thereon and the Expense Reimbursement (if the Cash
Collateral Order has been issued or if the Interim Cash Collateral Order has
been issued and is still in effect), but not the Breakup Fee;

          (l)  by Purchaser in the event of a material breach of the
Noteholders' Undertaking by either (A) Consenting Noteholders who, together with
their respective Affiliates, hold not less than 33 1/3% of the outstanding
principal amount of Senior Secured Notes or (B) any of the original signatories
to the Noteholders' Undertaking (other than Purchaser), but only if (i) at the
time of such termination Purchaser is neither materially in breach of, nor
materially in default under, this Agreement and (ii) Purchaser exercises this
termination right within ten Business Days after such breach or default comes to
the Knowledge of Purchaser, in which case Purchaser shall be entitled to the
Earnest Money Deposit and all interest earned thereon, but not the Expense
Reimbursement or the Breakup Fee (and Purchaser's entitlement to the
Noteholders' Undertaking Expense Reimbursement from Consenting Noteholders shall
be determined under the Noteholders' Undertaking);

          (m)  by Purchaser in the event of a material breach of the Fitzgeralds
Undertaking by Parent, any Sellers or FFEC, but only if at the time of such
termination Purchaser is neither materially in breach of, nor materially in
default under, this Agreement, in which case Purchaser shall be entitled to the
Earnest Money Deposit, all interest earned thereon and the Expense Reimbursement
(if the Cash Collateral Order has been issued or if the Interim Cash Collateral
Order has been issued and is still in effect), and Purchaser's entitlement to
the Breakup Fee shall be determined under Section 14.01;
                                          -------------

          (n)  by Purchaser if EBITDA for the fiscal year or 12-month period
reported in any unaudited consolidated statement of operations of the Business
that Parent delivers to Purchaser pursuant to Section 4.05(a) plus the Corporate
                                              ---------------
Expense Adjustment is less than $22,900,000, but only if (i) at the time of such
termination Purchaser is neither materially in breach of, nor materially in
default under, this Agreement and (ii) Purchaser exercises this termination
right within ten Business Days after Parent has delivered to Purchaser such
unaudited consolidated statement of operations, in which case Purchaser shall be
entitled to the Earnest Money Deposit and all interest earned thereon, but not
the Expense Reimbursement or the Breakup Fee;

                                      55
<PAGE>

          (o)    by Purchaser if Adjusted EBITDA is less than $24,275,000, but
only if at the time of such termination Purchaser is neither materially in
breach of, nor materially in default under, this Agreement, in which case
Purchaser shall be entitled to the Earnest Money Deposit and all interest earned
thereon, but not the Expense Reimbursement or the Breakup Fee;

          (p)    by Sellers and Parent on one side, or by Purchaser on the other
side, if Sellers, Parent and Purchaser have not approved the form and content of
all Sections of the Disclosure Schedule, all Exhibits to this Agreement and the
proposed forms of the Bid Protection Order, Interim Cash Collateral Order and
Cash Collateral Order by December 4, 2000, in which case Purchaser shall be
entitled to the Earnest Money Deposit and all interest earned thereon, but not
the Expense Reimbursement or the Breakup Fee;

          (q)    by Purchaser by not later than December 4, 2000, if, by that
date it has not approved the resolution of outstanding issues concerning
Contracts relating to the Las Vegas Business' hotel operations, in which case
Purchaser shall be entitled to the Earnest Money Deposit and all interest earned
thereon, but not the Expense Reimbursement or the Breakup Fee;

          (r)    by Sellers and Parent if, as of December 4, 2000, the
Restructuring Agreement has been terminated or otherwise is not in effect,
provided that Sellers and Parent exercise this termination right within ten (10)
Business Days after Sellers and Parent have delivered to Purchaser written
notice of the termination of the Restructuring Agreement, in which case
Purchaser shall be entitled to the Earnest Money Deposit and all interest earned
thereon, but not the Expense Reimbursement or the Breakup Fee; or

          (s)    by Sellers and Parent if, by December 4, 2000, Sellers and
Parent have not received and approved the letter executed by Jefferies as
described in Section 5.03(i), in which case Purchaser shall be entitled to the
             ---------------
Earnest Money Deposit and all interest earned thereon and Purchaser shall not be
entitled to the Expense Reimbursement or Breakup Fee.

     If this Agreement terminates other than (i) pursuant to any of paragraphs
                                                                    ----------
(a) through (s) of this Section 12.01 or (ii) by mutual agreement of Sellers,
-------------------------------------
Parent and Purchaser, the Earnest Money Deposit and all interest earned thereon
shall be immediately released to Sellers, and Purchaser shall not be entitled to
the Expense Reimbursement or the Breakup Fee.  If this Agreement terminates by
mutual agreement of Sellers, Parent and Purchaser, entitlement to the Earnest
Money Deposit and all interest thereon shall be determined by such mutual
agreement, and Purchaser shall not be entitled to the Expense Reimbursement or
the Breakup Fee.

          12.02. Effect of Termination.  In the event of termination of this
                 ---------------------
Agreement and abandonment of the transactions contemplated hereby, this
Agreement shall become null and void and there will be no liability or
obligation under this Agreement on the part of any party hereto or any of such
party's officers, directors, managers, employees, agents or other
Representatives or Affiliates, except that (i) the provisions of Section 12.01
                                                                 -------------
and Article XIV which relate to payment of the Earnest Money Deposit, interest
---------------
thereon, the Expense Reimbursement and the Breakup Fee, and Sections 12.02,
                                                            --------------
15.04, and 15.05 shall survive any such termination and abandonment other than
----------------
the provisions of Section 12.01(p), (q), (r) or (s) and (ii) the provisions of
                  ---------------------------------
Sections 12.01(p), (q), (r) or (s) (as the case may be), 12.02, 15.04 and
-------------------------------------------------------------------------

                                      56
<PAGE>

15.05 shall survive any such termination and abandonment pursuant to Section
-----                                                                -------
12.01(p), (q), (r) or (s).
-------------------------

                                 ARTICLE XIII

                                  DEFINITIONS

          13.01.  Defined Terms.  As used in this Agreement, the following
                  -------------
defined terms have the meanings indicated below:

          "ACSM" means the American Congress on Surveying and Mapping.

          "Action or Proceeding" means any action, suit, proceeding, arbitration
or Governmental or Regulatory Authority investigation or audit.

          "Adjusted Balance Sheet" has the meaning ascribed to it in Section
                                                                     -------
1.05(a).
-------

          "Adjusted EBITDA" has the meaning ascribed to it in Section 1.06(b).
                                                              ---------------

          "Adjusted Long Term Debt" has the meaning ascribed to it in Section
                                                                      -------
1.05(c).
-------

          "Adjusted Working Capital" has the meaning ascribed to it in Section
                                                                       -------
1.05(b).
-------

          "Advance Reservations and Deposits" has the meaning ascribed to it in
Section 1.01(a)(viii).
---------------------

          "Affiliate" has the meaning ascribed to it in (S) 101(2) of the
Bankruptcy Code.

          "Agreement" means this Asset Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto, as the same shall be amended from
time to time.

          "ALTA" means the American Land Title Association.

          "Assets" or "Assets" has the meaning ascribed to it in Section
                                                                 -------
1.01(a).
-------

          "Assets and Properties" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including, without
limitation, cash, cash equivalents, accounts and notes receivable, chattel
paper, documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.

          "Assignment Instruments" has the meaning ascribed to it in Section
                                                                     -------
1.08.
----

          "Assumed Liabilities" has the meaning ascribed to it in Section
                                                                  -------
1.02(a).
-------

          "Assumption Agreement" has the meaning ascribed to it in Section 1.08.
                                                                   ------------

                                      57
<PAGE>

          "Assumption and Assignment Motion" has the meaning ascribed to it in
Section 14.02(c).
----------------

          "Assumption Instruments" has the meaning ascribed to it in Section
                                                                     -------
1.08.
----

          "Balance Sheet" means an unaudited, adjusted consolidating balance
sheet of Parent and Sellers pertaining to the Business.

          "Bankruptcy Code" has the meaning ascribed to it in the forepart of
this Agreement.

          "Bankruptcy Court" has the meaning ascribed to it in the forepart of
this Agreement.

          "Bankruptcy Proceedings" has the meaning ascribed to it in the
forepart of this Agreement.

          "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure
promulgated pursuant to 28 U.S.C. (S)2075 and the Local Rules of Practice of
the Bankruptcy Court as amended from time-to-time during the reorganization
cases.

          "Bankruptcy Schedules and Pleadings" means all schedules and
statements of affairs and other papers and pleadings filed by Parent and the
Subsidiaries in the Bankruptcy Proceedings.

          "Benchmark EBITDA" has the meaning ascribed to it in Section 1.06.
                                                               ------------

          "Bid Protection Order" has the meaning ascribed to it in Section
                                                                   -------
14.02(b).
--------

          "Black Hawk Business" has the meaning ascribed to it in the forepart
of this Agreement.

          "Bonus Program" has the meaning ascribed to it in Section 4.06(h).
                                                            ---------------

          "Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
condition of (financial or other), results of operations and Assets and
Properties of such Person, including without limitation financial statements,
Tax Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock certificates and books, stock transfer ledgers, Contracts, Licenses,
customer lists, computer files and programs, retrieval programs, operating data
and plans and environmental studies and plans.

          "Breakup Fee" has the meaning ascribed to it in Section 14.01(b).
                                                          ----------------

          "Business" has the meaning ascribed to it in the forepart of this
Agreement.

          "Business Books and Records" has the meaning ascribed to it in Section
                                                                         -------
1.01(a)(x).
----------

                                      58
<PAGE>

          "Business Combination" means with respect to any Person, any merger,
consolidation or combination to which such Person is a party, any sale,
dividend, split or other disposition of capital stock or other equity interests
of such Person or any sale, dividend or other disposition of all or
substantially all of the Assets and Properties of such Person.

          "Business Contracts" has the meaning ascribed to it in Section
                                                                 -------
1.01(a)(iv).
-----------

          "Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of Nevada are authorized or obligated to close.

          "Business Licenses" has the meaning ascribed to it in Section
                                                                -------
1.01(a)(vi).
-----------

          "Cash Collateral" has the meaning ascribed to it in (S) 363(a) of the
Bankruptcy Code.

          "Cash Collateral Order" means a Final Order approving the Cash
Collateral Stipulation.

          "Cash Collateral Stipulation" means the stipulation by the Consenting
Noteholders, the Indenture Trustee, Parent and Sellers pursuant to (S) 363(c)(2)
of the Bankruptcy Code authorizing the use by Parent and Sellers of Cash
Collateral and further consenting to the use of Cash Collateral to pay the
Expense Reimbursement and the grant to Purchaser of a super-priority
administrative claim "carve out" for the Expense Reimbursement from the Lien in
favor of the Indenture Trustee for the benefit of the holders of the Senior
Secured Notes.

          "Cash Component" has the meaning ascribed to it in Section 1.04(a)(i).
                                                             ------------------

          "Chapter 11" means Chapter 11 of the Bankruptcy Code.

          "Claim Notice" means written notification pursuant to Section 11.02(a)
                                                                ----------------
of a Third Party Claim as to which indemnity under Section 11.01 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 11.01, 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.

          "Closing" means the closing of the transactions as contemplated by

Section 1.08.
------------

          "Closing Date" means (i) the fifth Business Day after the day on which
the last of the consents, approvals, actions, filings, notices or waiting
periods described in or related to the filings described in Sections 6.04, 6.05,
                                                            --------------------
7.04 and 7.05 has been obtained, made or given or has expired, as applicable, or
-------------
(ii) such other date to which Purchaser, Sellers and Parent mutually agree in
writing.

          "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

          "Competing Business" has the meaning ascribed to it in Section
                                                                 -------
4.04(e).
-------

                                      59
<PAGE>

          "Competing Offer" means an offer from any Person other than Purchaser
or its Representatives or Affiliates to acquire all or substantially all of the
Assets or the Business.

          "Condition of the Business" means the business, financial condition,
results of operations, Assets and Properties and prospects of the Business.

          "Consenting Noteholders" has the meaning ascribed to it in the
Restructuring Agreement.

          "Consolidated Net Income" means consolidated net income (or loss) for
the Business determined in accordance with GAAP and adjusted so as to eliminate
the impact of (i) discontinued operations; (ii) extraordinary items; and (iii)
changes in accounting principles.

          "Contract" means any Business Contract, Real Property Lease, personal
property lease, agreement, lease, license, evidence of indebtedness, mortgage,
indenture, security agreement or other contract (whether written or oral).

          "Contracted Employees" has the meaning ascribed to it in Section
                                                                   -------
5.04(a).
-------

          "Corporate Expense Adjustment" means $2,100,000, which represents a
partial adjustment of corporate expenses normally allocated to the Business.

          "County" has the meaning ascribed to it in Section 15.06.
                                                     -------------

          "Covered Employees" has the meaning ascribed to it in Section 9.03.
                                                                ------------

          "C.R.S." means the Colorado Revised Statutes, as may be amended from
time to time.

          "Customer Lists" shall have the meaning ascribed to it in Section
                                                                    -------
1.01(a)(ix).
-----------

          "Deposit Escrow Account" means the account established and maintained
by the Deposit Escrow Agent pursuant to the Deposit Escrow Agreement.

          "Deposit Escrow Agent" means Nevada Title Company.

          "Deposit Escrow Agreement" means that certain Escrow Agreement,
substantially in the form of Exhibit G hereto, pursuant to which the Earnest
                             ---------
Money Deposit shall be escrowed upon the execution of this Agreement.

          "Deposit Escrow Fees" means the fees and other amounts payable to the
Deposit Escrow Agent pursuant to the Deposit Escrow Agreement.

          "Development Notification" has the meaning ascribed to it in Section
                                                                       -------
4.10.
----

          "Disclosure Schedule" means the record delivered to Purchaser by
Sellers herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Sellers pursuant to this Agreement.

                                      60
<PAGE>

          "Dispute Notice" has the meaning ascribed to it in Section 1.07.
                                                             ------------

          "Dispute Period" means the period ending 30 days following receipt by
an Indemnifying Party of either a Claim Notice or an Indemnity Notice.

          "DOJ" means the Antitrust Division of the U.S. Department of Justice.

          "Downtown Las Vegas" has the meaning ascribed to it in Section
                                                                 -------
4.08(e).
-------

          "Earnest Money Deposit" shall have the meaning ascribed to it in

Section 1.04(b).
----------------

          "EBITDA" means Consolidated Net Income plus (i) intercompany interest
expense; plus (ii) interest expense (excluding intercompany interest expense);
plus (iii) any state or federal income tax expense; plus (iv) depreciation and
amortization; plus (v) write-downs required by FASB pronouncements that do not
result in the expenditure of cash (e.g., Statement of Financial Accounting
                                   ----
Standards 121); plus (vi) any losses recognized in connection with the
sale/disposal of assets in the ordinary course; plus (vii) any expenses properly
classified as "reorganization items" pursuant to the American Institute of
Certified Public Accountants" Statement of Position 90-7; plus (viii) any amount
recognized for state or federal income tax provisions; minus (ix) intercompany
interest income; minus (x) interest income (excluding intercompany interest
income); minus (xi) any amount recognized for state or federal income tax
benefit; minus (xii) any gains recognized in connection with the sale/disposal
of assets in the ordinary course.

          "EBITDA Financial Statements" means the unaudited financial statements
reporting EBITDA for a specified period, prepared on the basis specified in
Section 1.06(a).
---------------

          "Employee" means each employee or officer of a Seller engaged in the
conduct of any part of the Business.

          "Employee Plan" means any (i) Pension Plan or employee welfare benefit
plan (as defined in (S) 3(1) of ERISA) which is subject to ERISA and which
Sellers and each ERISA Affiliate, maintain, contribute to or are obligated to
contribute to on behalf of Employees; or (ii) severance, stock option, payroll
taxes, sick pay, profit sharing or equity appreciation plan, practice or
arrangement providing benefits to Employees.

          "Employment Loss" has the meaning ascribed to it in Section 9.03.
                                                              ------------

          "Environmental Laws" has the meaning ascribed to it in Section 2.14.
                                                                 ------------

          "Environmental Reports" means (i) the environmental reports and
updates thereto obtained by Sellers concerning the Business (which are included
in Section 2.14 of the Disclosure Schedule); (ii) the Purchaser's Environmental
   ---------------------------------------
Reports (which are included in Section 3.07 of the Disclosure Schedule); and
                               -------------------------------
(iii) if any of the aforementioned reports or updates recommend further
investigation, the matters that would be reported pursuant to such further
investigations.

                                      61
<PAGE>

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.

          "ERISA Affiliate" means a company, trade or business which is treated
with Sellers as a member of a controlled group of corporations or trades or
businesses under common control pursuant to Code (S)414(b), (c), (m) or (o).

          "Escrow Account" means the account established and maintained by the
Escrow Agent pursuant to the Escrow Agreement.

          "Escrow Agent" has the meaning ascribed to it in the Escrow Agreement.

          "Escrow Agreement" means that certain Escrow Agreement, substantially
in the form of Exhibit H hereto, pursuant to which a portion of the Cash
               ---------
Component shall be escrowed at the Closing.

          "Escrow Fees" means the fees and other amounts payable to the Escrow
Agent pursuant to the Escrow Agreement.

          "Excluded Assets" has the meaning ascribed to it in Section 1.01(b).
                                                              ---------------

          "Excluded Books and Records" has the meaning ascribed to it in Section
                                                                         -------
1.01(b)(iv).
-----------

          "Existing Levee" has the meaning ascribed to it in Section 15.06.
                                                             -------------

          "Expense Reimbursement" has the meaning ascribed to it in Section
                                                                    -------
14.01(b).
--------

          "FASB" means the Financial Accounting Standards Board.

          "FBH" has the meaning ascribed to it in the forepart of this
Agreement.

          "FFEC" means Fitzgeralds Fremont Experience Corp., a Nevada
corporation and a wholly-owned subsidiary of FLV.

          "Final Adjustment Amount" has the meaning ascribed to it in Section
                                                                      -------
1.06(c)(i).
----------

          "Final Balance Sheet" has the meaning ascribed to it in Section
                                                                  -------
1.05(a).
-------

          "Final EBITDA" has the meaning ascribed to it in Section 1.06(c)(i).
                                                           ------------------

          "Final EBITDA Financial Statements" has the meaning ascribed to it in

Section 1.06(a).
---------------

          "Final Long Term Debt" has the meaning ascribed to it in Section
                                                                   -------
1.05(d)(ii).
-----------

          "Final Order" means an order, judgment or other decree of the
Bankruptcy Court which has not been vacated, reversed, modified or amended or
stayed, and for which the time to appeal or seek review or rehearing has
expired.

                                      62
<PAGE>

          "Final Holdback Expiration Date"  has the meaning ascribed to it in
Section 1.03(b).
---------------

          "Final Working Capital" has the meaning ascribed to it in Section
                                                                    -------
1.05(d)(i).
----------

          "First Holdback Expiration Date" has the meaning ascribed to it in
Section 1.03(b).
---------------

          "First Release" has the meaning ascribed to it in Section 1.03(b).
                                                            ---------------

          "Fitzgeralds Undertaking" means that certain Fitzgeralds Undertaking,
dated November 22, 2000, by and among Purchaser, Parent, Sellers and FFEC
relating to certain standstill and "no shop" obligations on the part of Parent,
Sellers and FFEC.

          "FLV" has the meaning ascribed to it in the forepart of this
Agreement.

          "FLV/FR Real Property" has the meaning ascribed to it in Section
                                                                   -------
1.01(c).
-------

          "FM" has the meaning ascribed to it in the forepart of this Agreement.

          "FR" means Fitzgeralds Reno, Inc., a Nevada corporation and a wholly-
owned subsidiary of Parent.

          "FSELLC" means The Fremont Street Experience Limited Liability
Company, a Nevada limited-liability company.

          "FSELLC Membership Interest" means all of FFEC's rights, title and
interests in and to its limited-liability company membership interest in FSELLC.

          "FSELLC Organization Documents" means the articles of organization and
operating agreement of FSELLC.

          "FTC" means the U.S. Federal Trade Commission.

          "GAAP" means generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately prior comparable
period.

          "Gaming Authorities" means the applicable gaming and liquor licensing
and regulatory authorities of the States of Nevada, Colorado and Mississippi and
of the applicable counties, cities or other political subdivisions within such
states.

          "General Assignments" has the meaning ascribed to it in Section 1.08.
                                                                  ------------

          "Governmental or Regulatory Authority" means any Gaming Authorities,
court, tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.

                                      63
<PAGE>

          "HSR Act" means (S)7A of the Clayton Act (Title II of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended) and the rules and
regulations promulgated thereunder.

          "Improvements" has the meaning ascribed to it in Section 1.01(a)(i).
                                                           ------------------

          "Indebtedness" of any Person means all obligations of such Person (i)
for the deferred purchase price of goods or services (other than trade payables
or accruals incurred in the ordinary course of business) or (ii) in the nature
of guarantees of the obligations described in clause (i) above of any other
Person.

          "Indemnified Party" means any Person claiming indemnification under
any provision of Article XI.
                 ----------

          "Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article XI.
                                                         ----------

          "Indemnity Notice" means written notification pursuant to Section
                                                                    -------
11.02(b) of a claim for indemnity under Article XI 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.

          "Indenture Trustee" has the meaning ascribed to it in the
Restructuring Agreement.

          "Intangible Personal Property" has the meaning ascribed to it in
Section 1.01(a)(v).
------------------

          "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, and copyright
rights, trade dress, business and product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies, computer programs
(including all source codes) and related documentation, technical information,
manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, trademarks, service marks and
copyrights.

           "Interim Adjustment Amount" has the meaning ascribed to it in Section
                                                                         -------
1.06(b).
-------

          "Interim Cash Collateral Order" means an interim or preliminary Order
of the Bankruptcy Court approving the Cash Collateral Stipulation.

          "Interim EBITDA Financial Statements" has the meaning ascribed to it
in Section 1.06(a).
   ---------------

          "Inventoried Baggage" has the meaning ascribed to it in Section 4.12.
                                                                  ------------

                                      64
<PAGE>

          "Inventoried Vehicles" has the meaning ascribed to it in Section 4.14.
                                                                   ------------

          "Inventory" means all inventories of office, restaurant, bar, hotel,
casino and other supplies (including all foods and alcoholic and non-alcoholic
beverages), parts, packaging materials and other accessories related thereto
which are held at, or are in transit from or to, the locations at which the
Business is conducted, in each case, which are used or held for use by any
Seller in the conduct of the Business, including any of the foregoing purchased
subject to any conditional sales or title retention agreement in favor of any
other Person, together with all rights of any Seller against suppliers of such
inventories held for use in connection with the Business, as these shall exist
on the Closing Date.

          "IRS" means the U.S. Internal Revenue Service.

          "Knowledge of Purchaser" means the knowledge, with due inquiry, of the
directors and the officers of Purchaser.

          "Knowledge of Sellers" means the knowledge with due inquiry, of the
directors and the officers of any Sellers.

          "Las Vegas Business" has the meaning ascribed to it in the forepart of
this Agreement.

          "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 or Regulatory Authority.

          "Leased Employees" has the meaning ascribed to it in Section 5.04(b).
                                                               ---------------

          "Leased Real Property" has the meaning ascribed to it in Section
                                                                   -------
4.09(c).
-------

          "Lease Period" has the meaning ascribed to it in Section 5.04(b).
                                                           ---------------

          "Liabilities" means all indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).

          "License Agreement" means the Trademark License Agreement,
substantially in the form of Exhibit I hereto, pursuant to which Purchaser shall
                             ---------
grant Parent and its Affiliates a license to use certain Intellectual Property,
as provided therein.

          "Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.

          "Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.

                                      65
<PAGE>

          "Loss" or "Losses" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including, without limitation, interest,
court costs, fees of attorneys, accountants and other experts or other expenses
of litigation or other proceedings or of any claim, default or assessment).

          "Measuring Date" has the meaning ascribed to it in Section 14.02(d).
                                                             ----------------

          "Minimum Work Force" has the meaning ascribed to it in Section 9.03.
                                                                 ------------

          "Miss. Code Ann." means the Mississippi Code Annotated, as may be
amended from time to time.

          "Motions" has the meaning ascribed to it in Section 14.02(c).
                                                      ----------------

          "Multiemployer Plan" means a multiemployer pension plan, as defined in
"3(37) of ERISA, with respect to Employees.

          "Noteholders" Undertaking" means that certain Noteholders"
Undertaking, dated November 22, 2000, by and among Purchaser and the Consenting
Noteholders relating to certain standstill and "no shop" obligations on the part
of the Consenting Noteholders.

          "Noteholders" Undertaking Expense Reimbursement" means the Expense
Reimbursement, as such term is defined in the Noteholders" Undertaking.

          "NRS" means the Nevada Revised Statutes, as may be amended from time
to time.

          "Operative_Agreements" means, collectively, the General Assignments
and the other Assignment Instruments, the License Agreement, the Assumption
Agreement, the other Assumption Instruments, and the Escrow Agreement.

          "Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).

          "Owned Real Property" has the meaning ascribed to it in Section
                                                                  -------
4.09(c).
-------

          "Pension Plan" means an employee pension benefit plan, as defined in
(S)3(2) of ERISA, which Sellers and each ERISA Affiliate maintain, contribute
to, or are obligated to contribute to on behalf of Employees.

          "Permitted Exceptions" has the meaning ascribed to it in Section
                                                                   -------
4.09(a).
-------

          "Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other

                                      66
<PAGE>

such Liens does not materially impair the value of the property subject to such
Lien or the use of such property in the conduct of the Business.

          "Person" means any natural person, corporation, limited-liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, union, association or Governmental or Regulatory
Authority.

          "Petition Date" has the meaning ascribed to it in Section 14.02(a).
                                                            ----------------

          "Plan of Reorganization" means a Chapter 11 plan of reorganization
which relates to Sellers and authorizes consummation of the transactions
contemplated by this Agreement.

          "Pre-Closing Tax Returns" has the meaning ascribed to it in Section
                                                                      -------
8.02.
----

          "Pre-Closing Taxes" has the meaning ascribed to it in Section 8.02.
                                                                ------------

          "Prepaid Expenses" has the meaning ascribed to it in Section
                                                               -------
1.01(a)(xii).
------------

          "Protocol Motion" has the meaning ascribed to it in Section 14.02(c).
                                                              ----------------

          "Purchase Price" has the meaning ascribed to it in Section 1.04(a).
                                                             ---------------

          "Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.

          "Purchaser Indemnified Parties" means Purchaser and its officers,
directors, employees, agents and Affiliates.

          "Purchaser's Environmental Reports" means the environmental reports
concerning the Business which were prepared and provided to Purchaser by
consultants retained by or on behalf of Purchaser in contemplation of entering
into this Agreement.

          "Purchaser's Holdback" has the meaning ascribed to it in Section
                                                                   -------
1.03(b).
-------

          "Purchaser's Parent" means The Majestic Star Casino, LLC, an Indiana
limited-liability company.

          "Real Property" has the meaning ascribed to it in Section 1.01(a)(i).
                                                            ------------------

          "Real Property Leases" has the meaning ascribed to it in Section
                                                                   -------
1.01(a)(ii).
-----------

          "Regulatory Holdback" has the meaning ascribed to it in Section
                                                                  -------
1.03(a).
-------

          "Regulatory Action" has the meaning ascribed to it in Section 5.01(a).
                                                                ---------------

          "Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.

                                      67
<PAGE>

          "Representatives" has the meaning ascribed to it in Section 4.03.
                                                              ------------

          "Resolution Period" means the period ending 30 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 a Claim Notice or an
Indemnity Notice.

          "Restructuring Agreement" means that certain Agreement Regarding Pre-
Negotiated Restructuring contemplated to be executed by and among the Subject
Parties, certain of their Affiliates and the Consenting Noteholders.

          "Retained Liabilities" has the meaning ascribed to it in Section
                                                                   -------
1.02(b).
-------

          "Sales Order" has the meaning ascribed to it in the forepart of this
Agreement.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Seller" and "Sellers" have the meanings ascribed to them in the
forepart of this Agreement.

          "Sellers Indemnified Parties" means Sellers and their respective
officers, directors, employees, agents and Affiliates.

          "Senior Secured Notes" means the 12.25% Senior Secured Notes, due
2004, issued by Parent.

          "Straddle Period"  means any taxable period beginning before and
ending after the Closing Date.

          "Subject Employers" has the meaning ascribed to it in Section 15.18.
                                                                -------------

          "Subject Land" has the meaning ascribed to it in Section 15.06.
                                                           -------------

          "Subject Parties" has the meaning ascribed to it in Section 4.08(a).
                                                              ---------------

          "Subsequent Plan of Reorganization" means a Chapter 11 plan of
reorganization, other than the Plan of Reorganization, which relates to Sellers
and authorizes a sale of all or substantially all of the Assets at each of the
three Business locations.

          "Subsequent Price" has the meaning ascribed to it in Section
                                                               -------
14.01(c)(iv).
------------

          "Subsequent 363 Motion" means a motion brought in accordance with "
363(f) of the Bankruptcy Code, other than the 363 Motion, seeking the entry of a
Final Order approving a sale of assets free and clear of liens, claims and
interests and an assumption and assignment of executory contracts and unexpired
leases, which Final Order provides for, among other things, a sale of the
Business.

          "Tangible Personal Property" has the meaning ascribed to it in Section
                                                                         -------
1.01(a)(iii).
------------

                                      68
<PAGE>

          "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

          "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code (S)59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not and any expenses incurred in
connection with the determination, settlement or litigation of any Tax liability
and shall include any liability for such amounts as a result either of being (or
having been) a member of a combined, consolidated, unitary or affiliate group or
of a contractual obligation to indemnify any Person, and shall include any
liability for such amounts relating to any other Person if such liability is
imposed by reason of law (including transferee or successor liability).

          "Tenant Security Deposits" has the meaning ascribed to it in Section
                                                                       -------
1.01(a)(xi).
-----------

          "Termination Event" has the meaning ascribed to it in Section
                                                                -------
14.02(d).
--------

          "Territory" and "Territories" have the meaning ascribed to such terms
in Section 4.08(a).
   ---------------

          "Third Party Claim" has the meaning ascribed to it in Section
                                                                -------
11.02(a).
--------
          "363 Motion" has the meaning ascribed to it in the forepart of this
Agreement.

          "Title Companies" has the meaning ascribed to it in Section 4.09(c).
                                                              ---------------

          "Title Policies" has the meaning ascribed to it in Section 4.09(c).
                                                             ---------------

          "Title Reports" has the meaning ascribed to it in Section 4.09(a).
                                                            ---------------

          "Transfer Taxes" has the meaning ascribed to it in Section 8.01(a).
                                                             ---------------

          "Transfer Time" has the meaning ascribed to it in Section 1.08.
                                                            ------------

          "Transferable Policies" has the meaning ascribed to it in Section
                                                                    -------
2.18.
----

          "Tunica Business" has the meaning ascribed to it in the forepart of
this Agreement.

          "Updated Balance Sheet" has the meaning ascribed to it in Section
                                                                    -------
1.05(a).
-------

          "Updated Long Term Debt" has the meaning ascribed to it in Section
                                                                     -------
1.05(c).
-------

          "Updated Working Capital" has the meaning ascribed to it in Section
                                                                      -------
1.05(b).
-------

                                      69
<PAGE>

          "U.S. Trustee Guidelines" means the guidelines promulgated from time-
to-time by the U.S. Trustee's Office.

          "Vehicles" has the meaning ascribed to it in Section 1.01(a)(vii).
                                                       --------------------

          "WARN" means the Worker Adjustment and Retraining Notification Act of
1988, as amended, and regulations promulgated thereunder.

          "Working Capital" has the meaning ascribed to it in Section 1.05(a).
                                                              ---------------

          13.02.  Construction of Certain Terms and Phrases. Unless the context
                  ------------------------------------------
of this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby"
and derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of Sellers in connection with the Business. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.

                                  ARTICLE XIV

                    BANKRUPTCY PROCEEDINGS; BID PROTECTION

          14.01.  Protections for Purchaser.
                  -------------------------

          (a)     Parent and Sellers acknowledge that Purchaser would not agree
to pursue the purchase of the Assets on the terms contemplated hereby without
certain protections and rights, as Parent and Sellers intend to commence the
Bankruptcy Proceedings promptly after the execution of this Agreement. Purchaser
has advised Sellers that it would not incur the expense or suffer the
uncertainty of attempting to purchase the Assets in the Bankruptcy Proceedings
except as hereinafter set forth. In accordance with the Restructuring Agreement
contemplated to be entered into with the Consenting Noteholders who, as of
November 22, 2000, were the holders of not less than 75% of the outstanding
principal amount of Senior Secured Notes, Sellers have determined that under the
totality of the circumstances it is in the best interest of Sellers and their
and Parent's creditors to seek to provide Purchaser with the protections and
rights as set forth in this Article XIV. In consideration of Purchaser's
                            -----------
willingness to execute and proceed with this Agreement and to pay the Purchase
Price, the parties have agreed to the provisions of this Article XIV.
                                                         -----------

          (b)     Breakup Fee and Expense Reimbursement Definitions and
                  -----------------------------------------------------
Requirements. For purposes of this Agreement, "Breakup Fee" means $4,000,000;
------------
provided, however, that if the Breakup Fee is payable to Purchaser pursuant to
--------  -------
Section 14.01(c)(iv), then "Breakup Fee" shall mean the lesser of (i) $4,000,000
--------------------
or (ii) the amount by which the Subsequent Price exceeds $149,000,000. The
Breakup Fee shall be paid in cash or immediately available funds. "Expense
Reimbursement" means the amount to be paid to Purchaser in cash or immediately
available

                                      70
<PAGE>

funds (but not to exceed $800,000), on account of amounts incurred by Purchaser
as actual out-of-pocket expenses in connection with the negotiation,
preparation, execution, delivery and attempted performance of this Agreement and
the matters contemplated hereby. The Expense Reimbursement shall include,
without limitation, all out-of-pocket expenses incurred by Purchaser
constituting costs and fees (including fees and expenses of attorneys,
accountants, investment bankers, consultants and other third parties). If the
Expense Reimbursement is due to Purchaser as provided hereunder, it shall be
paid five Business Days after the delivery by Purchaser to Sellers of a written
request for payment of the Expense Reimbursement, accompanied by reasonably
detailed and accurate supporting documentation for such request. If Sellers
dispute the amount of the requested Expense Reimbursement, they shall so advise
Purchaser in writing and in reasonable detail within three Business Days after
Sellers" receipt of the request and related supporting documentation. Any
undisputed amount shall be timely paid by Sellers to Purchaser and the balance
of the amount requested by Purchaser shall be resolved in good faith by the
parties, if possible. Sellers or Purchaser shall be entitled to ask the
Bankruptcy Court to resolve promptly any unresolved disputes arising in
connection with Purchaser's request for the Expense Reimbursement. The Breakup
Fee shall not be payable if the Bid Protection Order has not been issued, nor
shall it be payable under any circumstances besides those specified in paragraph
                                                                       ---------
(c) of this Section 14.01. The Expense Reimbursement shall not be payable unless
---         -------------
the Cash Collateral Order has been issued or the Interim Cash Collateral Order
has been issued and is still in effect, nor shall it be payable under any
circumstances besides those specified in paragraphs (g), (i), (k) or (m) of
                                         -------------------------------
Section 12.01 or paragraph (c) of this Section 14.01 (provided, however, that
-------------    -------------         -------------
under the circumstances specified in paragraph (l) of Section 12.01, Purchaser's
                                     -------------    -------------
entitlement to the Noteholders" Undertaking Expense Reimbursement from
Consenting Noteholders shall be determined under the Noteholders" Undertaking).

          (c)     Entitlement to Breakup Fee, Expense Reimbursement and Return
                  ------------------------------------------------------------
of Earnest Money Deposit.
------------------------

                  (i)    Except as provided in clauses (ii) and (iii) of this
                                               ----------------------
     paragraph (c), Purchaser shall be entitled to the Breakup Fee, the Expense
     -------------
     Reimbursement and a return of the Earnest Money Deposit (plus all interest
     thereon) if and when the acquisition of all or substantially all of the
     Assets at one or more of the three Business locations is consummated by
     another Person or Persons other than an Affiliate of Purchaser pursuant to
     the 363 Motion or a Plan of Reorganization. Occurrence of such an event
     shall entitle Purchaser to the Breakup Fee, Expense Reimbursement and
     Earnest Money Deposit, as provided herein, but shall not constitute a
     breach of, or a default under, this Agreement by Parent or Sellers.

                  (ii)   Purchaser shall not be entitled to the Breakup Fee,
     Expense Reimbursement or the Earnest Money Deposit if Purchaser is
     materially in breach of, or is materially in default under, this Agreement
     at the time of the occurrence of the event specified in clause (i) of this
                                                             ----------
     paragraph (c).
     -------------

                  (iii)  Purchaser shall not be entitled to the Breakup Fee if
     the Bid Protection Order has not been issued. Purchaser shall not be
     entitled to the Expense Reimbursement unless the Cash Collateral Order has
     been issued or the Interim Cash Collateral Order has been issued and is
     still in effect (provided, however, that under the

                                      71
<PAGE>

     circumstances specified in paragraph (l) of Section 12.01, Purchaser's
                                -------------    -------------
     entitlement to the Noteholders" Undertaking Expense Reimbursement from
     Consenting Noteholders shall be determined under the Noteholders"
     Undertaking).

                  (iv)  Except as provided in clause (iii) of this paragraph
                                              ------------         ---------
     (c), Purchaser shall be entitled to the Breakup Fee, the Expense
     ---
     Reimbursement and a return of the Earnest Money Deposit (plus all interest
     thereon) if (A) Purchaser has terminated this Agreement pursuant to
     paragraphs (b), (c), (g) or (m) of Section 12.01 and (B) within nine months
     -------------------------------    -------------
     after such termination, all or substantially all of the Assets at one or
     more of the three Business locations are acquired by another Person or
     Persons other than an Affiliate of Purchaser pursuant to a Subsequent 363
     Motion or a Subsequent Plan of Reorganization at a price in excess of
     $149,000,000 (the "Subsequent Price").

                  (v)   This paragraph (c) sets forth the sole and exclusive
                             -------------
     circumstances under which Purchaser is entitled to, or Sellers can be held
     liable for, the Breakup Fee.

          14.02.  Conduct of the Bankruptcy Proceedings; Approval of Protections
                  --------------------------------------------------------------
for Purchaser; Sale of Assets.
-----------------------------

          (a)     By not later than December 5, 2000, Seller shall file the
pleadings necessary to commence the Bankruptcy Proceedings (the date of such
filings is referred to herein as the "Petition Date").

          (b)     On the Petition Date, Sellers shall also file, or cause to be
filed, (i) the 363 Motion seeking, among other things, the issuance of the Sales
Order and (ii) one or more other motions or other papers with the Bankruptcy
Court, which other motions or other papers shall not be inconsistent with any of
Purchaser's rights or Sellers" obligations under this Agreement and shall seek
(A) a Final Order approving the payment of the Breakup Fee to Purchaser on the
terms and conditions provided herein when any sale to another Person (other than
an Affiliate of Purchaser) of all or substantially all of the Assets at (I) one
or more of the three Business locations pursuant to the 363 Motion or the Plan
of Reorganization or (II) each of the three Business locations under the
circumstances specified in Section 14.01(c)(iv) is consummated (the "Bid
                           --------------------
Protection Order") and (B) the Cash Collateral Order.

          (c)     Purchaser acknowledges that within five Business Days after
the Petition Date, Sellers will also file a motion seeking an Order in the
Bankruptcy Proceedings for procedures governing the sale of assets free and
clear of liens, claims and interests and assumption and assignment of certain
executory contracts and unexpired leases (the "Protocol Motion"), and a motion
to assume and assign all leases and executory contracts to be assigned to
Purchaser under this Agreement (the "Assumption and Assignment Motion" and
together with the Protocol Motion, the "Motions"). The Motions may be filed in
one or more papers. The Motions shall not be inconsistent with any of
Purchaser's rights or Sellers" obligations under this Agreement. The Motions
shall also seek a Final Order approving a bid process that provides, with regard
to the 363 Motion, as follows:

                                      72
<PAGE>

                  (i)    sale of the Assets shall be by an open outcry auction
     (and not a sealed bid auction) conducted by or before the Bankruptcy Court
     not later than 85 days after the Petition Date;

                  (ii)   each competing bid must be on terms that are the same
     as, or substantially similar to, those contained in this Agreement other
     than price or are more favorable to Sellers than the terms contained in
     this Agreement;

                  (iii)  all competing bids (or groups of competing bids) for
     all of the Assets must be in an amount that (A) is greater than
     $153,000,000 and (B) includes, in addition, any increment required under
     clause (iv) of this paragraph (c); and
     -----------         -------------

                  (iv)   all bids (or group of competing bids) after the first
     competing bid for all of the Assets shall be in increments of $250,000.

          (d)     If any of the following events (each a "Termination Event")
occur and Purchaser is not materially in breach of, and is not materially in
default under, this Agreement, then within five Business Days after the
occurrence of such Termination Event, Purchaser may, but shall not be obligated
to, terminate this Agreement by giving written notice of such termination to
Sellers, whereupon this Agreement shall be terminated and the Earnest Money
Deposit and all interest thereon shall be immediately released to Purchaser. The
Termination Events are:

                  (i)    the Court fails to enter the Interim Cash Collateral
     Order within one Business Day after the Petition Date;

                  (ii)   the Court fails to enter the Bid Protection Order or
     the Cash Collateral Order within 21 days after the Petition Date; or

                  (iii)  within 85 days after the Petition Date, the Court fails
     or refuses to enter the Sales Order unless upon such failure or refusal by
     the Court to enter the Sales Order Sellers proceed diligently to confirm a
     Plan of Reorganization and Sellers meet each of the following milestones:

                              (A)  within 30 days after the earlier of (I) the
Court's refusal to enter the Sales Order or (II) the 85/th/ day after the
Petition Date (such earlier of the two dates being the "Measuring Date"),
Sellers shall have filed a Plan of Reorganization and a related disclosure
statement, each in form reasonably acceptable to Purchaser;

                              (B)  within 70 days after the Measuring Date,
Sellers shall have commenced a solicitation for votes on the Plan of
Reorganization; and

                              (C)  within 120 days after the Measuring Date, a
Final Order confirming the Plan of Reorganization shall have been entered in the
Bankruptcy Proceedings.

                                      73
<PAGE>

                                  ARTICLE XV

                                 MISCELLANEOUS

          15.01.  Notices. All notices, requests and other communications
                  -------
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:

If to Purchaser, to:     Majestic Investor, LLC
                         One Buffington Harbor Drive
                         Gary, Indiana 46406-3000
                         Attn: Don H. Barden
                         Tel: (219) 977-7823
                         Fax: (219) 977-7811

with a copy to:          Latham & Watkins
                         5800 Sears Tower
                         Chicago, Illinois 60606
                         Attn: Michael D. Levin, Esq.
                         Tel: (312) 876-7727
                         Fax: (312) 993-9767

If to Parent, to:        Fitzgeralds Gaming Corporation
                         301 E. Fremont Street
                         P.O. Box 7600
                         Las Vegas, Nevada 89101
                         Attn: Michael E. McPherson
                         Tel: (702) 388-2400
                         Fax: (702) 382-5562

If to FLV, to:           Fitzgeralds Las Vegas, Inc.
                         301 E. Fremont Street
                         P.O. Box 7600
                         Las Vegas, Nevada 89101
                         Attn: Michael E. McPherson
                         Tel: (702) 388-2400
                         Fax: (702) 382-5562

                                      74
<PAGE>

If to FBH, to:                     101 Main Street, Limited Liability Company
                                   c/o  Fitzgeralds Gaming Corporation
                                   301 E. Fremont Street
                                   P.O. Box 7600
                                   Las Vegas, Nevada 89101
                                   Attn: Michael E. McPherson
                                   Tel: (702) 388-2400
                                   Fax: (702) 382-5562

If to FM, to:                      Fitzgeralds Mississippi, Inc.
                                   c/o  Fitzgeralds Gaming Corporation
                                   301 E. Fremont Street
                                   P.O. Box 7600
                                   Las Vegas, Nevada 89101
                                   Attn: Michael E. McPherson
                                   Tel: (702) 388-2400
                                   Fax: (702) 382-5562

with a copy of any notice to
Parent or any Seller to:           Gordon & Silver, Ltd.
                                   3960 Howard Hughes Parkway, 9/th/ Floor
                                   Las Vegas, Nevada 89109
                                   Attn: Gerald M. Gordon, Esq.
                                   Tel: (702) 796-5555
                                   Fax: (702) 369-2666

               and                 Ropes & Gray
                                   1 International Place
                                   Boston, Massachusetts  02110-2624
                                   Attn: Don DeAmicis, Esq.
                                   Tel: (617) 951-7000
                                   Fax: (617) 951-7050

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section).  Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.

          15.02.  Bulk Sales Act.  The parties hereto waive compliance with the
                  --------------
bulk sales act or comparable statutory provisions of each applicable
jurisdiction.

                                      75
<PAGE>

          15.03.  Entire Agreement.  This Agreement and the Operative Agreements
                  ----------------
supersede all prior discussions and agreements among the parties with respect to
the subject matter hereof and thereof between the parties, and contain the sole
and entire agreement among the parties hereto with respect to the subject matter
hereof and thereof, except for the Fitzgeralds Undertaking.

          15.04.  Expenses.  Except as otherwise expressly provided in this
                  --------
Agreement (including, without limitation, as provided in Sections 12.01, 12.02,
                                                         ----------------------
14.02 and 14.03), whether or not the transactions contemplated hereby are
----------------
consummated, each party will pay its own costs and expenses incurred in
connection with the negotiation, execution and closing of this Agreement and the
Operative Agreements and the transactions contemplated hereby and thereby.

          15.05.  Confidentiality.  Except as otherwise required by the
                  ---------------
Bankruptcy Code, Bankruptcy Rules or U. S. Trustee Guidelines, each party hereto
will hold, and will use its best efforts to cause its Affiliates, and in the
case of Purchaser, any Person who has provided, or who is considering providing,
financing to Purchaser to finance all or any portion of the Purchase Price, and
their respective Representatives to hold, in strict confidence from any Person
(other than any such Affiliate, Person who has provided, or who is considering
providing, financing or Representative), unless (i) compelled to disclose by
judicial or administrative process (including, without limitation, in connection
with obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (A) previously known by the party receiving such documents
or information, (B) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (C) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential;
provided that following the Closing the foregoing restrictions will not apply to
Purchaser's use of documents and information concerning the Business, the Assets
or the Assumed Liabilities furnished by Parent or Sellers hereunder. In the
event the transactions contemplated hereby are not consummated, upon the request
of the other parties, each party hereto will, and will cause its Affiliates, any
Person who has provided, or who is considering providing, financing to such
party and their respective Representatives to, promptly (and in no event later
than five Business Days after such request) redeliver or cause to be redelivered
all copies of documents and information furnished by the other party in
connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by the
party furnished such documents and information or its Representatives.

                                      76
<PAGE>

          15.06.  Certain Tunica Business Plans.
                  -----------------------------

          (a)     The parties hereto acknowledge and accept that between the
execution of this Agreement and the Closing, Parent and FM have certain plans
regarding the Tunica Business and certain of the Assets located therein, as
described in paragraph (b) of this Section. Provided that such plans are carried
             -------------
out in accordance with the provisions of this Section and FM's rights, interests
and obligations under the boat dock lease and sublease, as described in
paragraph (b) of this Section, become a part of the Assets and the Assumed
-------------
Liabilities and are transferred to Purchaser at the Closing in accordance with
the terms of this Agreement, carrying out such plans and the transactions
incidental thereto shall not constitute a breach of this Agreement or require a
modification of the Purchase Price.

          (b)     FM plans to convey to the County of Tunica, Mississippi (the
"County") approximately 50 acres of land (the "Subject Land") that is part of
the Real Property included in the Tunica Business, but is outside of the
Existing Levee (as defined in paragraph (c) of this Section).  The County
                              -------------
intends to construct a boat dock and nature park on the Subject Land.  The sole
or principal consideration that the County will pay to FM for the Subject Land
will be the granting to FM of a (i) lease to use the boat dock, with FM having
no obligation to make lease payments thereunder; and (ii) perpetual easement
allowing ingress and egress between the Tunica Business and the boat dock.  FM
will negotiate with the County for a lease term of at least 15 years, but no
representations, warranties or covenants are made to Purchaser as to the actual
length of the lease term.  FM, in turn, plans to sublease to one or more Persons
(which may include Affiliates of Parent or Sellers) the right to use the boat
dock for boat docking and riverboat cruises in return for sublease payments to
FM and other sublease terms and conditions that FM will negotiate in good faith
and on reasonable terms with the sublessees.  If Parent and FM carry out the
plans described in this paragraph (b) prior to the Closing, the following
                        -------------
restrictions and obligations shall apply:

                  (i)   Without Purchaser's prior written consent, no Real
     Property located within the Existing Levee shall be conveyed, or committed
     to be conveyed, to the County nor shall FM grant, or commit to grant to the
     County, any rights to use such Real Property.

                  (ii)  FM shall give Purchaser (A) prompt written notice of the
     specific details of the plans, the Subject Land conveyance, and the boat
     dock lease and subleases as they become known to Purchaser and (B) a
     reasonable opportunity to consult and have discussions with FM regarding
     such matters other than the subleases.

          (c)     "Existing Levee" means the area designated as "Existing Levee
[208]" on the map attached hereto as Exhibit J.
                                     ---------

          15.07.  Computer Systems.  Parent and FR covenant to Purchaser that
                  ----------------
for a six-month period commencing on the Closing Date or for such shorter period
designated by Purchaser as provided below, FR shall, on a transitional basis,
lease to the Black Hawk Business FR's computer systems and provide to the Black
Hawk Business FR's MIS administrative support and maintenance to the same extent
and on the same terms as under the arrangement

                                      77
<PAGE>

between FR and FBH that was in effect in the ordinary and regular course of FR's
and FBH's business prior to the execution of this Agreement, as described in
Exhibit K hereto, with the fees and other costs specified therein prorated for
---------
the number of days during which this post-Closing transitional arrangement
remains in effect. Purchaser may terminate this arrangement at any time prior to
the expiration of this six-month transitional period by (i) delivering to Parent
or to FR written notice of termination at least 30 days prior to the termination
date, (ii) returning to FR on or before the termination date all Books and
Records (together with all copies thereof in whatever form they exist) in
Purchaser's or the Black Hawk Business" possession or under its control that are
owned or were provided by FR pursuant to this arrangement, and (iii) paying to
FR all fees and costs owed for the period ending on the termination date, as
provided in the immediately preceding sentence.

          15.08.  Authorized Pre-Closing Actions and Activities.
                  ---------------------------------------------
Notwithstanding anything in this Agreement to the contrary, Parent and Sellers
(and their respective Affiliates) are authorized under this Agreement to take
the following actions and conduct the following activities at any time or from
time to time prior to the Closing:

          (a)     commencing, continuing and concluding the Bankruptcy
Proceedings, including the filing with the Clerk of the Bankruptcy Court of
applications, motions and plans seeking or providing relief not inconsistent
with the Bankruptcy Code, the transactions at the Closing contemplated by this
Agreement or the proceedings contemplated by Section 14.02;
                                             -------------

          (b)     taking all actions necessary or appropriate to comply with the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, local rules of
practice promulgated by the Bankruptcy Court and Orders of the Bankruptcy Court
so long as such actions are not inconsistent with the transactions at the
Closing contemplated by this Agreement or with the proceedings contemplated by
Section 14.02;
-------------

          (c)     liquidating in an orderly manner Parent's, Sellers" and their
respective Affiliates" assets, stock and other equity interests; provided,
                                                                 ---------
however, that the Assets shall be dealt with in accordance with, and as
-------
contemplated by, this Agreement;

          (d)     entering into Contracts with existing creditors, lessors,
licensors and licensees regarding the restructuring of their claims against
Parent, Sellers or their respective Affiliates in a manner not inconsistent with
the transactions at the Closing contemplated by this Agreement;

          (e)     adopting a retention and severance program for members of
management of Parent, Sellers or their respective Affiliates; provided, however,
                                                              -----------------
that such program and the obligations thereunder shall be Retained Liabilities;

          (f)     paying success fees to the Subject Parties for the sale or
other disposition of stock or other equity interests in Parent, Sellers or any
of their respective Affiliates; provided, however, that the obligations to make
                                -----------------
such payments shall be Retained Liabilities;

          (g)     not making regular payments that are due to the Indenture
Trustee for the benefit of holders of the Senior Secured Notes;

                                      78
<PAGE>

          (h)  making payments to the Indenture Trustee for the benefit of
holders of the Senior Secured Notes; and

          (i)  retaining and paying professionals in connection with the matters
described in paragraphs (a) through (e) of this Section.
             --------------------------         -------

          The taking of any such actions or the conduct of any such activities
by Parent or Sellers (or their respective Affiliates) shall not constitute a
breach of this Agreement or require a modification of the Purchase Price.

          15.09.  Waiver; Remedies. Any term or condition of this Agreement
                  ----------------
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.

          15.10.  Amendment.  This Agreement may be amended, supplemented or
                  ---------
modified only by a written instrument duly executed by or on behalf of each
party hereto.

          15.11.  No Third Party Beneficiary.  The terms and provisions of this
                  --------------------------
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article XI.
                                            ----------

          15.12.  No Assignment; Binding Effect.  Neither this Agreement nor
                  -----------------------------
any right, interest or obligation hereunder may be assigned by Purchaser without
the prior written consent of Sellers and Parent and any attempt to do so will be
void, except (i) for assignments and transfers by operation of Law and (ii) that
Purchaser may assign any or all of its rights, interests and obligations
hereunder (including, without limitation, its rights under Article XI) to (A)
                                                           ----------
any financial institution providing purchase money or other financing to
Purchaser from time to time as collateral security for such financing and (B) a
wholly-owned subsidiary in each of Nevada, Colorado and Mississippi. Subject to
the preceding sentence, this Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective successors and
assigns.

          15.13.  Directors and Officers.  This Agreement shall confer no
                  ----------------------
obligation on the part of any directors or officers of Parent, Sellers or any of
their Affiliates to remain employed by, or to remain on the board of directors
or as managers of, any such entities after the date of this Agreement.

          15.14.  Headings.  The headings used in this Agreement have been
                  --------
inserted for convenience of reference only and do not define or limit the
provisions hereof.

          15.15.  Consent to Jurisdiction; Venue.  Each party hereto irrevocably
                  ------------------------------
submits to the exclusive jurisdiction of the Bankruptcy Court in any action,
suit or proceeding arising out of

                                      79
<PAGE>

or relating to this Agreement or any of the Operative Agreements or any of the
transactions contemplated hereby or thereby, and agrees that any such action,
suit or proceeding shall be brought only in such court. Each party 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 and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum.

          15.16.  Invalid Provisions.  If any provision of this Agreement is
                  ------------------
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.

          15.17.  Governing Law.  This Agreement shall be governed by and
                  -------------
construed in accordance with the (i) Laws of the State of Nevada applicable to a
contract executed and performed exclusively in such State, without giving effect
to the conflicts of laws principles thereof, and (ii) the Bankruptcy Code, to
the extent applicable.

          15.18.  Counterparts.  This Agreement may be executed in any number of
                  ------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

          15.19.  Employees.  Until the Closing or the termination of this
                  ---------
Agreement, other than termination because of a material breach by Purchaser,
Purchaser shall not, and Purchaser shall cause its Affiliates not to, directly
or indirectly, hire or seek to hire any Employees or any officers or employees
of Parent, any Seller or any Affiliate of Parent or of any Seller (collectively,
the "Subject Employers") or encourage any of the foregoing Persons to terminate
their employment with any of the Subject Employers unless the Subject Employers
have first terminated such Persons" employment.

                                      80
<PAGE>

          IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party  as of the date first
above written.

PURCHASER:               MAJESTIC INVESTOR, LLC
                         a Delaware limited-liability company


                         By:   /s/ Don H. Barden
                             -----------------------------------
                             Name: Don H. Barden
                                   -----------------------------
                             Title: Chairman and CEO
                                    ----------------------------

FLV:                     FITZGERALDS LAS VEGAS, INC.,
                         a Nevada corporation

                         By:   /s/ Philip D. Griffith
                             -----------------------------------
                             Name: Philip D. Griffith
                                   -----------------------------
                             Title: President
                                    ----------------------------

FBH:                     101 MAIN STREET LIMITED LIABILITY COMPANY,
                         a Colorado limited-liability company doing business as
                         "Fitzgeralds Casino Black Hawk"

                         By:  /s/ Philip D. Griffith
                             -----------------------------------
                             Name: Philip D. Griffith
                                   -----------------------------
                             Title: President
                                    ----------------------------

FM:                      FITZGERALDS MISSISSIPPI, INC.,
                         a Mississippi corporation

                         By:    /s/ Philip D. Griffith
                             -----------------------------------
                             Name: Philip D. Griffith
                                   -----------------------------
                             Title: President
                                    ----------------------------

PARENT:                  FITZGERALDS GAMING CORPORATION,
                         a Nevada corporation

                         By:   /s/ Philip D. Griffith
                             -----------------------------------
                             Name: Philip D. Griffith
                                   -----------------------------
                             Title: President
                                    ----------------------------

                                      81
<PAGE>

AS TO SECTION 4.08 ONLY:
      ------------
                                /s/ Philip D. Griffith
                                -------------------------------------
                                PHILIP D. GRIFFITH, an individual

                                /s/ Michael E. McPherson
                                -------------------------------------
                                MICHAEL E. McPHERSON, an individual

                                /s/ Max L. Page
                                -------------------------------------
                                MAX L. PAGE, an individual

                                /s/ Paul H. Manske
                                -------------------------------------
                                PAUL H. MANSKE, an individual

AS TO SECTION 15.07 ONLY:
      -------------


                                FITZGERALDS RENO, INC.,
                                a Nevada corporation


                                By: /s/ Philip D. Griffith
                                    ---------------------------------
                                    Name: Philip D. Griffith
                                          ---------------------------
                                Title:  President
                                      -------------------------------

AS TO OWNERSHIP AND TRANSFER
OF THE FSELLC MEMBERSHIP
INTEREST TO PURCHASER ONLY:

                                FITZGERALDS FREMONT EXPERIENCE CORP.,
                                a Nevada corporation


                                By:  /s/ Philip D. Griffith
                                    ---------------------------------
                                    Name: Philip D. Griffith
                                          ---------------------------
                                    Title:  President
                                           --------------------------
                                      82
<PAGE>

                                   EXHIBIT A

                         PROPOSED FORM OF SALES ORDER
<PAGE>

                                   EXHIBIT B

                            ADJUSTED BALANCE SHEET
<PAGE>

                                   EXHIBIT C

                     GENERAL ASSIGNMENTS AND BILLS OF SALE
<PAGE>

                                   EXHIBIT D

                             ASSUMPTION AGREEMENT
<PAGE>

                                   EXHIBIT E

                           FOREIGN PERSON AFFIDAVIT
<PAGE>

                                   EXHIBIT F

                           PRELIMINARY TITLE REPORTS
<PAGE>

                                   EXHIBIT G

                           DEPOSIT ESCROW AGREEMENT
<PAGE>

                                   EXHIBIT H

                               ESCROW AGREEMENT
<PAGE>

                                   EXHIBIT I

                               LICENSE AGREEMENT
<PAGE>

                                   EXHIBIT J

                                  TUNICA MAP
<PAGE>

                                   EXHIBIT K

                     SUMMARY TERMS OF BLACK HAWK BUSINESS'

                LEASE OF COMPUTER SYSTEMS AND RELATED SERVICES
<TABLE>
<S>                                                                    <C>
AS/400 lease and associated software @ $2,080 per month                   $24,960
MIS administrative support @ $1,500 per 4-week period                      12,000
MIS administrative support @ $1,875 per 5-week period                       7,500
Annual Infinium maintenance contract
  (15% of total cost, which is subject to change each year)                 5,669  (estimated)
                                                                       ----------
   Total Annual Fees Payable by Black Hawk Business                       $50,129  (estimated)
                                                                       ==========
</TABLE>
<PAGE>

                              FIRST AMENDMENT TO

                          PURCHASE AND SALE AGREEMENT

     This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Amendment"),
dated as of December 4, 2000, is entered into by and among MAJESTIC INVESTOR,
LLC, a Delaware limited-liability company ("Purchaser"); FITZGERALDS LAS VEGAS,
INC., a Nevada corporation ("FLV'); 101 MAIN STREET LIMITED LIABILITY COMPANY, a
Colorado limited-liability company ("F&7"); FITZGERALDS MISSISSIPPI, INC., a
Mississippi corporation ("FM' and collectively with FLV and FBH, "Sellers" and
each, a "Seller"); and FITZGERALDS GAMING CORPORATION, a Nevada corporation
("Parent"). Capitalized terms not defined herein have the meanings ascribed to
them in the Purchase and Sale Agreement, dated as of November 22, 2000 (the
"Agreement"), by and among the parties to this Amendment and certain Affiliates
of Parent or Sellers named on the signature pages of the Agreement.

     In consideration of the mutual covenants and agreements set forth in this
Amendment, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1.    Inconsistencies. If any inconsistencies exist between the provisions
           ---------------
of this Amendment and the provisions of the Agreement, then the provisions of
this Amendment shall control and supersede the inconsistent provisions of the
Agreement. Unless otherwise specifically indicated, all references to Paragraphs
and Subparagraphs are to Paragraphs and Subparagraphs of the Agreement and such
Paragraphs and Subparagraphs referred to shall include the effect of the
amendments hereunder.

     2.    Amendments. The Agreement is hereby amended as follows:
           ----------

           A.  Paragraph (b) of Section 1.03 is amended and restated in its
               -------------    ------------
entirety as follows:

                   (b) (i)   There shall be withheld from the Cash Component
               payable to Sellers at the Closing Three Million Five Hundred
               Thousand Dollars ($3500,000) (the "Purchaser's Holdback"), which
               amount shall be deposited by Purchaser and held in the Escrow
               Account. From time to time prior to the date which is nine months
               from the Closing Date (the "First Holdback Expiration Date"), in
               accordance with the Escrow Agreement (A) Purchaser may apply the
               Purchaser's Holdback to pay, or to provide for the payment of,
               any liability of Parent or Sellers to Purchaser resulting from
               (I) post-Closing adjustments of the Cash Component other than the
               Hotel Adjustment Amount, (II) Parent's and Sellers'
               indemnification obligations under Section 11.01 or (III)
                                                 --------------
               Underestimated Re-Flagging Costs under Section 1.16 and (B)
                                                      ------------
               Sellers may apply the Purchaser's Holdback to pay, or to provide
               for the payment of, any liability of Purchaser to Sellers for
               Overestimated Re-Flagging Costs as provided in Section 1.16.
                                                              ------------
               Between the 12-month and 14-month anniversaries of

                                       1
<PAGE>

               the Closing Date, in accordance with the Escrow Agreement,
               Purchaser may apply the Purchaser's Holdback to pay, or to
               provide for the payment of, any liability of Sellers to Purchaser
               for the Hotel Adjustment Amount under Section 1.15. From time to
                                                     ------------
               time between the First Holdback Expiration Date and the date
               which is 12 months from the First Holdback Expiration Date (the
               "Final Holdback Expiration Date"), in accordance with the Escrow
               Agreement, Purchaser may apply up to One Million Dollars
               ($1,OOO,OOO) of the remaining balance of the Purchaser's Holdback
               to pay, or to provide for the payment of, any liability of Parent
               or Sellers to Purchaser resulting from Parent's and Seller's
               indemnification obligations under Section 11.01 only as they
                                                 -------------
               pertain to breaches of representations and warranties contained
               in Sections 2.07 or 2.14 or breaches of covenants contained in
                  ---------------------
               Sections 8.01, 8.02 or 8.03.
               ---------------------------

                       (ii)  On the 14- month anniversary of the Closing Date,
               any portion of the Purchaser's Holdback in excess of One Million
               Dollars ($1,000,000) remaining in the Escrow Account shall be
               released to Sellers in accordance with the Escrow Agreement or,
               in the event of a pending dispute, as provided in the Escrow
               Agreement (the "First Release"). On the Final Holdback Expiration
               Date, any portion of the Purchaser's Holdback remaining in the
               Escrow Account shall be released to Sellers in accordance with
               the Escrow Agreement or, in the event of a pending dispute, as
               provided in the Escrow Agreement.

                       (iii) There shall b e added to each and every payment to
               Purchaser or Sellers out of the Purchaser's Holdback pursuant to
               this Section 1.03(b) a proportionate share of the interest earned
                    ---------------
               on the Purchaser's Holdback through the date of such payment.

          B.   Clause (i) of Section 1.04(a) is amended and restated in its
                             ---------------
          entirety as follows:

                       (i) One Hundred Forty Nine Million Dollars
               ($149,000,000), subject to adjustment as provided in Sections
                                                                    --------
               1.05, 1.06, 1.07, 1.15 and 1.16 (the "Cash Component"); plus
               -------------------------------

          C.   The following sentence is inserted at the end of clause (i) of
                                                                ----------
Section 1.06(c): "Final EBIDTA shall be subject to adjustment as provided in
---------------
paragraph (d) of this Section 1.06."
-------------         ------------

          D.   The following new paragraph (d) is inserted after paragraph (c)
                                 -------------                   -------------
of Section 1.06:
   ------------

                   (d) (i)   The provisions of this paragraph (d) shall apply
                                                    -------------
               only if the Closing Date is prior to July 3 1,200l and as of the
               Closing, the Hotel Consents have been obtained.

                       (ii)  Final EBITDA shall be reduced by an amount equal to
               (I) the amounts that were payable by Sellers to the companies
               listed in Section 1.06(d)(ii) of the Disclosure Schedule (the
                         ---------------------------------------------
               "Hotel

                                       2
<PAGE>

               Companies") under the original terms of the Contracts listed in
               Section 1.O6(d)(ii) of the Disclosure Schedule (the "Hotel
               ----------------------------------------------
               Contracts") for the 12-month period covered by the Final EBITDA
               Financial Statements (the "Final EBITDA Period') minus (II) the
               amounts actually paid by Sellers to the Hotel Companies under the
               Hotel Contracts for the Final EBITDA Period.

          E.   Section 1.07 is amended and restated in its entirety as follows:
               ------------

                       1.07. Post-Closing Audit and Adjustment.
                             ---------------------------------

                       (a)   Parent will have the right to review or audit the
               Final Balance Sheet, the calculation of Final EBITDA, the Hotel
               Calculations under Section 1.15 and the Actual Re-Flagging Costs
                                  ------------
               under Section 1.16. Any appropriate corrections or restatements
                     ------------
               resulting from such review or audit that affect the Cash
               Component adjustments specified in Sections 1.05, 1.06, 1.15 or
                                                  ----------------------------
               1.16 will require a corresponding cash payment by Purchaser to
               ----
               Sellers in the case of an increase in the Cash Component, or
               reimbursement by or on behalf of Sellers to Purchaser in the case
               of a reduction of the Cash Component. If Parent disagrees with
               the Final Balance Sheet, the calculation of Final EBITDA, any of
               the Hotel Calculations or the Actual Re-Flagging Costs, Parent
               shall notify Purchaser of such disagreement in writing,
               specifying in detail the particulars of such disagreement, within
               15 Business Days after Parent's receipt of the Final Balance
               Sheet, the calculation of Final EBITDA or the Hotel Calculations
               in question or documentation supporting the Actual Re-Flagging
               Costs, as the case may be (each such notification, a "Dispute
               Notice"). To the extent that any portion of the Final Balance
               Sheet or calculation of Final EBITDA is not in dispute, within 15
               Business Days after Parent's receipt of the Final Balance Sheet
               and the calculation of Final EBITDA, Sellers shall pay or cause
               to be paid to Purchaser or Purchaser shall pay or cause to be
               paid to Sellers, as the case may be, that portion of the
               adjustment to the Cash Component which is not in dispute. Any
               such payment owed by Sellers shall be made from the Purchaser's
               Holdback as provided in Section 1.03(b), to the extent that the
                                       ---------------
               Purchaser's Holdback is sufficient for that purpose. To the
               extent that any portion of the Hotel Adjustment Amount under
               Section 1.15 is not in dispute, such portion not in dispute shall
               ------------
               be paid to Purchaser out of the Purchaser's Holdback, as provided
               in Section 1.03(b), after 15 Business Days have elapsed from the
                  ---------------
               date of Parent's receipt of the calculation of Post-Closing Hotel
               Revenues. To the extent there are any Underestimated Re-Flagging
               Costs which are not in dispute, they shall be reimbursed to
               Purchaser out of the Purchaser's Holdback, as provided in Section
                                                                         -------
               1.03(b), after 15 Business Days have elapsed from the date of
               -------
               Parent's receipt of supporting documentation for the Actual Re-
               Flagging Costs. To the extent there are any Overestimated Re-
               Flagging Costs that Purchaser has not paid to Sellers within the
               10-day

                                      3
<PAGE>

               period specified in Section 1.16, at Sellers' option they shall
                                   ------------
               be paid by Purchaser to Sellers out of the Purchaser's Holdback,
               as provided in Sections 1.03(b) and 1.16; provided, however, that
                              --------------------------------------------
               if Sellers do not obtain payment of the Overestimated Re-Flagging
               Costs out of the Purchaser's Holdback, Purchaser shall remain
               liable to Sellers for such payment.

                       (b)   Purchaser and Sellers shall use commercially
               reasonable efforts for a period of 30 days after Parent's
               delivery of a Dispute Notice (or such longer period as Purchaser
               and Sellers mutually agree upon) to resolve any disagreements
               raised by Parent with respect to the Final Balance Sheet, the
               calculation of Final EBITDA, the Hotel Calculations or the Actual
               Re-Flagging Costs, as the case may be. If, at the end of such
               period, Purchaser and Sellers are unable to resolve such
               disagreements, Deloitte & Touche and Price Waterhouse Coopers,
               independent auditors of Sellers and Purchaser, respectively,
               shall jointly select a third independent auditor from a
               recognized national standing "Big-5" accounting firm to resolve
               any remaining disagreements. Fees and expenses of such third
               independent auditor shall be borne equally by Purchaser on one
               side and Sellers on the other side. The determination by such
               third independent auditor shall be final, binding and conclusive
               on Purchaser, Parent and Sellers. Purchaser and Sellers shall use
               commercially reasonable efforts to cause such third independent
               auditor to make its determination within 30 days of accepting its
               selection. If Parent or any Sellers determine that a delay in
               this dispute resolution mechanism threatens to delay the closing
               of their cases in the Bankruptcy Proceedings, then Parent or any
               Sellers may seek means from the Bankruptcy Court to enforce such
               independent auditor's determination. The parties hereto, Sellers'
               and Purchaser's respective independent auditors, and such third
               selected independent auditor shall agree to be subject to the
               jurisdiction of the Bankruptcy Court for this purpose. Within ten
               days after the date of determination by such third independent
               auditor, Purchaser shall pay Sellers, or Sellers shall pay or
               cause to be paid to Purchaser, as the case may be, the amount of
               the adjustment to the Cash Component or the amount of the
               Overestimated Re-Flagging Costs or Underestimated Re-Flagging
               Costs, as the case may be, that is determined to be due and
               payable. Any such payments owed by Sellers shall be made from the
               Purchaser's Holdback as provided in Section 1.03(b), to the
                                                   ---------------
               extent that, the Purchaser's Holdback is sufficient for that
               purpose. Any such payment of Overestimated Re-Flagging Costs owed
               by Purchaser shall be made as provided in Sections 1.03(b) and
                                                         --------------------
               1.16 and paragraph (a) of this Section 1.07.
               ----     -------------         ------------

          F.   In the first sentence of Section 1.08(b), the phrase "and
                                        ---------------
1.06(b)," is changed 3 to ",1.06(b) and 1.16(b)," and in the third sentence of
-------                    --------------------
Section 1.08(c), the term "First Holdback Expiration Date" is changed to "14-
---------------
month anniversary of the Closing Date."

                                       4
<PAGE>

           G.  The following new Sections 1.15 and 1.16 are inserted after
                                 ----------------------
Section 1.14:
------------

                       1.15  Hotel Cash Component Adjustments:
                             --------------------------------

                       (a)   A post-Closing reduction of the Cash Component and
               delivery by Purchaser to Parent of the Hotel Calculations, as
               provided in this Section 1.15, shall be made only if the Hotel
                                ------------
               Consents have not been obtained as of the Closing.

                       (b)   The Cash Component shall be reduced by an amount
               (the "Hotel Adjustment Amount") equal to the product of (i) the
               Las Vegas Business' hotel room revenues for the Final EBITDA
               Period (the "Pre-Closing Hotel Revenues") minus the Las Vegas
               Business' hotel room revenues for the 12-month period commencing
               on the Closing Date (the "Post-Closing Hotel Revenues") minus
               Sellers' payments under the Hotel Contracts for the Final EBITDA
               Period (the "Hotel Contracts Payments"), multiplied by (ii) four.
               The Hotel Adjustment Amount shall be paid to Purchaser solely out
               of the Purchaser's Holdback, as provided in Section 1.03(b). No
                                                           ---------------
               Cash Component adjustment shall be made under this Section 1.15
                                                                  ------------
               if the amount computed under clause (i) of this paragraph (b) is
                                            ----------         -------------
               a negative number or if the Hotel Consents have been obtained as
               of the Closing.

                       (c)   Purchaser shall deliver to Parent written
               calculations of the Pre-Closing Hotel Revenues, the Post-Closing
               Hotel Revenues and the Hotel Contracts Payments (collectively,
               the "Hotel Calculations") in sufficient detail to facilitate
               Parent's review or audit of such calculations pursuant to Section
                                                                         -------
               1.07. Purchaser shall deliver the Pre-Closing Hotel Revenues
               ----
               calculation to Parent together with the Final Balance Sheet and
               the Final EBITDA Financial Statements. Purchaser shall deliver
               the Post-Closing Hotel Revenues calculation to Parent within 15
               Business Days after the end of the 12-month period that commenced
               on the Closing Date. The Hotel Calculations shall be made in a
               manner consistent with the calculation of revenues in the Interim
               EBITDA Financial Statements and the Final EBITDA Financial
               Statements.

         1.16     Hotel Re-Flagging After the Closing.
                  -----------------------------------

                       (a)   The provisions of this Section 1.16 shall only
                                                    ------------
               apply if, as of the Closing, the Hotel Consents have not been
               obtained and the Re-Flagging Changes have not been implemented
               pursuant to Section 15 20.
                           -------------

                       (b)   Sellers shall present to Purchaser at or prior to
               the Closing a reasonably detailed written estimate of the
               anticipated costs to be incurred by Purchaser to implement the
               Re-Flagging Changes after the Closing (the "Estimated Re-Flagging
               Costs"). At the Closing, the

                                       5
<PAGE>

               Cash Component will be decreased by the Estimated Re-Flagging
               costs.

                       (c)   As promptly as reasonably practicable after
               Purchaser has implemented the Re-Flagging Changes, Purchaser
               shall deliver to Parent supporting documentation for the costs
               actually incurred by Purchaser to implement the Re-Flagging
               Changes (the "Actual Re-Flagging Costs") in reasonable detail to
               facilitate a review or audit by Parent of the Actual Re-Flagging
               Costs pursuant to Section 1.07. The amount, if any, by which the
                                 ------------
               Actual Re-Flagging Costs exceed the Estimated Re-Flagging Costs
               (the "Underestimated Re-Flagging Costs") shall be paid to
               Purchaser out of the Purchaser's Holdback, as provided in Section
                                                                         -------
               1.03(b). The amount, if any, by which the Estimated Re-Flagging
               -------
               Costs exceed the Actual Re-Flagging Costs (the "Overestimated Re-
               Flagging Costs") shall be paid by Purchaser to Sellers within ten
               days after Purchaser delivers to Sellers the supporting
               documentation specified in this paragraph (b). If Purchaser does
                                               -------------
               make such payment within this ten-day period, Sellers shall have
               the right to obtain such payment of the Overestimated Re-Flagging
               Costs out of the Purchaser's Holdback. If Sellers do not obtain
               such payment from the Purchaser's Holdback, Purchaser shall
               remain liable to Sellers for payment of the Overestimated Re-
               Flagging costs.

                       (d)   Purchaser shall complete the removal of the Las
               Vegas Business' existing hotel signs, logos, uniforms and
               amenities that are necessary to implement the Re-Flagging Changes
               within 60 days after the Closing Date. Purchaser shall submit to
               the appropriate vendors or suppliers all purchase orders for new
               hotel signs, logos, uniforms and amenities that are necessary to
               complete the Re-Flagging Changes within 90 days after the Closing
               and shall deliver to Parent copies of such purchase orders within
               ten days after they have been submitted to such vendors or
               suppliers. The Re-Flagging Changes shall be made in a
               commercially reasonable manner, consistent with the Las Vegas
               Business' normal and customary practices and expenditures prior
               to the Closing.

       H.      In the second sentence of Section 2.05, "or Section 15.20" is
                                         ------------      -------------
inserted immediately after "Section 15.08."
                            -------------

       I.      At the end of the first sentence of Section 4.04 and at the end
                                                   ------------
of clause (ii) of Section 4.06, "or Section 15.20" is inserted immediately after
                  ------------
"Section 15.08."
 -------------

       J.      Section 4.09(a) is amended and restated in its entirety as
               --------------
follows:

                       (a)   (i)   Exhibit F contains preliminary title reports
                                   ---------
               for the Real Property and the Real Property Leases (the "Title
               Reports").

                                       6
<PAGE>

                             (ii)  Purchaser shall have 30 days (the "Exception
               Review Period') from the date Purchaser receives a copy of the
               ALTA surveys for the Real Property and the Real Property Leases
               and all documents of record listed as title exceptions in the
               Title Reports (the "Title Exceptions") within which to review and
               approve the Title Exceptions. Purchaser shall notify Sellers in
               writing within the Exception Review Period if Purchaser
               disapproves of any of the Title Exceptions (the "Title Exception
               Objections"). If Purchaser fails to deliver the Title Exception
               Objections within the Exception Review Period, the Title
               Exceptions shall be deemed Permitted Exceptions. If Purchaser
               delivers the Title Exception Objections to Sellers within the
               Exception Review Period, Sellers shall have 15 days (the
               "Objection Review Period') from the date of the receipt of the
               Title Exception Objections to notify Purchaser in writing of
               Sellers' approval or disapproval of the Title Exception
               Objections. If Sellers fail to notify Purchaser of their approval
               or disapproval within the Objection Review Period, Sellers shall
               be deemed to have disapproved all of the Title Exception
               Objections. If Sellers do not accept all of the Title Exception
               Objections, Purchaser shall have five days (the "Termination
               Notification Period') from the earlier of (x) the expiration of
               the Objection Review Period or (y) the date that Purchaser
               receives notice from Sellers of their disapproval of some or all
               of the Title Exception Objections, to terminate the Purchase
               Agreement pursuant to Section 12.01(p). If Purchaser does not
                                     ----------------
               terminate the Purchase Agreement pursuant to Section 12.01(p)
                                                            ----------------
               within the Termination Notification Period, Purchaser shall be
               deemed to have withdrawn the Title Exception Objections not
               approved by Sellers.

                             (iii) Following expiration of the Exception Review
               Period, Permitted Exceptions shall also include those other title
               exceptions which (A) are disclosed or become apparent to
               Purchaser after the date hereof, (B) are not already Permitted
               Exceptions, (C) cannot be removed by the payment of a sum of
               money, (D) are not caused by the intentional act of a Seller or
               any Affiliate of a Seller after the date hereof, and which do not
               materially adversely affect the value of the Real Property or
               Improvements, or the continued use thereof as currently
               conducted, or as to which Purchaser has not timely objected.

         K.    The following new Sections 4.19, 4.20 and 4.21 are inserted after
                                 ----------------------------
Section 4.18
------------

                       4.19  Sellers' Obligations Regarding the Modular Space
                             ------------------------------------------------
               Consents. If prior to the Closing it becomes readily
               --------
               apparent to Sellers that any of the consents (or in lieu thereof
               waivers or appropriate

                                       7
<PAGE>

               Orders of the Bankruptcy Court) listed in Section 6.05 of the
                                                         ------------
               Disclosure Schedule that pertain to Sellers' Contracts with GE
               -------------------
               Capital Modular Space (the "Modular Space Consents") will, as of
               the Closing, (i) not have been obtained, (ii) be subject to the
               satisfaction of any condition that has not been satisfied or
               waived or (iii) not be in full force and effect, Sellers shall so
               notify Purchaser in writing and shall negotiate with Purchaser in
               a spirit of good faith and cooperation with a view towards
               reaching an amicable and fair agreement on a financial remedy or
               accommodation to Purchaser or a substitute for the Modular Space
               Consents that is reasonably satisfactory to Purchaser. Any such
               agreement between Sellers and Purchaser with respect to the
               Modular Space Consents shall constitute satisfaction of the
               conditions specified in Section 6.05 as they pertain to the
                                       ------------
               Modular Space Consents.

                    4.20.   Black Hawk Business Condition of Improvements. Prior
                            ---------------------------------------------
               to the Closing, Sellers shall remedy in all material respects the
               conditions described in Section 2.08(i) of the Disclosure
                                       ---------------------------------
               Schedule (including the descriptions in correspondence from
               --------
               consultant Harry L. Siebert contained therein), in a manner
               reasonably satisfactory to Purchaser.

                    4.21.   Intellectual Property Conveyance Documents. Parent
                            ------------------------------------------
               and Sellers shall execute any documents necessary, make any
               filings necessary, and otherwise cooperate in good faith with
               Purchaser, to establish an effective chain of title with respect
               to the trademark Intellectual Property to be conveyed to
               Purchaser pursuant to this Agreement.

          L.   The following new Section 5.08 is inserted after Section 5.07:
                                 ------------                   ------------

                    5.08    Purchaser's Obligations Regarding the Modular Space
                            ---------------------------------------------------
               Consents. If prior to the Closing Purchaser receives written
               --------
               notification from Sellers that it has become readily apparent
               that the Modular Space Consents will, as of the Closing, (i) not
               have been obtained, (ii) be subject to the satisfaction of any
               condition that has not been satisfied or waived or (iii) not be
               in full force and effect, Purchaser shall negotiate with Sellers
               in a spirit of good faith and cooperation with a view towards
               reaching an amicable and fair agreement on a financial remedy or
               accommodation to Purchaser or a reasonably satisfactory
               substitute for the Modular Space Consents that is reasonably
               satisfactory to Purchaser. Any such agreement between Purchaser
               and Sellers with respect to the Modular Space Consents shall
               constitute satisfaction of the conditions specified in Section
                                                                      -------
               6.05 as they pertain to the Modular Space Consents.
               ----

          M.   The following is inserted at the end of Section 6.05:
                                                       ------------

                                       8
<PAGE>

               If it becomes readily apparent to Sellers that any conditions
               specified in sub-clauses (A), (B) and (C) of this Section will
                            ----------------------------
               not be satisfied (and waivers or Bankruptcy Court Orders will not
               be obtained) as of the Closing with respect to any consents that
               (i) are listed in Section 6.05 of the Disclosure Schedule and
                                 ---------------------------------------
               pertain to Sellers' Contracts with International Game Technology
               ("IGT") or (ii) pertain to FM's Contract with Hotel Information
               Systems ("HIS"), Sellers shall have the right to provide
               Purchaser with reasonably comparable slot machine player tracking
               systems in substitution for any such IGT Contracts or a
               reasonably comparable hotel information system for the Tunica
               Business in substitution for the HIS Contract, as the case may
               be; provided, however, that any such substituted system shall be
                   -----------------
               subject to Purchaser's reasonable approval. The substitution of
               any player tracking or hotel information system pursuant to the
               preceding sentence shall constitute satisfaction of the
               conditions specified in this Section as they pertain to the
               corresponding IGT or HIS Contract.

          N.   The following new Section 6.12 is inserted after Section 6.11:
                                 ------------                   ------------

                    6.12.  Certain Domain Name Registrations. Prior to the
                           ---------------------------------
               Closing, Sellers shall make commercially reasonable efforts to
               (i) cause the respective registrants to transfer the domain name
               registrations listed in Section 2.10(a) of the Disclosure
                                       ---------------------------------
               Schedule ("Domain Name Registrations") to Sellers and (ii) avoid
               --------
               the loss of any Intellectual Property rights, including, but not
               limited to, those registrations listed in Section 1.01(a)(v) of
                                                         ---------------------
               the Disclosure Schedule arising from the registration and use of
               -----------------------
               the Domain Name Registrations. Such efforts shall include any one
               or more of the following: (A) purchasing the Domain Name
               Registrations, (B) arbitration or (C) litigation against any
               owners of the Domain Name Registrations who refuse to transfer
               the Domain Name Registrations and attempt to benefit commercially
               from the Domain Name Registrations. Sellers shall consult in good
               faith with Purchaser with respect to their efforts to satisfy the
               conditions specified in this Section. Any and all Domain Name
               Registrations acquired by Parent or any Sellers at any time shall
               be transferred and assigned to Purchaser together with the other
               Intellectual Property listed in Section 1.01(a)(v) of the
                                               -------------------------
               Disclosure Schedule at the Closing pursuant to Section 1.01(a)(v)
               -------------------                            ------------------
               or by separate agreement if the Domain Name Registrations are
               acquired by Parent or Sellers after the Closing.

          O.   The second sentence of Article X is amended and restated as
                                      ---------
follows:

               The representations, warranties, covenants and agreements of
               Sellers, Parent and Purchaser contained in this Agreement will
               survive the Closing until, and terminate on, the First Holdback
               Expiration Date with respect to all matters except (i) the
               covenants and agreements herein regarding the Hotel Adjustment
               Amount, which will survive the

                                       9
<PAGE>

               Closing until, and terminate on, the date of the First Release
               and (ii) representations and warranties contained in Sections
                                                                    --------
               2.07 or 2.14 and covenants and agreements contained in Article
               -----------                                            -------
               VIII, which will survive the Closing until, and terminate on, the
               ----
               Final Holdback Expiration Date; provided that any representation,
               warranty, covenant or agreement that would otherwise terminate in
               accordance with the above provisions of this Article X will
                                                            ---------
               continue to survive if a Claim Notice or Indemnity Notice (as
               applicable) shall have been timely given under Article XI on or
                                                              ----------
               prior to such termination date, until the related claim for
               indemnification has been satisfied or otherwise resolved as
               provided in Article XI.
                           ----------

          P.   Section 12.01(p) is amended and restated in its entirety as
               ----------------
follows:

                    (p)  (i) by Sellers and Parent on one side, or by Purchaser
               on the other side, if Sellers, Parent and Purchaser have not
               approved the form and content of all Sections of the Disclosure
               Schedule, all Exhibits to this Agreement and the proposed forms
               of the Bid Protection Order, Interim Cash Collateral Order and
               Cash Collateral Order by December 4, 2000 or (ii) by Purchaser
               within the Termination Notification Period, if permitted under
               Section 4.09(a), in either of which case Purchaser shall be
               ---------------
               entitled to the Earnest Money Deposit and all interest earned
               thereon, but not the Expense Reimbursement or the Breakup Fee;

          Q.   The following definitions in Section 13.01 are amended and
                                            -------------
restated to read as follows:

                    "Cash Collateral Order" means a Final Order approving the
               Cash Collateral Stipulation, and if the super-priority
               administrative claim status for (i) the Fitzgeralds Undertaking
               Expense Reimbursement, (ii) the Expense Reimbursement, and (iii)
               the Break-up Fee in respect of the Lien in favor of the Indenture
               Trustee for the benefit of the holders of the Senior Secured
               Notes is obtained by a motion brought under (S)364(c)(1) of the
               Bankruptcy Code (as opposed to being provided in the Cash
               Collateral Stipulation), then the Cash Collateral Order shall
               also include the Final Order granting such motion.

                    "Cash Collateral Stipulation" means the Agreement Regarding
               Use of Cash Collateral among the Consenting Noteholders, the
               Indenture Trustee, Parent and Sellers pursuant to (S)363(c)(2)
               and other applicable provisions of the Bankruptcy Code
               authorizing, among other things, the use by Parent and Sellers of
               Cash Collateral and further (x) consenting to the use of Cash
               Collateral to pay, and (y) granting to Purchaser a super-priority
               administrative claim status for (i) the Fitzgeralds Undertaking
               Expense Reimbursement, (ii) the Expense Reimbursement, and (iii)
               the Break-up Fee in respect of the Lien in favor of the Indenture
               Trustee for the benefit of the holders of the Senior Secured
               Notes; provided, however, that at the option of Sellers, the
                      -----------------
               super-priority administrative claim status for (i) the
               Fitzgeralds Undertaking

                                      10
<PAGE>

               Expense Reimbursement, (ii) the Expense Reimbursement, and (iii)
               the Break-up Fee in respect of the Lien in favor of the Indenture
               Trustee for the benefit of the holders of the Senior Secured
               Notes may be obtained by a separate motion brought under
               (S)364(c)(1) of the Bankruptcy Code (as opposed to being granted
               by means of the Cash Collateral Stipulation).

                    "Interim Cash Collateral Order" means an interim or
               preliminary Order of the Bankruptcy Court approving the Cash
               Collateral Stipulation, and if the super-priority administrative
               claim status for the Fitzgeralds Undertaking Expense
               Reimbursement in respect of the Lien in favor of the Indenture
               Trustee for the benefit of the holders of the Senior Secured
               Notes is obtained by a separate motion brought under (S)364(c)(1)
               of the Bankruptcy Code (as opposed to being provided in the Cash
               Collateral Stipulation), then for the purpose of this Agreement
               the term Interim Cash Collateral Order shall also include the
               interim Order of the Bankruptcy Court granting such motion;
               provided, however, in either event, the super-priority
               -----------------
               administrative claim status for such Expense Reimbursement shall
               be considered a post-petition loan entitled to the protection of
               (S) 364(e) of the Bankruptcy Code.

          R.   In the definition of Competing Business in Section 13.01,
                                                          -------------
"Section 4.04(e)" is changed to "Section 4.08(f)."
 ---------------                 ---------------

          S.   In the definition of Downtown Las Vegas in Section 13.01,
                                                          -------------
"Section 4.08(e)" is changed to "Section 4.08(f)."
 ---------------                 ---------------

          T.   At the end of the definition of EBITDA in Section 13.01, the
                                                         -------------
following is inserted after "course":

                    ; plus (xiii) any expenses incurred by Parent or Sellers
               with respect to the changes specified in Section 15.20, the
                                                        -------------
               Estimated Re-Flagging Costs or the Actual Re-Flagging Costs,
               which expenses were included in the calculation of Consolidated
               Net Income.

          U.   The following definitions are inserted in Section 13.01, in
                                                         -------------
alphabetical order, among the defined terms that presently appear therein:

                    "Actual Re-Flagging Costs" has the meaning ascribed to it in
               Section 1.16.
               ------------

                    "Domain Name Registrations" has the meaning ascribed to it
               in Section 6.12.
                  ------------

                    "Estimated Re-Flagging Costs" has the meaning ascribed to it
               in Section 1.16.
                  ------------

                    "Exception Review Period" has the meaning ascribed to it in

               Section 4.09(a).
               ---------------

                                      11
<PAGE>

                    "Final EBITDA Period" has the meaning ascribed to it in
               Section 1.06(d)(ii).
               -------------------

                    "Fitzgeralds Undertaking Expense Reimbursement" means the
               Expense Reimbursement, as such term is defined in the Fitzgeralds
               Undertaking.

                    "HIS" has the meaning ascribed to it in Section 6.05.
                                                            ------------

                    "Hotel Adjustment Amount" has the meaning ascribed to it in
               Section 1.15(b).
               ---------------

                    "Hotel Calculations" has the meaning ascribed to it in
               Section 1.15(c).
               ---------------

                    "Hotel Companies" has the meaning ascribed to it in Section
                                                                        -------
               1.06(d)(ii).
               ----------

                    "Hotel Consents" means the consents (or in lieu thereof
               waivers or Bankruptcy Court Orders) specified in Section 6.05 as
                                                                ------------
               they pertain to the Hotel Contracts, which consents satisfy the
               conditions specified in clauses (A), (B) and (C) of Section 6.05.
                                               ----------------    ------------

                    "Hotel Contracts" has the meaning ascribed to it in Section
                                                                        -------
               1.06(d)(ii).
               -----------

                    "Hotel Contracts Payments" has the meaning ascribed to it in
               Section 1.15(b).
               --------------

                    "IGT" has the meaning ascribed to it in Section 6.05.
                                                            ------------

                    "Modular Space Consents" has the meaning ascribed to it in
               Section 4.19.
               ------------

                    "Objection Review Period" has the meaning ascribed to it in
               Section 4.09(a).
               ---------------

                    "Overestimated Re-Flagging Costs" has the meaning ascribed
               to it in Section 1.16.
                        ------------

                    "Post-Closing Hotel Revenues" has the meaning ascribed to it
               in Section 1.15(b).
                  ---------------

                    "Pre-Closing Hotel Revenues" has the meaning ascribed to it
               in Section 1.15(b).
                  ---------------

                    "Re-Flagging Changes" has the meaning ascribed to it in
               Section 15.20.
               -------------

                                      12
<PAGE>

                    "Termination Notification Period" has the meaning ascribed
               to it in Section 4.09(a).
                        ---------------

                    "Title Exception Objections" has the meaning ascribed to it
               in Section 4.09(a).
                  ---------------

                    "Title Exceptions" has the meaning ascribed to it in Section
                                                                         -------
               4.09(a).
               -------

                    "Underestimated Re-Flagging Costs" has the meaning ascribed
               to it in Section 1.16.
                        ------------

          V.   The following new Section 15.20 is inserted after Section 15.19:
                                 -------------                   -------------

                    15.20.  Hotel Re-Flagging Prior to Closing. If prior to the
                            ----------------------------------
               Closing the Hotel Consents are not obtained and FLV implements
               changes to the Las Vegas Business' hotel signs, logos, uniforms
               and amenities due to the failure to obtain the Hotel Consents
               (the "Re-Flagging Changes"), the Re-Flagging Changes shall be
               implemented in a commercially reasonable manner, consistent with
               the Las Vegas Business' normal and customary past practices and
               expenditures, and reasonably satisfactory to Purchaser. If, as of
               the Closing, the Hotel Consents have not been obtained and the
               Re-Flagging Changes have not been implemented, then the
               provisions of Section 1.16 shall apply.
                             ------------

     3.   Invalid Provisions. If any provision of this Amendment is held to be
          ------------------
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Amendment will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Amendment will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof
and (iii) the remaining provisions of this Amendment will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.

     4.   Full Force and Effect. Except as expressly amended by this Amendment,
          ---------------------
the Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof and the parties hereto ratify and agree to
be bound by all terms and provisions of the Agreement as amended hereby.

     5.   Counterparts. This Amendment may be executed in any number of
          ------------
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.

                                      13
<PAGE>

          IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered by the duly authorized officer of each party as of the date first
above written.

PURCHASER:               MAJESTIC INVESTOR, LLC
                         a Delaware limited-liability company


                         By:  /s/ Michael E. Kelly
                            ---------------------------------------
                            Name: Michael E. Kelly
                                  ---------------------------------
                            Title: Vice President
                                   --------------------------------

FLV:                     FITZGERALDS LAS VEGAS, INC.,
                         a Nevada corporation


                         By:  /s/ Philip D. Griffith
                            ---------------------------------------
                            Name: Philip D. Griffith
                                  ---------------------------------
                            Title: President
                                   --------------------------------

FBH:                     101 MAIN STREET LIMITED LIABILITY COMPANY,
                         a Colorado limited-liability company doing business as
                         "Fitzgeralds Casino Black Hawk"


                         By:  /s/ Philip D. Griffith
                            ---------------------------------------
                            Name: Philip D. Griffith
                                  ---------------------------------
                            Title: President
                                   --------------------------------

FM:                      FITZGERALDS MISSISSIPPI, INC.,
                         a Mississippi corporation


                         By:  /s/ Philip D. Griffith
                            ---------------------------------------
                            Name: Philip D. Griffith
                                  ---------------------------------
                            Title: President
                                   --------------------------------


PARENT:                  FITZGERALDS GAMING CORPORATION,
                         a Nevada corporation

                         By:  /s/ Philip D. Griffith
                            ---------------------------------------
                            Name: Philip D. Griffith
                                  ---------------------------------
                            Title: President
                                   --------------------------------

                                      14