Document:

EX-10.1

 

Exhibit 10.1

Execution
Copy

 

 

MEMBERSHIP INTEREST

PURCHASE AGREEMENT

OF

FX LUXURY REALTY, LLC

 

Dated as
of June 1, 2007

 

 

 

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

          This
MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”),
dated as of June 1, 2007, is entered into by and among FX LUXURY REALTY, LLC, a Delaware limited liability company (the
“Company”), CKX, Inc., a Delaware corporation (“Purchaser”), and Flag Luxury
Properties, LLC, a Delaware limited liability company (“Flag”).

          WHEREAS, upon the terms and conditions contained in this Agreement, Purchaser is purchasing
membership interests comprising, immediately after giving effect to such purchase, fifty percent
(50%) of the aggregate outstanding membership interests in the Company (subject, as provided in the
Operating Agreement, to the Flag Priority Interest described below) for an aggregate investment of
$100 million, the proceeds of which will be used in the manner and at the times required hereby;
and

          WHEREAS, as a condition to the closing of the transactions contemplated hereby, Purchaser and
Flag are required to enter into the FX LUXURY REALTY, LLC Operating Agreement in substantially the
form attached hereto as Exhibit A (the “Operating Agreement”), all on the terms and
conditions set forth herein; and

          WHEREAS, in connection with the formation and capitalization of the Company by Flag, (i) Flag
previously has effected or caused the contribution or transfer of certain interests and other
assets to the Company (the “Formation Transactions”) and (ii) in connection therewith, Flag
shall receive the Class A preferred membership interest in the Company which reflects the priority
distribution that the parties have agreed that Flag is entitled to receive (the “Flag Priority
Interest”); and

          WHEREAS, as a condition to the closing of the transactions contemplated hereby, the Company
shall enter into a license agreement with Elvis Presley Enterprises, Inc. (“EPE”) in
substantially the form attached hereto as Exhibit B (the “EPE License”), and a
license agreement with Muhammad Ali Enterprises, LLC (“MAE LLC”) in the form attached hereto as
Exhibit C (the “MAE License”), all on the terms and conditions set forth herein;
and

          WHEREAS, following the Closing, the Company intends to evaluate and pursue a retail, hotel,
commercial and residential development project for the approximately 17.72 contiguous acres of real
estate that are owned by Company Subsidiaries and are located at the beginning at the corner of Las
Vegas Boulevard and Harmon Avenue in Las Vegas, Nevada (the “Project”); and

          WHEREAS, following the Closing, and in anticipation of the Stockholder Distribution (as
defined below) and subsequent Rights Offering (as defined below), the parties intend to reorganize
(the “Reorganization”) their respective ownership interests in the Company by (i)
establishing a corporation (“NEWCO Inc.”) (the certificate of incorporation of which shall
be substantially in the form of Exhibit D attached hereto), (ii) requiring all members of
the Company to contribute to NEWCO Inc. their membership interests in the Company for shares of
common stock of NEWCO Inc,

 

 

except that Flag will not contribute to NEWCO Inc. the Flag Priority Interest (for the
avoidance of doubt, the Flag Priority Interest shall remain outstanding pursuant to its terms set
forth in the Operating Agreement, and (iii) taking such other actions as may be reasonably
necessary to effectuate the Reorganization, all on the terms and conditions set forth herein;
provided, that such Reorganization shall only be effective immediately prior to the consummation of
the Stockholder Distribution and subsequent Rights Offering;

          WHEREAS, as soon as reasonably practical following the Reorganization, Purchaser shall effect
the distribution of at least 50% of the shares of common stock of NEWCO Inc. that Purchaser
receives in connection with such Reorganization in a pro rata distribution to its stockholders (the
“Stockholder Distribution”); and

          WHEREAS, following the Reorganization, Flag shall effect a mandatory, pro rata distribution
(for no consideration) to its members (the “Flag Members”) of all of the shares of common
stock of NEWCO Inc. that Flag receives in connection with such Reorganization, which shares shall
be subject, at all times, to the Waiver of Rights and Lock-Up Agreement described below (the
“Mandatory Distribution”);

          WHEREAS, , Purchaser and Flag shall use commercially reasonable efforts to cause NEWCO Inc. to
effect a rights offering on substantially the terms and conditions contained in Exhibit E
attached hereto (the “Rights Offering”) as soon as reasonably practicable after the
Stockholder Distribution;

          WHEREAS, in connection with certain of the transactions contemplated by this Agreement the
Company shall issue a series of promissory notes to Flag or Flag Leisure Group LLC (“Flag
Leisure”) which shall be due and payable pursuant to their respective terms, as provided
herein;

          WHEREAS, as a condition to the closing of the transactions contemplated hereby, Purchaser (but
only with respect to shares it shall hold and not shares distributed in the Stockholder
Distribution) and Flag (and the Flag Members set forth in Schedule W-1 attached hereto (the
“Designated Flag Members”)) in connection with the Mandatory Distribution shall enter into
a waiver of their rights to participate in the Rights Offering on substantially the terms and
conditions contained in Exhibit F attached hereto (the “Waiver of Rights”); and

          WHEREAS, as a condition to the closing of the transactions contemplated hereby, Purchaser and
Flag (and the Designated Flag Members in connection with the Mandatory Distribution) shall enter
into a three (3) year lock-up agreement in substantially the form attached hereto as Exhibit
G (the “Lock-Up Agreement”) with respect to their shares of common stock of NEWCO Inc.
to be received in connection with the Reorganization and Mandatory Distribution; provided, that
such Lock-Up Agreements (i) shall only be effective for one (1) year for all members of Flag other
than the Designated Flag Members and (ii) shall not become effective until the Reorganization is
effected (it being understood that, except for Robert F.X. Sillerman (who shall be subject to a one
(1) year lock-up regarding shares received in the Stockholder Distribution)), no Lock-Up Agreement
shall be effective with respect to any shares of

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common stock of NEWCO Inc. that were distributed to the stockholders of Purchaser as part of
the Stockholder Distribution).

          NOW, THEREFORE, in consideration of these premises and the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

ARTICLE I.

PURCHASE OF MEMBERSHIP INTEREST

          1.1 Purchase of Membership Interests. Upon the terms and subject to the conditions
set forth herein, Purchaser shall purchase from the Company, and the Company shall sell and issue
to Purchaser, membership interests comprising fifty percent of the aggregate outstanding membership
interests in the Company (subject, as provided in the Operating Agreement, to the Flag Priority
Interest) for an aggregate price of $100,000,000 (the “Purchase Price”).

          1.2 Closing.

          (a) The consummation of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Paul, Hastings, Janofsky & Walker LLP, 75
East 55th Street, New York, New York, at 11:00 a.m. local time, on the business day specified
by Purchaser which is two business days from the date upon which all of the conditions
precedent set forth in Articles V and VI of this Agreement are satisfied or waived by the
appropriate party hereto (other than those conditions which by their nature are to be satisfied
at Closing, but subject to the fulfillment or waiver of those conditions). The actual date of
the Closing is herein referred to as the “Closing Date”.

          (b) At the Closing, the Company shall deliver or cause to be delivered to Purchaser the
membership interests described in Section 1.1 above, free and clear of all pledges, claims,
liens, charges, encumbrances, adverse claims, mortgages and security interests of any kind or
nature whatsoever (collectively, the “Liens”).

          (c) At the Closing, Purchaser shall deliver to the Company the Purchase Price, by wire
transfer of immediately available funds to an account specified by the Company at least two
business days prior to the Closing Date.

          1.3 Use of Proceeds. Upon delivery of the Purchase Price by Purchaser to the Company,
the Company shall use the Purchase Price for legal and appropriate corporate purposes, as
determined by the Company and as shall be consistent with the terms of this Agreement.

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ARTICLE II.

REPRESENTATIONS AND WARRANTIES

OF FLAG AND THE COMPANY

          The Company and Flag, jointly and severally, hereby make the following representations and
warranties to Purchaser:

          2.1 Organization and Corporation Power. Each of the Company and the direct and
indirect subsidiaries listed in Schedule 2.1 attached hereto (the “Subsidiaries”) is a
limited liability company duly organized, validly existing and in good standing under the laws of
the state of its formation and has full limited liability company power and authority to conduct
its business as presently conducted and as proposed to be conducted. Each of the Company and its
Subsidiaries has full limited liability power and authority to enter into and perform its
obligations under this Agreement and to carry out the transactions contemplated hereby. Each of
the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is
in good standing in every jurisdiction in which it is required to be so qualified, except where the
failure to be so qualified would not have a Company Material Adverse Effect. Each of the Company
and its Subsidiaries has furnished to Purchaser true and complete copies of the certificate of
formation and operating agreement for the Company and each of its Subsidiaries, each as amended to
date and presently in effect. Neither the Company nor any of its Subsidiaries is in violation of
any material provision of its certificate of formation or operating agreement.

          2.2 Subsidiaries.

          (a) Except as set forth in Schedule 2.2(a), other than the Subsidiaries, neither
the Company nor any of its Subsidiaries own or control, directly or indirectly, any shares of
capital stock of any other corporation or any interest in any partnership, limited liability
company, joint venture or other non-corporate business enterprise.

          (b) Except as set forth in Schedule 2.2(b), none of the Subsidiaries can, directly
or indirectly, take or effect any material action (including, without limitation, any asset
sale, the incurrence of indebtedness or the issuance of any equity securities), nor can any
member of any such Subsidiary cause such Subsidiary to any such material action, in any case,
without the prior written consent of the Company, other than such actions that are not material
to the Company and are taken in the ordinary course of business of any such Subsidiary.

          2.3 Capitalization.

          (a) Schedule 2.3(a) sets forth a true, correct and complete schedule of membership
interests in the Company immediately prior to the Closing. Other than these membership
interests, the Company has no other membership

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interests. Except as contemplated by the Operating Agreement and this Agreement, there
are no outstanding subscriptions, rights, options, warrants, conversion rights, agreements,
commitments, understandings or other claims for the purchase or acquisition of the membership
interests in the Company, or otherwise entitling any person other than the parties hereto to
acquire any membership interest in the Company or obligating the Company or any of the
Subsidiaries to issue, repurchase or otherwise acquire any membership interest in the Company.

          (b) Immediately following the Closing, Purchaser will own fifty percent (50%) of the
aggregate outstanding membership interests in the Company and Flag will own fifty percent (50%)
of the aggregate outstanding membership interests in the Company and the Flag Priority
Interest.

          (c) Except as contemplated by the Operating Agreement, the AI Purchase Agreement (as
defined in Section 2.20), this Agreement or as set forth in Schedule 2.3(c), (i)
neither the Company nor any of its Subsidiaries have an obligation to issue any membership
interest or any subscriptions, options, warrants, preemptive rights or other rights (contingent
or otherwise) to purchase membership interests, or to distribute to their members any
membership interests, any evidence of indebtedness or any of their assets and (ii) neither the
Company nor any of its Subsidiaries have an obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of their membership interests or any interest therein or to pay
any dividend or make any other distribution in respect thereof.

          2.4 Authorization; No Conflicts.

          (a) The execution, delivery and performance by the Company of this Agreement and the
consummation by the Company and each of its Subsidiaries of the transactions contemplated
hereby, including the purchase of the membership interests by Purchaser and the Formation
Transactions, have been duly authorized by all necessary Company and Subsidiary action. No
meeting of the members of the Company or any of the Subsidiaries is necessary to authorize the
consummation of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Company and constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally
creditors’ rights and subject to general principles of equity.

          (b) Except as set forth in Schedule 2.4(b), the execution and delivery of this
Agreement by the Company and the performance by the Company of its obligations (including the
Formation Transactions) hereunder will not (i) conflict with or violate the certificate of
formation or operating agreement of the Company or any of the Subsidiaries, (ii) conflict with
or violate any material law, statute, ordinance, rule, regulation, order, judgment, decree,
injunction or other binding action or requirement of any Governmental Authority or agency
applicable to the Company

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or any of its Subsidiaries, or (iii) result in a violation or breach of or constitute a
default (or an event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or cancellation of, or
result in any loss of any benefit under, or the creation of any lien on any of the property or
assets of the Company or any of the Subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument
or obligation of the Company or any of the Subsidiaries or to which the Company or any of the
Subsidiaries are a party.

          2.5 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any U.S. Federal, state,
local, municipal or foreign governmental authority, quasi-governmental authority (including any
governmental agency, commission, public authority, branch, department or official, and any court or
other tribunal) or body exercising, or entitled to exercise, any governmentally derived
administrative, executive, judicial, legislative, police, regulatory or taxing authority, or any
self-regulatory organization, administrative or regulatory agency, commission, tribunal or
authority (a “Governmental Authority”) is required on the part of the Company or any of the
Subsidiaries in connection with the execution, delivery or performance of this Agreement and the
transactions to be consummated hereby, except as would not have a Company Material Adverse Effect.

          2.6 Litigation. Except as disclosed in Schedule 2.6, no claim, action, suit
or other proceeding is pending or, to the Company’s or any of the Subsidiaries’ knowledge,
threatened against the Company or any of the Subsidiaries (i) which questions the validity of this
Agreement or the right of the Company to enter into it or to consummate the transactions
contemplated hereby or to pursue and complete the Project, or (ii) which might, either individually
or in the aggregate, have a material adverse effect on, or result in any material adverse change in
the Company or any of the Subsidiaries or impair the ability of the Company or any of the
Subsidiaries to perform their obligations hereunder or their ability to pursue and complete the
Project. Neither the Company nor any of its Subsidiaries are a party to or subject to any writ,
order, decree, injunction or judgment of any Governmental Authority, which would adversely affect
the Company or any of its Subsidiaries or the performance of their obligations hereunder or their
ability to pursue and complete the Project, and to the knowledge of the Company there is no
reasonable basis therefor or threat thereof.

          2.7 Taxes. Except as disclosed in Schedule 2.7:

               (a) All Tax Returns required to be filed under any applicable Tax Law by or with respect to
the Company, any of its Subsidiaries and the Assets have been timely filed and all such Tax Returns
were correct and complete in all material respects. All Taxes with respect to the Company, its
Subsidiaries and the Assets have been paid through the Closing Date. No claim has ever been made
by any governmental

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entity in a jurisdiction where Tax Returns are not filed that the Company, its Subsidiaries
and the Assets is or may be subject to taxation in that jurisdiction.

               (b) All Taxes that the Company and its Subsidiaries are or were required by Tax Law to
withhold or collect in connection with any amounts paid or owing to any employee, independent
contractor, nonresident, creditor or other third party have been duly withheld or collected and, to
the extent required, have been paid to the proper governmental entity. For the avoidance of doubt,
if the closing of the AI Purchase occurs prior to the Closing herein, the Company and its
Subsidiaries will duly withhold and pay all required withholding amounts to the proper governmental
entity. The Company and its Subsidiaries have complied with (or, if the closing of the AI Purchase
occurs prior to the Closing herein, will comply with) all information reporting and record keeping
requirements related to withholding and back-up withholding on payments to third parties.

               (c) Schedule 2.7(c) lists all the foreign countries where the Company and any of its
Subsidiaries has a “permanent establishment” within the meaning of any applicable Tax Law in any
foreign country.

               (d) None of the Company, any of its Subsidiaries or the Assets is subject to an IRS private
letter ruling or a comparable ruling of any taxing authorities, and no request for such a ruling is
currently pending.

               (e) Neither the Company nor any of its Subsidiaries will be required to include any amount in,
or exclude any item of deduction from, taxable income for any taxable period or portion thereof
ending after the Closing Date as a result of (i) any installment sale or open transaction; (ii) any
prepaid amount received on or prior to the Closing Date; or (iii) change in method of accounting
for a taxable period ending on or prior to the Closing Date. Neither the Company nor any of its
Subsidiaries has had any item of income, gain, loss or deduction reportable in a taxable period
ending after the date hereof but attributable to a transaction that occurred and is reportable in a
taxable period or portion thereof ending on or before the date hereof.

               (f) No claim or Tax Proceeding is pending, currently being conducted or has been threatened
against or with respect to the Company, any of its Subsidiaries or the Assets in respect of any
Tax. There are no liens for Taxes upon the Company, any of its Subsidiaries or the Assets, except
liens for current Taxes not yet due and payable.

               (g) Neither the Company nor any of its Subsidiaries has agreed to or is required to make any
adjustments in taxable income for any tax period (or portion thereof) beginning after the Closing
Date pursuant to Section 481(a) or 263A of the Code or any similar provision of state, local or
foreign Tax Law as a result of transactions or events occurring prior to the Closing Date, nor is
any application pending with any governmental entity requesting permission for any changes in
accounting methods that relate to the Company, any of its Subsidiaries or the Assets.

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               (h) There are no outstanding agreements, waivers or arrangements extending the statutory
period of limitation applicable to any claim for, or the period for the collection or assessment
of, Taxes due from or with respect to the Company, any of its Subsidiaries or the Assets for any
taxable period and no such extension or waiver has been requested (formally or informally) from the
Company or any of its Subsidiaries, or with respect to Taxes due on the Assets.

               (i) No closing agreement pursuant to Section 7121 of the Code (or any predecessor provision)
or any similar provision of any state, local or foreign Tax Law has ever been entered into by or
with respect to the Company, any of its Subsidiaries, or the Assets.

               (j) The Company and its Subsidiaries have at all times been in compliance with the provisions
of Sections 6011, 6111 and 6112 of the Code (or any corresponding provision of state, local, or
foreign Tax Law) relating to tax shelter disclosure, registration, list maintenance and record
keeping and with the Treasury Regulations thereunder (including any predecessor or successor Code
provisions or Treasury Regulations thereof, as applicable). Neither the Company nor its
Subsidiaries have, at any time, engaged in or entered into a “listed transaction” within the
meaning of Treasury Regulation Sections 1.6011, 301.6111 or 301.6112 or that would have been such a
“listed transaction” if current Tax Law was in effect at the time the transaction was entered into.

               (k) Neither the Company nor any Subsidiary is party to or bound by or obligated under any Tax
allocation or sharing, indemnification or similar agreement.

               (l) No power of attorney is currently in force with respect to any matter relating to Taxes
that could affect the Company, or any of its Subsidiaries or the Assets.

               (m) None of the assets of the Company or its Subsidiaries: (v) is property required to be
treated as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986; (w) is “tax-exempt use property” within the meaning of Section 168(h)(1) of
the Code, (x) is “tax-exempt bond financed property” within the meaning of Section 168(g) of the
Code, (y) is subject to Section 168(g)(1)(A) of the Code, or (z) is “limited use property” (as the
term is used in Rev. Proc. 2001-28).

               (n) The Company is a limited liability company, wholly owned by Flag and disregarded as an
entity separate from Flag, and neither the Company nor any of its Subsidiaries is or has been
treated as a corporation for federal income tax purposes and is not and has not been a member of an
affiliated group filing a consolidated federal income Tax Return.

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               (o) Flag is not a foreign person within the meaning of Section 1445 of the Code.

          For purposes of this Section 2.7 and Section 7.6(a) herein, any reference to the Company or
any of its Subsidiaries shall include (i) any entity which merged or was liquidated with and into
the Company or any of its Subsidiaries, (ii) any predecessor to the Company or any of its
Subsidiaries, and (iii) Flag to the extent of any assets, income and transactions that relate to
the Company.

          For purposes of this Agreement, capitalized terms used but otherwise not defined in this
Agreement shall have the following meanings:

                    (i) “Assets” shall mean all property of any kind, tangible or intangible, either owned
currently by the Company and its Subsidiaries, or previously owned by the Company and its
Subsidiaries.

                    (ii) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder, all as the same shall be in effect from time to time;
“IRS” shall mean the Internal Revenue Service;

                    (iii) “Tax” shall mean any tax (including any income tax, franchise tax, capital gains
tax, estimated tax, gross receipts tax, value added tax, surtax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory
tax, occupancy tax, withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), that is, has been or may in the future be (a) imposed,
assessed or collected by or under the authority of any governmental entity, or (b) payable pursuant
to any tax sharing agreement or similar contract;

                    (iv) “Tax Law” shall mean any federal, state, foreign or local law, statute,
ordinance, rule, regulation, order, judgment or decree, administrative order, decree,
administrative or judicial decision and any other executive, legislative, regulatory or
administrative proclamation related to Tax;

                    (v) “Tax Return” shall mean any return (including any information return), report,
statement, declaration, estimate, schedule, notice, notification, form, election, certificate or
other document or information that is, has been or may in the future be filed with or submitted to,
or required to be filed with or submitted to, any governmental entity in connection with the
determination, assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any applicable Tax Law relating
to any Tax; and

                    (vi) “Tax Proceeding” shall mean any audit, examination, contest, litigation or other
proceeding with respect to Taxes.

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          2.8 Personal Property.

          (a) Except as set forth in Schedule 2.8, the Company and each of its Subsidiaries
has good title to all of its material tangible assets and properties, free and clear of any
mortgage, judgment, claim, lien, security interest, pledge, escrow, charge, easement, option,
debt, assessment, right of first refusal, imperfection of title, lease or tenancy, legal or
equitable right or other encumbrances of any kind or character whatsoever except for (i) taxes
not yet due and payable; and (ii) those that arise in the ordinary course of business and do
not materially impair the Company’s or any of its Subsidiaries’ ownership or use of any such
asset or property or the Company’s or any of its Subsidiaries’ ability to obtain financing by
using such assets or property as collateral.

          (b) Effective as of the Closing, the Company or one or more of its Subsidiaries will be
the record and beneficial owner of (i) 836,588 shares of common stock, par value $0.0001 per
share (the “Riv Shares”), of Riviera Holdings Corporation and (ii) one-half of an
interest in an option held by Riv Acquisition Holdings, Inc. to acquire an additional 1,147,550
Riv Shares at an exercise price of $23.00 per share (subject to adjustment as may be provided
pursuant to the terms of such option).

          (c) This Section 2.8 shall not apply to intellectual property or real property assets,
which are the subject of the representations and warranties set forth in Section 2.9, 2.10 and
2.11 below.

          2.9 Real Property. Schedule 2.9 sets forth a complete and correct list of all
Owned Real Property and interests in Real Property held by the Company and each of its
Subsidiaries. Except as disclosed in Schedule 2.9 (and other Schedules referenced in this
Section 2.9):

          (a) The Company and each of its Subsidiaries has good, marketable and insurable fee simple
absolute interest in the Owned Real Property and real property interests other than leasehold
interests. The Company has obtained commercially appropriate and reasonable policies of title
insurance in favor of the Company and any of its Subsidiaries with respect to the Owned Real
Property, the Leased Real Property and the real property interests other than leasehold
interests (collectively, the “Real Property”), a copy of which policies are attached
hereto as Schedule 2.9(a) and remain valid and effective such that all Owned Real
Property and Leased Real Property listed in Schedules 2.9(k)(ii) and
2.9(k)(iii) are thereby insured.

          (b) There are no Liens, restrictions or encumbrances to title to any portion of the Real
Property. To the knowledge of the Company, the Real Property or the improvements thereon are
not subject to any unrecorded contracts, deeds, options, leases, easements, rights,
obligations, covenants, conditions, restrictions, limitations or agreements not of record,
except as set forth in the title policies or in the surveys listed in Schedule 2.9(a);

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          (c) There is no pending condemnation or similar proceeding affecting the Real Property or
any portion thereof and, to the Company’s or any its Subsidiaries’ best knowledge, no such
action is presently contemplated or threatened against the Real Property;

          (d) Neither the Company nor any of its Subsidiaries have received any notice from any
insurance company of any defects or inadequacies in the Real Property or any part thereof which
could adversely affect the insurability of the Real Property or the premiums for the insurance
thereof. Neither the Company nor any of its Subsidiaries have received any notice from any
insurance company which has issued or refused to issue a policy with respect to any portion of
the Real Property or by any board of fire underwriters (or other body exercising similar
functions) requesting the performance of any repairs, alterations or other work with which full
compliance has not been made;

          (e) Except as set forth in Schedule 2.9, as of April 23, 2007 there are no parties
in possession of any portion of the Real Property other than the Company and each of its
Subsidiaries. Except as set forth in Schedule 2.9(e), there are no options or rights
in any party to purchase or acquire any ownership interest in the Real Property, including
without limitation pursuant to any executory contracts of sale, rights of first refusal or
options;

          (f) To the Company’s and each of its Subsidiaries’ knowledge, no zoning, subdivision,
building, health, land-use, fire or other federal, state or municipal law, ordinance,
regulation or restriction is violated by the continued maintenance, operation, use or occupancy
of the Real Property or any tract or portion thereof or interest therein in its present manner,
except for such violations which would not have a material adverse effect. To the Company’s and
each of its Subsidiaries’ knowledge, the current use of the Real Property and all parts thereof
as aforesaid does not violate any restrictive covenants affecting the Real Property. Except as
set forth in the title policies listed in Schedule 2.9(a), no current use by the
Company or any of its Subsidiaries of the Real Property or any improvement located thereon or
any current use of the Real Property Leases is dependent on a nonconforming use or other
approval from any Governmental Authority, the absence of which would significantly limit the
use of any of the properties or assets in the operation of the Real Property;

          (g) Except as set forth in Schedule 2.9(g), the Real Property has adequate access
to and from completed, dedicated and accepted public roads, and there is no pending, or to the
Company’s or any of its Subsidiaries’ knowledge, threatened, governmental proceeding which
could impair or curtail such access. Except as set forth in Schedule 2.9(g), no
improvement or portion thereof is dependent for its access, operation, or utility on any land,
building, or other improvement not included in the Real Property;

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          (h) There are presently in existence water, sewer, gas and/or electrical lines or private
systems on the Real Property which have been completed, installed and paid for and which are
sufficient to service adequately the current operations of each building, facility or tower
located on the Real Property, as the case may be;

          (i) All material Environmental Permits and other Permits which are necessary to permit the
lawful access, use and operation of the buildings and improvements located on the Real Property
for their present and intended use have been obtained, are in full force and effect, and to the
Company’s and each of its Subsidiaries’ knowledge, there is no pending threat of modification
or cancellation of any such Environmental Permits and other Permits. Neither the Company nor
any of its Subsidiaries have received or been informed by a third party of the receipt by it of
any written notice from any Governmental Authority having jurisdiction over the Real Property
threatening a suspension, revocation, modification or cancellation of any Environmental Permit
or other Permit.

          (j) Definitions. For purposes of this Section 2.9 and Section 2.10 below,
capitalized terms used but otherwise not defined in this Agreement shall have the following
meanings:

          (i) “Environmental Permit” shall mean any permit, license,
certificate, approval, identification number or other authorization required under
applicable Environmental Laws.

          (ii) “Leased Real Property” shall mean any parcel of Real Property of
which the Company or any of its Subsidiaries are the lessee or sublessee (together
with all fixtures and improvements thereon), including, but not limited to, the
real property described in Schedule 2.9(j)(ii) attached hereto.

          (iii) “Owned Real Property” shall mean all real property owned by the
Company or any of its Subsidiaries, together with all structures, facilities,
fixtures, systems, improvements and items of property located thereon, or attached
or appurtenant thereto, and all easements, rights and appurtenances relating to the
foregoing, including, but not limited to, the real property described in
Schedule 2.9(j)(iii) attached hereto.

          (iv) “Permit” shall mean permits, licenses, franchises, approvals,
certificates, consents, waivers, concessions, exemptions, orders, registrations,
notices or other authorizations issued to, or required to be obtained or maintained
by, the Company or any of its Subsidiaries by a Governmental Authority, and all
pending applications therefor and amendments, modifications and renewals thereof.

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          (v) “Real Property Leases” shall mean each lease, sublease and license
to which the Company or any of its Subsidiaries are a party relating to any Real
Property, including, but not limited to, leasehold interests in the real property
described in Schedule 2.9(j)(v) attached hereto.

          (k) The Project.

          (i) Schedule 2.9(k) accurately sets forth the legal description of the
17.72 contiguous areas of real estate that are included in the Project are owned by
Company Subsidiaries and are located at the corner of Las Vegas Boulevard and
Harmon Avenue in Las Vegas, Nevada.

          (ii) All of the Real Property included in the Project has a base zoning
classification of H-1 for high density hospitality development and is within the
MUD-1 subdistrict. The current zoning of the Real Property included in the Project
includes a designation as a gaming enterprise district and casino gaming would be a
permitted use of such Real Property included in the Project if the required special
use permit is obtained.

          2.10 Real Property Leases. Except as set forth in Schedule 2.10, neither the
Company nor any Subsidiary occupies or leases any Leased Real Property. Except as set forth in
Schedule 2.10 and except as would not have a Company Material Adverse Effect:

          (a) All of the Real Property Leases (i) constitute legal, valid and binding obligations of
the Company and each of its Subsidiaries and to the Company’s and any of its Subsidiaries’
knowledge, the other parties thereto, (ii) are in full force and effect, and (iii) neither the
Company nor any of its Subsidiaries nor, to the Company’s and each of its Subsidiaries’
knowledge, any other party thereto has violated any provisions of, or committed or failed to
perform any act which, with notice, lapse of time or both, would constitute a default under the
provisions of any of, the Real Property Leases that would allow the other party to bring a
claim for damages, except as would not individually or in the aggregate have, or could
reasonably be expected to have, a material adverse effect, or to terminate such Real Property
Lease;

          (b) The Real Property Leases constitute all of the agreements between the Company or any
of its Subsidiaries, and third parties relating to the Leased Real Property. Schedule
2.10 lists all of the Real Property Leases, each of which has been delivered to Purchaser.
None of the Real Property Leases has been cancelled, modified, assigned, extended or amended;

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          2.11 Intellectual Property. Neither the Company nor any of its Subsidiaries own or
use any patents, trademarks, service marks, trade names, domain names and copyrights, domestic and
foreign (the “Intellectual Property Rights”). To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries are infringing on any person’s Intellectual Property Rights.

          2.12 Insurance. Schedule 2.12 lists all insurance policies maintained by the
Company and each of its Subsidiaries, and a copy of each such policy listed in Schedule
2.12 has been delivered to Purchaser.

          2.13 Environmental Matters. No material hazardous waste, substance or material, and
no oil, petroleum, petroleum product, asbestos, toxic substance, pollutant or contaminant
(collectively, “Hazardous Material”), has been improperly generated, transported, used,
handled, processed, disposed, stored or treated on any real property owned, leased, or operated by
the Company or any of its Subsidiaries. No material Hazardous Material has been spilled upon,
released from, discharged from, disposed of upon or transported from any real property owned,
leased or operated by the Company or any of its Subsidiaries, and no such material Hazardous
Material is present in, on, or to the knowledge of the Company and each of its Subsidiaries under
any such property. The Company and each of its Subsidiaries is, in compliance in all material
respects with all applicable material environmental rules, ordinances, by-laws and regulations, and
with all permits, registrations and approvals required under such laws, rules, ordinances, by-laws
and regulations (collectively, “Environmental Laws”). Neither the Company nor any of its
Subsidiaries are aware of any fact or circumstance which they believe could involve the Company or
any of its Subsidiaries in any material litigation, or impose upon the Company or any of its
Subsidiaries any liability, arising under any Environmental Laws.

          2.14 Material Contracts and Obligations. Schedule 2.14 sets forth a list of
all agreements or commitments of any nature to which the Company or any of its Subsidiaries are
parties to or by which they are bound, whether written or verbal, including, without limitation,
(a) each agreement or lease which requires future payments or guarantees by the Company or any of
its Subsidiaries, (b) all employment and consulting agreements, employee benefit, bonus, pension,
profit-sharing, and similar plans and arrangements, (c) any agreement with any member of the
Company or any of its Subsidiaries or any affiliate of such persons, (d) any agreement relating to
the purchase of membership interests of the Company or any of its Subsidiaries, (e) all loans,
guarantees, pledges and other agreements of the Company or any of its Subsidiaries relating to
indebtedness for borrowed money, (f) all non-competition and similar agreements entered into by the
Company or any of its Subsidiaries (except for exclusives as contained in existing Real Property
Leases), (g) any material agreement relating to the Project. Each of such agreements is valid and
binding on and enforceable against the Company or its Subsidiaries, as applicable, and, to the
knowledge of the Company and each of its Subsidiaries, each other party thereto and is in full
force and effect. Neither the Company nor any of its Subsidiaries are in breach of or
noncompliance with any term of any such agreement, and no event has occurred which, with the
passage of time or giving of notice (or both), would constitute a breach under any such agreement,
except as

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would not have a Company Material Adverse Effect. To the Company’s and each of its
Subsidiaries’ knowledge, no third party to such agreements is in material breach of or default
under any of the provisions thereof. To the Company’s and each of its Subsidiaries’ knowledge,
each such agreement listed in Schedule 2.14, unless otherwise noted therein, shall survive
Closing and is not terminable on less than thirty (30) days’ written notice.

          2.15 Compliance. The Company and each of its Subsidiaries is, in all respects, in
compliance with all applicable domestic and foreign statutes, laws, regulations, ordinances,
permits, rules, writs, judgments, orders, decrees and arbitration awards (including, without
limitation, environmental laws, labor laws and the Foreign Corrupt Practices Act) except as would
not have a Company Material Adverse Effect. There is no term or provision of any mortgage,
indenture, contract, agreement or instrument to which the Company or any of its Subsidiaries are a
party or by which they are bound, or of any provision of any foreign, Federal or state judgment,
decree, order, statute, rule or regulation applicable to or binding upon the Company or any of its
Subsidiaries, which restricts in any material respect the conduct of their business, or that
otherwise materially adversely affects the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries have, during the past two years, received any notice relating to any
violation or potential violation of any applicable statutes, laws, regulations, ordinances,
permits, rules, writs, judgments, orders, decrees and arbitration awards.

          2.16 Employees. Except as set forth in Schedule 2.16, neither the Company nor
any of its Subsidiaries have employees who receive a salary and no employee of or consultant to the
Company or any of its Subsidiaries are a party to a written employment or consulting agreements or
arrangements. None of the employees of the Company or any of its Subsidiaries are or ever have
been represented by any labor union, neither the Company nor any of its Subsidiaries have had any
collective bargaining relationship or duty to bargain with any “Labor Organization” (as such term
is defined in Section 2(5) of the National Labor Relations Act, as amended), and neither the
Company nor any of its Subsidiaries have recognized any labor organization as the collective
bargaining representative of any of its employees. There is no contract, agreement, plan or
arrangement (oral or written) covering any employee of the Company or any of its Subsidiaries with
“change of control”, “stay-put”, severance or similar provisions.

          2.17 ERISA. Neither the Company nor any of its Subsidiaries maintain or contribute
to, or have any obligations to contribute to, any employee pension plans, as defined in Section
3(2) of the Employer Retirement Income Securities Act of 1974, as amended (“ERISA”), or any
employer welfare plans, as defined in Section 3(1) of ERISA, or any equity-based compensation
plans. All such employee benefit plans are in compliance with the applicable provisions of ERISA,
the Internal Revenue Code of 1986, as amended, and all other applicable rules, regulations and
administrative pronouncements. Neither the Company nor any of its Subsidiaries have contributed to
a

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multi-employer pension plan or a single-employer plan as described in Title IV of ERISA.

          2.18 Financial Statements; Absence of Undisclosed Liabilities.

          (a) Flag has previously made available to Purchaser complete and correct copies of the
audited combined financial statements for Metroflag BP, LLC, Metroflag Polo, LLC, Metroflag
Cable, LLC, CAP/TOR, LLC, Metroflag SW, LLC, Metro Flag HD, LLC, and Metroflag Management, LLC
(collectively, the “Subject Entities”) the fiscal year ended December 31, 2005, and the related
audited combined statements of income, cash flows and parent funding for the fiscal year ended
December 31, 2005, including the notes thereto (collectively, the “2005 Audited Financial
Statements”). The 2005 Audited Financial Statements fairly present in all material
respects the financial position of the Subject Entities as of the respective dates thereof, and
the results of operations and changes in cash flows, changes in parent funding or other
information included therein for such periods or as of the dates then ended, in each case
except as otherwise noted therein and subject, where appropriate, to normal year-end audit
adjustments. The 2005 Audited Financial Statements have been prepared in accordance with
United States generally accepted accounting principals (“GAAP”), applied on a
consistent basis, except as otherwise noted therein.

          (b) As of the date hereof, except as set forth in Schedule 2.18(a) and in the
balance sheet included in the 2005 Audited Financial Statements, and except for liabilities (i)
incurred in the ordinary course of business, consistent with past practice and (ii) that
individually not exceed $500,000 (or, $2,000,000 in the aggregate), neither the Company nor any
of its Subsidiaries have any liabilities or obligations arising from the operations of their
respective businesses that are of a nature that would be required to be disclosed on a combined
balance sheet prepared consistently with the Company’s audited financial statements or in the
notes thereto prepared in conformity with GAAP, other than liabilities or obligations that (x)
would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect and (y) do not exceed $500,000 (or, $2,000,000 in the aggregate). Schedule
2.18(a) sets forth and describes all obligations of the Company and its Subsidiaries as of
the date hereof for borrowed money or other funded indebtedness.

          2.19 Brokers. The Company does not have any contract, arrangement or understanding
with any broker, investment banker, financial advisor, finder, consultant or similar agent relating
to the payment of commissions, fees or other compensation in connection with the transactions
contemplated by this Agreement.

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          2.20 Purchase of AI Interests.

          (a) The execution, delivery and performance by the Company of the Purchase and/or
Redemption Agreement, dated as of May 30, 2007, between the Company and Leviev Boymelgreen of
Nevada, LLC (the “AI Purchase Agreement”) and the consummation by the Company of the
transactions contemplated thereby, have been duly authorized by all necessary Company and
Subsidiary action. No meeting of the members of the Company or any of the Subsidiaries is
necessary to authorize the consummation of the transactions contemplated thereby. The AI
Purchase Agreement has been duly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting generally creditors’ rights and subject to general principles of equity. A true
and complete copy of the AI Purchase Agreement has been delivered to Purchaser.

          (b) The execution and delivery of the AI Purchase Agreement by the Company and the
performance by the Company of its obligations thereunder does not (i) conflict with or violate
the certificate of formation or operating agreement of the Company or any of the Subsidiaries,
(ii) conflict with or violate any material law, statute, ordinance, rule, regulation, order,
judgment, decree, injunction or other binding action or requirement of any Governmental
Authority or agency applicable to the Company or any of its Subsidiaries, or (iii) result in a
violation or breach of or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in any loss of any benefit under, or the creation of
any lien on any of the property or assets of the Company or any of the Subsidiaries pursuant
to, any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation of the Company or any of the Subsidiaries or to
which the Company or any of the Subsidiaries are a party or bound.

          (c) To the Company’s knowledge, there exists no facts or circumstances that would cause
any condition to the closing and consummation of the transactions contemplated by the AI
Purchase Agreement to be or remain unsatisfied, other than the payment by the Company of the
purchase price thereunder. The Company expects that the transactions contemplated by the AI
Purchase Agreement shall be consummated no later than September 28, 2007 (but makes no
representation of warranty that such transaction will occur on or before such date).

          2.21 Refinancings.

          (a) Metrotoflag Polo, LLC, Metroflag Cable, LLC, Metroflag BP, LLC, Metroflag SW, LLC,
Metroflag HD, LLC, CAP/TOR, LLC, and BP Parent, LLC (collectively, “Borrower”) have
refinanced in full (the “Refinancing”) all indebtedness and other amounts owed under
the Loan Agreement, dated as of July 15,

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2005 (as amended, the “Loan Agreement”), between Borrower and Barclay’s Capital
Real Estate Inc., as Lender, and the Loan Agreement has been terminated and is of no force and
effect and any and all liens and other encumbrances on any asset of any Borrower have been
terminated and released. Flag has delivered to Purchaser true and complete copies of all
primary replacement loan and related agreements with any new lender(s) relating to the
Refinancing

          (b) Metroflag BP, LLC(the “BP Borrower”) has refinanced in full (the “BP
Refinancing”) all indebtedness and other amounts owed under the Loan Agreement, dated as of
July 15, 2005 (as amended, the “BP Loan Agreement”), between the BP Borrower and
Barclay’s Capital Real Estate Inc., as Lender, and the BP Loan Agreement has been terminated
and of is of no force and effect and any and all liens and other encumbrances on any asset of
BP Borrower have been terminated and released. Flag and the BP Borrower have delivered to
Purchaser true and complete copies of all replacement loan and related agreements with any new
lender(s) relating to the BP Refinancing.

          2.22 No MAE. Except as set forth in Schedule 2.22, since December 31, 2005,
as of the date hereof, with respect to the Company and its Subsidiaries there has not occurred any
state of facts, change, development, event, effect, condition or occurrence that, individually or
in the aggregate, has had or would be reasonably likely to have a Company Material Adverse Effect.

          2.23 Stockholder Distribution and Rights Offering. To the knowledge of the Company,
the consummation by the Company of the Stockholder Distribution and the Rights Offering as
contemplated hereby will not (i) conflict with or violate the certificate of formation or operating
agreement of any of the Subsidiaries, or (ii) result in a violation or breach of or constitute a
default (or an event which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or cancellation of, or result in
any loss of any benefit under, or the creation of any lien on any of the property or assets of the
Company or any of the Subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or obligation of the
Company or any of the Subsidiaries or to which the Company or any of the Subsidiaries are a party.

          2.24 No Other Representations. Except for the representations and warranties
contained in this Agreement (as modified by the Schedules hereto), none of the Company, Flag or any
of their Affiliates or any other Person makes any other express or implied representation or
warranty with respect to the Company or its Subsidiaries, the business conducted or to be conducted
by any of them, the transactions contemplated by this Agreement, or with respect to any financial
information or other information provided to Purchaser or any other Person, whether on behalf of
the Company, Flag or any of their Affiliates or any other Person, including as to the probable
success or profitability of the ownership, or use or operation of the Company or its Subsidiaries,
and each of the Company and Flag (on behalf of themselves and any of their Affiliates and

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any other Person) disclaims any representations or warranties not contained in this Agreement,
whether made by the Company, Flag or any of their Affiliates or any other Person or any of their
respective officers, directors, employees, agents or representatives. Except for the
representations and warranties contained in this Agreement (as modified by the Schedules), each of
the Company and Flag (on behalf of themselves and any of their Affiliates and any other Person)
hereby disclaims all liability and responsibility for any representation, warranty, projection,
forecast, statement, or information made, communicated, or furnished (orally or in writing) to
Purchaser or its Affiliates or representatives (including any opinion, information, projection, or
advice that may have been or may be provided to Purchaser or any other Person by any director,
officer, employee, agent, consultant, or representative of the Company, Flag or any of their
Affiliates or any other Person).

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

          Purchaser represents and warrants to the Company as follows:

          3.1 Investment Intent. Purchaser is acquiring the membership interests for its own
account for investment and not with a view to, or for sale in connection with, any distribution
thereof (other than as contemplated by this Agreement and in accordance with applicable law).

          3.2 Authority. Purchaser is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization. Purchaser has full power and authority to
enter into and to perform its obligations under this Agreement in accordance with its terms.

          3.3 Validity of Agreements.

          (a) The execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby, including the purchase of the
membership interests by Purchaser, have been duly authorized by all necessary Purchaser action,
including the approval of Purchaser’s Board of Directors (based on the recommendation of the
Special Committee of the Board of Directors). This Agreement has been duly executed and delivered
by Purchaser and, assuming due authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of Purchaser enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting generally creditors’ rights and subject to general principles of equity.

          (b) Purchaser’s Board of Directors has received a fairness opinion from Houlihan Lokey Howard
& Zukin, Inc. with respect to the fairness to Purchaser of the investment made by Purchaser
hereunder.

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          3.4 No Conflicts. The execution and delivery of this Agreement by Purchaser and
the performance by Purchaser of its obligations hereunder will not (i) conflict with or violate the
certificate of incorporation or bylaws of Purchaser or any of the subsidiaries, (ii) conflict with
or violate any law, statute, ordinance, rule, regulation, order, judgment, decree, injunction or
other binding action or requirement of any Governmental Authority or agency applicable to Purchaser
or any of its subsidiaries, or (iii) result in a violation or breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or result in any loss
of any benefit under, or the creation of any lien on any of the property or assets of Purchaser or
any of its subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation of Purchaser or any of its
subsidiaries or to which Purchaser or any of its subsidiaries are a party except, in the case of
subclauses (ii) and (iii), as would not have a Purchaser Material Adverse Effect.

          3.5 Litigation. No claim, action, suit or other proceeding is pending or, to
Purchaser’s or any of its subsidiaries’ knowledge, threatened against Purchaser or any of its
subsidiaries (i) which questions the validity of this Agreement or the right of Purchaser to enter
into it or to consummate the transactions contemplated hereby or to pursue and complete the
Project, or (ii) which might, either individually or in the aggregate, have a material adverse
effect on Purchaser’s ability to perform its obligations hereunder. Neither Purchaser or any its
subsidiaries is a party to or subject to any writ, order, decree, injunction or judgment of any
Governmental Authority, which would adversely affect Purchaser’s ability to perform its obligations
hereunder.

          3.6 Experience. Purchaser represents that Purchaser is experienced in evaluating and
investing in companies in a similar stage of development and acknowledges that such Purchaser can
bear the economic risk of such Purchaser’s investment, and has such knowledge and experience in
financial and business matters that such Purchaser is capable of evaluating the merits and risks of
the investment in the Company.

          3.7 Brokers. Purchaser does not have any contract, arrangement or understanding with
any broker, investment banker, financial advisor, finder, consultant or similar agent relating to
the payment of commissions, fees or other compensation in connection with the transactions
contemplated by this Agreement.

          3.8 Stockholder Distribution and Rights Offering. To the knowledge of Purchaser, the
consummation by Purchaser of the Stockholder Distribution and by the Company of the Rights Offering
as contemplated hereby will not (i) conflict with or violate the certificate of incorporation of
Purchaser, or (ii) result in a violation or breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in any loss of any benefit under, or the creation

-21-

 

of any lien on any of the property or assets of Purchaser or any of its Subsidiaries pursuant to,
any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation of Purchaser or any of its Subsidiaries or to which
Purchaser or any of its Subsidiaries are a party.

          3.9 Riv Shares. As of the date hereof, Purchaser (not to be deemed to include any
director, officer or stockholder of Purchaser) does not, directly or indirectly, own any Riv
Shares.

ARTICLE IV.

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF FLAG

          4.1 Organization and Corporation Power. Flag is a limited liability company duly
organized, validly existing and in good standing under the laws of the state of its formation and
has full limited liability company power and authority to conduct its business as presently
conducted and as proposed to be conducted. Flag has full limited liability power and authority to
enter into and perform its obligations under this Agreement and to carry out the transactions
contemplated hereby. Flag is duly qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which it is required to be so qualified, except where the failure
to be so qualified would not have a Flag Material Adverse Effect. Flag has furnished to Purchaser
true and complete copies of its certificate of formation and operating agreement, each as amended
to date and presently in effect. Flag is not in violation of any material provision of its
certificate of formation or operating agreement.

          4.2 Authorization; no conflicts. The execution, delivery and performance by Flag of
this Agreement have been duly authorized by all necessary company action. The execution, delivery
and performance by Flag of this Agreement and the consummation by Flag of the transactions
contemplated hereunder will not (i) conflict with or violate the certificate of formation or
operating agreement of Flag or (ii) conflict with or violate any law, statute, ordinance, rule,
regulation, order, judgment, decree, injunction or other binding action or requirement of any
Governmental Authority or agency applicable to Flag, or (iii) result in a violation or breach of or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any benefit under, or the creation of any lien on any of
the property or assets of Flag pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation of Flag or to which
Flag is a party except in the case of subclauses (ii) and (iii) as would not have a Flag Material
Adverse Effect.

          4.3 Validity of Agreements. This Agreement has been duly executed and delivered by
Flag and, assuming due authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of Flag enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,

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reorganization, moratorium or similar laws affecting generally creditors’ rights and subject to general principles
of equity.

ARTICLE V.

CLOSING CONDITIONS OF PURCHASER

          The obligation of Purchaser to pay the Purchase Price, to acquire the membership interests and
otherwise consummate the transactions contemplated hereby shall be subject to the satisfaction or
waiver by Purchaser of the following conditions precedent on and as of the Closing Date:

          5.1 Representations and Warranties of the Company and Flag. Each of the
representations and warranties of the Company and Flag contained in this Agreement shall be true
and correct in all material respects as of the date hereof and as of the Closing Date as though
made on and as of the Closing Date (except that those representations and warranties which address
matters only as of a specified date shall be true and correct as of such specified date).

          5.2 Obligations and Covenants of the Company. The Company and Flag shall have
performed all obligations and agreements and complied with all covenants and conditions required by
this Agreement and any document contemplated hereby to be performed by or complied with by them
prior to or at the Closing, in each case in all material respects. 

          5.3 EPE License. The Company and EPE shall have executed and delivered the EPE
License in substantially the form attached hereto as Exhibit B, and upon delivery of the
required notice and payment of the required licensing fees, the Company shall have the right to
cause the EPE License to become effective within twelve months of the Closing Date.

          5.4 MAE License. The Company and MAE LLC shall have executed and delivered the MAE
License in substantially the form attached hereto as Exhibit C, and upon delivery of the
required notice and payment of the required licensing fees, the Company shall have the right to
cause the MAE License to become effective within twelve months of the Closing Date.

          5.5 Contribution and Sale Agreement Between Flag Leisure and the Company. Flag, Flag
Leisure and the Company shall have executed and delivered that certain (x) sale agreement
contemplated by clause (i) below and (y) contribution agreement described in clause (ii) below,
pursuant to which:

     (i) Flag Leisure simultaneously with the Closing sells to the Company one
hundred percent (100%) of the membership interests in RH1, LLC, a Nevada limited liability company (“RH1”) (and at such

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time RH1 was, and as of the date hereof is, the record and beneficial owner of
418,294 Riv Shares and shares representing a 20/70 equity interest in Riv
Acquisition Holdings, Inc., a Delaware corporation (“Riviera Acquisition”);

     (ii) Flag simultaneously with the Closing sells to the Company all of its
membership interests in Flag Luxury Riviera LLC (“Flag Riviera”) (and at
such time Flag Riviera was, and as of the date hereof is, the record and beneficial
owner of 418,294 Riv Shares) and shares representing a 20/70 equity interest in
Riviera Acquisition); and

     (iii) the Company (x) shall pay to Flag Leisure $12,548,820 in cash, and (y)
shall pay to Flag $7,500,000 in cash.

          5.6 Contribution Agreement Between Flag and the Company. Flag and the Company shall
have executed and delivered that certain contribution agreement relating to the Formation
Transactions pursuant to which Flag contributed all of its direct and indirect membership interests
in the Subsidiaries to the Company.

          5.7 Waiver of Rights Offering. Each of Purchaser and Flag (and the Designated Flag
Members) shall have entered into a Waiver of Rights, on substantially the same terms and conditions
contained in Exhibit F attached hereto, pursuant to which each of Purchaser and Flag waived
the right to participate in the Rights Offering.

          5.8 Lock-Up Agreements. Each of Purchaser and Flag (and the Designated Flag Members)
shall have executed and delivered to the Company a three (3) year Lock-Up Agreement, in
substantially the form attached hereto as Exhibit G, with respect to their shares of voting
securities of NEWCO Inc. (it being understood that, except for Robert F.X. Sillerman, no Lock-Up
Agreement shall be effective with respect to any shares of common stock of NEWCO Inc. that were
distributed to the stockholders of Purchaser as part of the Stockholder Distribution) and such
Lock-Up Agreement shall become effective immediately upon the Reorganization and shall relate to
the periods (i) from and after the Reorganization and prior to the consummation of the Rights
Offering and (ii) from and after the Rights Offering.

          5.9 Consents. All consents and approvals of, and all filings and registrations with,
governmental authorities and other third parties required in connection with the consummation of
the transactions contemplated by this Agreement shall have been obtained or made by or on behalf of
the Company, except for those the failure to obtain would not have a Company Material Adverse
Effect.

          5.10 No Litigation or Legislation. There is no Action pending, or threatened in
writing, which Purchaser determines, following the receipt of the advice from its outside counsel, would reasonably be expected to have a Company Material

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Adverse Effect. No preliminary or permanent injunction or other Order shall have been issued that would
make unlawful the consummation of the transactions contemplated by this Agreement, and consummation
of the transactions contemplated by this Agreement shall not be prohibited or made illegal by any
Law.

          5.11 Legal Opinion. The Company and Purchaser shall have received the favorable,
written opinion of Greenberg, Traurig, LLP, counsel to Flag and the Company, with respect to the
matters set forth in Schedule 5.11 hereof.

          5.12 Representations and Warranties of Principals. Each of Robert F.X. Sillerman,
Brett Torino and Paul C. Kanavos shall have executed and delivered to Purchaser a representation
letter, in form and substance reasonably satisfactory to Purchaser, containing the representations
and warranties set forth in Schedule 5.12 hereof.

          5.13 Non-Foreign Status Affidavit. A non-foreign status affidavit in the form of
Exhibit I attached hereto and incorporated herein by this reference, as required by Section
1445 of the Internal Revenue Code, executed by Flag, shall have been delivered to Purchaser.

ARTICLE VI.

CLOSING CONDITIONS OF THE COMPANY AND FLAG

          The obligation of the Company to issue and sell the membership interests to Purchaser and the
obligations of Flag and the Company otherwise to consummate the transactions contemplated hereby
shall be subject to the satisfaction or waiver by Purchaser of the following conditions precedent
on and as of the Closing Date:

          6.1 Representations and Warranties of Purchaser. Each of the representations and
warranties of Purchaser contained in this Agreement shall be true and correct in all material
respect as of the date hereof and as of the Closing Date as though made on and as of the Closing
Date (except that those representations and warranties which address matters only as of a specified
date shall be true and correct as of such specified date).

          6.2 Obligations and Covenants of Purchaser. Purchaser shall have performed all
obligations and agreements and complied with all covenants and conditions required by this
Agreement and any document contemplated hereby to be performed by or complied with it prior to or
at the Closing, in each case in all material respects.

          6.3 No Litigation or Legislation. There is no Action pending, or threatened in
writing, which Flag determines, following the receipt of the advice from its outside counsel could
reasonably be expected to have a Purchaser Material Adverse Effect. No preliminary or permanent injunction or other Order shall have been issued

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that would make unlawful the consummation of the transactions contemplated by this Agreement, and
consummation of the transactions contemplated by this Agreement shall not be prohibited or made
illegal by any Law.

          6.4 Payment of the Purchase Price. Purchaser shall have delivered the Purchase Price
to the Company.

          6.5 EPE License. The Company and EPE shall have executed and delivered the EPE
License in substantially the form attached hereto as Exhibit B, and upon delivery of the
required notice and payment of the required licensing fees, the Company shall have the right to
cause the EPE License to become effective within twelve months of the Closing Date.

          6.6 MAE License. The Company and MAE LLC shall have executed and delivered the MAE
License in substantially the form attached hereto as Exhibit C, and upon delivery of the
required notice and payment of the required licensing fees, the Company shall have the right to
cause the MAE License to become effective within twelve months of the Closing Date.

          6.7 Waiver of Rights Offering. Each of Purchaser and Flag (and the Designated Flag
Members) shall have entered into a Waiver of Rights, on substantially the same terms and conditions
contained in Exhibit F attached hereto, pursuant to which each of Purchaser and Flag (and
the Flag Members in connection with the Mandatory Distribution) waived its right to participate in
the Rights Offering.

          6.8 Lock-Up Agreements. Each of Purchaser and Flag (and the Designated Flag Members)
shall have executed and delivered to the Company a three (3) year Lock-Up Agreement, in
substantially the form attached hereto as Exhibit G, with respect to their shares of voting
securities of NEWCO Inc. (it being understood that, except for Robert F.X. Sillerman (who shall be
subject to a one (1) year lock-up regarding shares received in the Stockholder Distribution)), no
Lock-Up Agreement shall be effective with respect to any shares of common stock of NEWCO Inc. that
were distributed to the stockholders of Purchaser as part of the Stockholder Distribution) and such
Lock-Up Agreement shall become effective immediately upon the Reorganization and shall relate to
the periods (i) from and after the Reorganization and prior to the consummation of the Rights
Offering and (ii) from and after the Rights Offering.

          6.9 Consents. All consents and approvals of, and all filings and registrations with,
governmental authorities and other third parties required in connection with the consummation of
the transactions contemplated by this Agreement shall have been obtained or made by or on behalf of
the Company, except for those the failure to obtain would not have a Company Material Adverse
Effect.

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ARTICLE VII.

OTHER COVENANTS

          7.1 Reorganization, Stockholder Distribution and Rights Offering. In connection with
the Stockholder Distribution, the parties agree that Purchaser may, on not less than three (3)
business days prior written notice, cause the Company and its members, and Flag, to take such
preliminary steps as may be required to be in a position to effect the Reorganization and Mandatory
Distribution in connection with the Stockholder Distribution; provided, that the Reorganization
shall only be effective immediately prior to the Stockholder Distribution. Notwithstanding
anything to the contrary contained herein, the parties agree to use their commercially reasonable
efforts (i) to effect the Stockholder Distribution as soon as reasonably practicable after the date
hereof and (ii) thereafter to effect the Rights Offering as soon as reasonably practicable
following the Stockholder Distribution. In that regard, but subject to the foregoing, the parties
hereto agree as follows:

          (a) Purchaser shall establish NEWCO Inc. as a corporation duly formed under the laws of
the State of Delaware (the certificate of incorporation of which shall be substantially in the
form of Exhibit D attached hereto);

          (b) Flag and Purchaser shall contribute to NEWCO Inc. their membership interests in the
Company (except that Flag will not contribute to NEWCO Inc. the Flag Priority Interest) for shares of common stock of NEWCO Inc., issued on a ratable basis consistent with each such
member’s membership interest in the Company as of such date (for the avoidance of doubt, the
Flag Priority Interest shall remain outstanding pursuant to its terms set forth in the
Operating Agreement);

          (c) Promptly following written notice from Purchaser to Flag (and in no event more than
five (5) business days thereafter), (i) Flag shall take any and all such as action as is
necessary or reasonably requested by Purchaser to effect the Mandatory Distribution and, in
connection therewith and as a condition thereto, cause each Designated Flag Member to execute
and deliver to Purchaser and the Company (x) a Waiver of Rights and Lock-Up Agreement executed
by each of the Designated Flag Members (and such documents shall be executed by CKX only with
respect to shares it holds on its own behalf and not shares to be distributed in the
Stockholder Distribution) and (y) such other documents and instruments as Purchaser may
reasonably request, and (ii) the parties shall take such actions as are necessary to cause
each certificate representing such shares of common stock distributed in the Mandatory
Distribution to bear a legend identifying that such shares are subject to the Waiver of Rights
(except with respect to shares distributed in the Stockholder Distribution) and Lock-Up
Agreement (which shall be for a period of one (1) year for all members of Flag other than the
Designated Members (for which the Lock-Up Agreement shall be for a three (3) year period));

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          (d) The parties shall take (and Flag shall cause the Flag Members to take) such other
actions, and execute such documents and other instruments as Purchaser may reasonably request,
to effectuate the Reorganization, all on the terms and conditions set for the herein;

          (e) Purchaser, and, if requested by Flag, the Designated Flag Members shall enter into a
registration rights agreement that provides for one demand registration right for each
Designated Flag Member with regards to a registration on Form S-3 and two piggy-back
registration rights on equity registrations effected by NEWCO Inc. for equity offerings of
stockholders of the Company (and not registrations in respect of Company shares only) , subject
to underwriter lock-up and cut back provisions, and such other terms and conditions as are
customary and are agreed to by the parties thereto.

          (f) The parties agree that any shares of common stock of NEWCO Inc. distributed by Flag in
the Mandatory Distribution shall, at all applicable times, be subject to the Waiver of Rights
and Lock-Up Agreement, provided that the lock-up period with respect to members of Flag who are
not Designated Flag Members shall be one (1) year and not three (3) years, and stock
certificates representing such shares shall bear a legend identifying the foregoing
restrictions.

          (g) Notwithstanding anything herein to the contrary, Purchaser shall not be required to
effect the Stockholder Distribution and the Company shall not be required to effect the Rights
Offering until all applicable legal and regulatory requirements have been satisfied.

          7.2 Financial Statements and Other Information. In addition, in connection with the
Stockholder Distribution and/or the Rights Offering or otherwise, each of the parties hereto agrees
to the following:

          (a) The Company shall use commercially reasonable efforts to deliver to Purchaser no later
than 45 days after the Closing Date, the audited financial statements of the Subject Entities
for the fiscal year ended December 31, 2006 fiscal (collectively, such combined financial
statements, together with the notes thereto (the “2006 Audited Financial Statements”),
which will comply with the reporting requirements of the U.S. Securities and Exchange
Commission (the “SEC”) under Regulation S-X promulgated under the Securities Exchange
Act of 1934, as amended, together with the rules and regulations of the SEC promulgated
thereunder (the “Exchange Act”), together with an unqualified opinion of the Subject
Entities’ independent accounting firm, Ernst & Young LLP, it being agreed that the cost of such
audit shall be borne by the Company. The 2006 Financial Statements will be prepared in
accordance with GAAP and Regulation S-X promulgated under the Exchange Act applied on a
consistent basis throughout the period involved using the same accounting principles,
practices, methodologies and policies used in preparing the 2005 Audited Financial Statements
(except as may otherwise be required by GAAP or as may be expressly disclosed therein) and
present fairly, in all material

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respects, the financial position and operating results of the Subject Entities as of the
dates and for the periods indicated therein.

          (b) The Company shall use commercially reasonable efforts to deliver to Purchaser no later
than 45 days after the Closing Date interim unaudited financial statements of the Subject
Entities for the period commencing after the 2006 Audited Financial Statements (the
“Interim Financial Statements”). Such balance sheet and statements of income and cash
flows shall be prepared from the books and records of the Subject Entities in accordance with
GAAP and present fairly, in all material respects, the financial position and operating results
of the Subject Entities as of the dates and for the periods indicated therein. At the request
of Purchaser, the Company shall use commercially reasonable efforts to cause Ernst & Young LLP,
the independent auditors of the Subject Entities , to provide any unqualified opinions,
consents or customary comfort letters with respect to the financial statements of the Subject
Entities, in each case addressed to Purchaser or its designee, so as to permit the use or
disclosure thereof by Purchaser or the Company, as the case may be, in connection with (i) any
filing or report required to be filed by it under the Exchange Act, (ii) any registration
statement or other filing filed with the SEC or stock exchange with respect to the Stockholder
Distribution and/or the Rights Offering, and (iii) any proxy statement, registration statement
or other filing made by Purchaser with the SEC or any stock exchange with respect to any
merger, sale or other business combination involving Purchaser.

          (c) The Company agrees to allow Purchaser’s accounting representatives the opportunity to
review any such financial statements required and to allow such representatives reasonable
access to records of the Company and its Subsidiaries and supporting documentation with respect
to the preparation of such financial statements; provided, that such access shall not
include any right to review the working papers of the independent auditors of the Subject
Entities.

          (d) Purchaser may require the Company to engage an investment banker or financial advisor
chosen by Purchaser with the reasonable consent of Flag (which consent shall not be
unreasonably withheld, conditioned or delayed).

          (e) The parties hereto shall use commercially reasonable efforts to prepare and file any
and all necessary documents with the SEC and any applicable stock exchange or quotation system,
as contemplated hereby.

          (f) The parties hereto shall use commercially reasonable efforts to prepare and file any
and all necessary documents required to cause the Stockholder Distribution and/or the Rights
Offering to be completed in compliance with applicable states securities laws and any
applicable stock exchange or quotation system, as contemplated hereby.

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          (g) The parties hereto shall use commercially reasonable efforts to take any other actions
necessary or desirable to expedite or facilitate the Stockholder Distribution and/or the Rights
Offering, as contemplated hereby.

          In furtherance of the foregoing, Flag, the Company and its Subsidiaries shall use commercially
reasonable efforts to promptly provide Purchaser with any additional financial statements and other
information concerning Flag, the Company and its Subsidiaries as reasonably requested by Purchaser
in order to effect the Stockholder Distribution and/or Rights Offering. Furthermore, Flag, the
Company and its Subsidiaries shall use all commercially reasonable efforts to, or shall use all
commercially reasonable efforts to cause its representatives to, furnish as promptly as practicable
to Purchaser such requested additional information. None of the information regarding Flag
provided by Flag in writing specifically for inclusion in, or incorporation by reference into, (i)
any filing or report required to be filed by Purchaser or the Company under the Exchange Act, (ii)
any registration statement or other filing filed with the SEC or stock exchange with respect to the
Stockholder Distribution and/or the Rights Offering, or (iii) any proxy statement, registration
statement of other filing made by Purchaser or the Company with the SEC or any stock exchange with
respect to any merger, sale of other business combination involving the Company or Purchaser will,
in the case of any filing with the SEC pursuant to the Exchange Act, at the time such filing is
made, in the case of any proxy statement and any amendment thereto, at the time of the mailing of
such proxy statement, or in the case of any registration statement, at the time such registration
statement becomes effective, contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they are made, not misleading. None of the
information regarding Purchaser provided by Purchaser specifically for inclusion in, or
incorporation by reference into, (i) any filing or report required to be filed by the Company under
the Exchange Act, (ii) any registration statement or other filing filed with the SEC or stock
exchange with respect to the Stockholder Distribution and/or the Rights Offering, or (iii) any
proxy statement, registration statement of other filing made by the Company with the SEC or any
stock exchange with respect to any merger, sale of other business combination involving the Company
will, in the case of any filing with the SEC pursuant to the Exchange Act, at the time such filing
is made, in the case of any proxy statement and any amendment thereto, at the time of the mailing
of such proxy statement, or in the case of any registration statement, at the time such
registration statement becomes effective, contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not misleading.

This Section 7.2 shall survive the Closing.

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          7.3 Use of Proceeds. The parties hereto hereby agree that, in connection with the
consummation of the Formation Transactions and the other transactions contemplated by this
Agreement, they shall cause the Company to make such payments, issue such equity interests, issue
such notes and take such other actions as are set forth in Schedule 7.3 at the times set forth in
such Schedule.

          7.4 Ordinary Course. Between the date hereof and the Closing Date and to the extent
it has the power and authority to do so, the Company shall, and shall cause its Subsidiaries, to
(i) operate each of their respective businesses, in all material respects, in good faith and in the
ordinary course consistent with past practice, (ii) use all commercially reasonable efforts to
preserve substantially intact each of their respective business organizations and retain the
services of each of their respective key employees, (iii) use all commercially reasonable efforts
to preserve the Project and each of their relationships with material customers, suppliers,
sponsors, licensors and creditors, and (iv) use all commercially reasonable efforts to maintain and
keep each of their properties and assets in as good repair and condition as at present, ordinary
wear and tear excepted.

          7.5 Efforts to Close and Subsequent Transactions. Subject to the terms and conditions
set forth in this Agreement, each of the parties hereto shall use commercially reasonable efforts
to take all action and to do all things necessary, proper or advisable in order to consummate and
make effective the transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the conditions set forth in Articles V and VI).

          7.6 Tax Covenants.

          (a) Taxes. Flag shall pay, or shall cause to be paid, when due, and shall hold
Purchaser and the Company harmless against, all Taxes imposed on or assessed against the
Company or its Subsidiaries or the Project in connection with or attributable to activities and
operations, or events occurring, on or prior to the Closing Date. In the case of any Taxes
imposed on or assessed against the Company or its Subsidiaries with respect to a period that
begins before and ends after the Closing Date (a “Straddle Period”), the amount of any Taxes
based on or measured by income or receipts of the Company or its Subsidiaries, as applicable,
for the period ending on or prior to the Closing Date shall be determined based on an interim
closing of the books as of the close of business on the Closing Date, and any other Taxes for a
Straddle Period that relates to the period ending on or prior to the Closing Date shall be
deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the
numerator of which is the number of days in the taxable period ending on the Closing Date and
the denominator of which is the number of days in such Straddle Period.

          (b) Transfer Taxes. The Company shall prepare or cause to be prepared, and shall
file or shall cause to be filed, all necessary Tax Returns and other documentation with respect
to all sales, use, transfer, real property transfer, recording,

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gains, stock transfer, and other similar Taxes and fees including any filing and recording
fees (“Transfer Taxes”) arising from the transactions contemplated in this Agreement
(“Transactions”). If required by applicable Tax Law or requested by Purchaser, Flag shall join
in the execution of any such Tax Returns and other documentation so long as they are reasonably
acceptable to Flag. Flag and Purchaser shall equally pay all Transfer Taxes resulting solely
from Purchaser’s purchase of the membership interests pursuant to this Agreement. For the
avoidance of doubt, Flag shall pay all Transfer Taxes resulting from transactions entered into
on, as of or prior to the Closing and from the formation of the Company.

          (c) Cooperation on Tax Matters. (i) The Company shall control any
contest of Taxes relating to the Company, its Subsidiaries or the Project after the
date hereof, whether such contest relates to Taxes attributable to periods before
or after the Closing. Flag shall promptly notify Purchaser of any claim by any
taxing authority for any Taxes that would be the responsibility of Flag if
ultimately determined to be due under this Section 7.6 or as a result of a breach
of any Flag representation, and shall provide such information and assistance as is
reasonably necessary to assist the Company in connection with any proceeding
relating to such claim

          (ii) Flag shall transfer to the Company all material books and records with
respect to Tax matters pertinent to the Company, its Subsidiaries and the Project.

          (d) Treatment of Indemnity Payments. For all Tax purposes, Flag and Purchaser
agree to treat, except as required by applicable Law, any indemnity payment as an adjustment to
the Purchase Price.

          7.7 Certain Indemnification. From and after the Closing Date, the Company shall, and
the parties hereto shall cause the Company to, (i) indemnify and hold harmless each individual who
at the Closing Date is, or at any time prior to the Closing Date was, a director, officer or member
of the Company or of a Subsidiary of the Company (each, an “Indemnitee” and, collectively, the
“Indemnitees”) with respect to all claims, liabilities, losses, damages, judgments, fines,
penalties, costs (including amounts paid in settlement or compromise) and expenses (including fees
and expenses of legal counsel) in connection with any claim, suit, action, proceeding or
investigation (whether civil, criminal, administrative or investigative), whenever asserted, based
on or arising out of, in whole or in part, (A) the fact that an Indemnitee was a director, officer
or member of the Company or such Subsidiary or (B) acts or omissions by an Indemnitee in the
Indemnitee’s capacity as a director, officer, employee, member or agent of the Company or such
Subsidiary or taken at the request of the Company or such Subsidiary (including in connection with
serving at the request of the Company or such Subsidiary as a director, officer, employee, agent,
trustee or fiduciary of another Person), in each case under (A) or (B), at, or at any time prior
to, the Closing Date, to the fullest extent permitted under applicable Law, and (ii) assume all
obligations of the Company and such

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Subsidiaries to the Indemnitees in respect of indemnification and exculpation from liabilities for
acts or omissions occurring at or prior to the Closing Date as provided in the organizational
documents of the Company such Subsidiaries as currently in effect.

          7.8 Certain Filings. Purchaser agrees that it will use commercially reasonable
efforts to cooperate with the Company to allow the Company to make on a timely basis any filing or
report required to be filed by the Company or any subsidiary under the Exchange Act with regard to
the Riv Shares.

ARTICLE VIII.

INDEMNIFICATION

          8.1 Indemnification.

          (a) All of the representations and warranties made herein by any party shall survive any
investigation made at any time by or on behalf of any other party hereto and shall survive the
execution and delivery of this Agreement for a period of twelve (12) months from the Closing
Date; provided, that with respect to the representations and warranties made in
Section 2.7, such time period shall be extended to the end of the applicable statute of
limitations (including any extension thereof) with respect to claims arising thereunder. Such
representations and warranties contained herein are exclusive, and the parties hereto confirm
that they have not relied upon any other representations, warranties, covenants and agreements
as an inducement to enter into this Agreement or otherwise. No Claim for indemnification
hereunder may be made after the date that is twelve (12) months from the Closing Date.
Notwithstanding the foregoing, all Claims arising from the breach of any representations and
warranties made in Section 2.7 may be made until ninety (90) days from the end of the
applicable statute of limitations (including any extension thereof). Each party (the
“Indemnifying Party”) agrees to indemnify and hold harmless the other parties and its
affiliates and their respective officers, directors, agents, employees, subsidiaries, partners
members and controlling persons (each, an “Indemnified Party”) to the fullest extent
permitted by law from and against any and all losses, damages or expenses (including reasonable
fees, disbursements and other charges of counsel incurred by the Indemnified Party in any
action between the Indemnifying Party and the Indemnified Party or between the Indemnified
Party and any third party or otherwise) (collectively, “Losses”) incurred by such
Indemnified Party resulting or arising out of any breach of any representation or warranty by
such party in this Agreement; provided, however, that the Indemnifying Party
shall not be liable under Article VIII to an Indemnified Party for any amount paid in
settlement of claims with the Indemnifying Party’s consent as provided herein. In connection
with the obligation of the Indemnifying Party to indemnify for expenses as set forth above, the
Indemnifying Party shall, upon presentation of appropriate invoices containing reasonable
detail, reimburse each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel incurred by the Indemnified Party in any action
between the Indemnifying

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Party and the Indemnified Party or between the Indemnified Party and any third party) as
they are incurred by such Indemnified Party, subject to the agreement by the Indemnified Party
to reimburse the Indemnifying Party for such amounts if it is determined that the Indemnified
Party was not entitled to be indemnified hereunder. No Claim for indemnification shall be made
hereunder by a party unless and until the aggregate amount of Losses incurred by such party
exceeds $750,000, and then only to the extent of any excess over such amount. The maximum
liability of any party hereunder shall be $50 million. Any Claim against, and payments made
by, Flag and the Company shall be aggregated for purposes of the foregoing two sentences.

          (b) For purposes of this Section 8.1, a “Claim” shall mean any action, suit,
proceeding, claim, complaint, dispute, arbitration, hearing or investigation.

          8.2 Notification. Each Indemnified Party under this Article VIII shall, promptly
after the receipt of notice of the commencement of any Claim against such Indemnified Party in
respect of which indemnity may be sought from the Indemnifying Party under this Article VIII,
notify the Indemnifying Party in writing of the commencement thereof. The omission by any
Indemnified Party to so notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified Party under this
Article VIII unless, and only to the extent that, such omission results in the Indemnifying Party’s
loss of substantive rights or defenses. In case any such Claim shall be brought against any
Indemnified Party, and it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense at its own expense. Notwithstanding the foregoing, in any Claim in
which both the Indemnifying Party, on the one hand, and an Indemnified Party, on the other hand,
are, or are reasonably likely to become, a party, such Indemnified Party shall have the right to
employ separate counsel and to control its own defense of such Claim if, in the reasonable opinion
of counsel to such Indemnified Party, either (x) one or more defenses are available to the
Indemnified Party that are not available to the Indemnifying Party or (y) a conflict or potential
conflict exists between the Indemnifying Party, on the one hand, and such Indemnified Party, on the
other hand, that would make such separate representation advisable; provided,
however, that the Indemnifying Party shall reimburse the Indemnified Parties for all of
such fees and expenses of such counsel incurred in any action between the Indemnifying Party and
the Indemnified Parties or between the Indemnified Parties and any third party, as such expenses
are incurred, subject to the agreement by the Indemnified Party to reimburse the Indemnifying Party
for such amounts if it is determined that the Indemnified Party was not entitled to be indemnified
hereunder. The Indemnifying Party agrees that it will not, without the prior written consent of
the Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or
threatened Claim relating to the matters contemplated hereby (if any Indemnified Party is a party
thereto or has been actually threatened to be made a party thereto) unless such settlement,
compromise or consent

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includes an unconditional release of each Indemnified Party from all liability arising or that
may arise out of such Claim and such settlement does not impose injunctive or other equitable
relief against the Indemnified Party. The Indemnifying Party shall not be liable for any
settlement of any Claim effected against an Indemnified Party without its written consent, which
consent shall not be unreasonably withheld (the withholding of any consent relating to a proposed
settlement that imposes injunctive or other equitable relief against the Indemnified Party shall
not be deemed unreasonable). The provisions of this Article VIII shall be the sole and exclusive
remedy for any breach of any representation or warranty contained in this Agreement.

          8.3 Loss Calculation. In connection with calculating the amount of Losses that an
Indemnified Party is entitled to recover under Section 8.1(a), (i) in calculating the amount of
Losses incurred by Purchaser, Losses shall include the loss and/or diminution in value of
Purchaser’s membership interest in the Company and (ii) except as contemplated by the foregoing
clause (i) and clause (x)(B) of the definition of “Company Material Adverse Effect” under this
Agreement, no party shall be liable for consequential, special, indirect, incidental, punitive,
lost profit or other expectancy damages.

ARTICLE IX.

MISCELLANEOUS

          9.1 Press Releases; Confidentiality. Except to the extent required by applicable law,
each of the Company, Flag, and Purchaser agrees that it will not issue any press release,
advertisement or other public announcement with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the parties hereto, which consent may be
granted or withheld in the sole discretion of any other party. The parties agree that this
Agreement and the terms contained herein shall be kept confidential by the parties and their
affiliates and agents except to the extent disclosure is required by applicable legal requirements,
in which event the disclosing party shall immediately notify the other party of the requirement and
the terms thereof prior to submission and the disclosing party shall cooperate to the maximum
extent reasonably practicable to prevent or minimize the disclosure of such confidential
information.

          9.2 Amendments and Waivers. No amendment or waiver of any provision of this Agreement
shall be effective with respect to any party unless made in writing and signed by such party.
Waiver by any party of any breach or failure to comply with any provision of this Agreement by any
other party shall not be construed as, or constitute, a continuing waiver of such provision, or a
waiver of any other breach of or failure to comply with any other provisions of this Agreement.

          9.3 Assignability. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by the Company, Flag or
Purchaser, except that Purchaser may assign its rights, interests and

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obligations hereunder to a wholly-owned subsidiary of Purchaser; provided that in any event
Purchaser shall remain liable for all of its obligations hereunder.

          9.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto constitute
the entire agreement among the parties relating to the subject matter hereof and supersede any and
all prior agreements or understandings with respect to the subject matter hereof.

          9.5 Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when delivered in person,
by overnight courier or facsimile to the respective parties as follows:

If to Purchaser:

CKX, Inc.

650 Madison Avenue

16th Floor

New York, New York 10022

Facsimile: 212-753-3188

Attention: Howard Tytel, Esq.

With a copy to:

Paul, Hasting, Janofsky & Walker LLP

75 East 55th Street

New York, New York 10022

Facsimile: 212-319-9040

Attention: William F. Schwitter, Jr. 
                    Luke P. Iovine, III

If to Flag:

Flag Luxury Properties, LLC

650 Madison Avenue

15th Floor

New York, New York 10022

Facsimile: 212-750-3034

Attention: Mitchell Nelson, Esq.

If to the Company:

FX Luxury Realty, LLC

650 Madison Avenue

15th Floor

New York, New York 10022

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Facsimile: 212-750-3034

Attention: Managing Member

or to such other address as the person to whom notice is given may have previously furnished to the
other in writing in the manner set forth above (provided that notice of any change of address shall
be effective only upon receipt thereof).

          9.6 Governing Law; Submission to Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without regard for principles of
conflict of laws. Each of the Company, Flag, the Subsidiaries and Purchaser irrevocably consents
to the exclusive jurisdiction of the Federal and state courts, located in New York County, New
York, in any suit or proceeding based on or arising under this Agreement and irrevocably agree that
all claims in respect of such suit or proceeding shall be determined in such courts. The Company,
Flag and Purchaser irrevocably waive the defense of an inconvenient forum to the maintenance of
such suit or proceeding. Service of process on the Company or Purchaser mailed by first class mail
shall be deemed in every respect effective service of process upon the Company, Flag or Purchaser,
as the case may be, in any such suit or proceeding. Nothing herein shall affect the right of the
Company, Flag or Purchaser to serve process in any manner permitted by law.

          9.7 Waiver of Jury Trial. EACH OF THE COMPANY, FLAG AND PURCHASER ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.7.

          9.8 Severability. If one or more of the provisions contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof.

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          9.9 Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and assigns, and is not for the benefit of, and no
provision hereof may be enforced by, any other person or entity.

          9.10 Descriptive Headings, etc. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. All references herein to “Articles,” “Sections” and “Paragraphs”
shall refer to corresponding provisions of this Agreement unless otherwise expressly noted.

          9.11 Counterparts; Execution and Delivery by Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement. This Agreement may be executed and delivered by
facsimile, with such delivery to be as effective as delivery of an originally executed counterpart
hereof, followed promptly by delivery of an originally executed counterpart.

          9.12 Certain Definitions. Certain terms used in this Agreement are defined as
follows:

          (a) The term “Action” shall mean any controversy, claim, action, litigation,
arbitration, mediation or any other proceeding by or before any Governmental Entity,
arbitrator, mediator or other Person acting in a dispute resolution capacity, or any
investigation, subpoena or demand preliminary to any of the foregoing.

          (b) The term “affiliate,” or “Affiliate” as applied to any person, shall
mean any other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under common control
with”), as applied to any person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that person, whether through
the ownership of voting securities, by contract or otherwise, and a person shall be deemed to
control another person if the controlling person owns 15% or more of any class of voting
securities (or other ownership interest) of the controlled person.

          (c) The term “business day” shall mean each day other than a Saturday, Sunday or a
day on which commercial banks and national stock exchanges located in New York, New York are
closed or authorized by law to close.

          (d) The term “Company Material Adverse Effect” means a Material Adverse Effect on
the Company.

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          (e) The term “Flag Material Adverse Effect” means a Material Adverse Effect (but
only with respect to clause (y) of the definition thereof) on Flag.

          (f) The term “Governmental Entity” shall mean any arbitrator, court, judicial,
legislative, administrative or regulatory agency, commission, department, board, bureau, body
or other governmental authority or instrumentality or any Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government,
whether foreign, federal, state or local.

          (g) “knowledge” means, (i) with respect to the Company, Flag, or the
Subsidiaries, the knowledge (after reasonable inquiry and investigation) of the Company’s,
Flag’s, or the Subsidiaries’ managing member and senior executive officers and (ii) with
respect to Purchaser, the knowledge (after reasonable inquiry and investigation) of Purchaser’s
Chairman of the Board, President, Chief Executive Officer, Treasurer and Secretary.

          (h) The term “Law” shall mean any statute, law, ordinance, rule or regulation of
any Governmental Entity.

          (i) The term “Material Adverse Effect” shall mean, (x) with respect to the
Company, any state of facts, change, development, event, effect, condition or occurrence that,
individually or in the aggregate, has had or would be reasonably likely to have a materially
adverse effect on (A) the business, assets, properties, liabilities or condition (financial or
otherwise) of such business or Person and its Subsidiaries, as applicable, taken as a whole, or
(B) the value of Purchaser’s membership interest in the Company, or (y) that, directly or
indirectly, prevents or materially impairs or delays the ability of such Person to perform its
obligations under this Agreement; provided, however, that any adverse effect arising
out of, resulting from or attributable to (i) an event or series of events or circumstances
affecting (A) the United States or global economy generally or capital or financial markets
generally, including changes in interest or exchange rates, (B) political conditions generally
of the United States or any other country or jurisdiction in which such party or any of its
subsidiaries operates or (C) any of the industries generally in which such party or any of its
subsidiaries operates, except to the extent any of the foregoing have a disproportionate effect
on the such Person as opposed to other person’s in the applicable industry, (ii) the
negotiation, execution or the announcement of, the consummation of the transactions
contemplated by this Agreement, or the performance of obligations under, this Agreement or the
other documents contemplated by this Agreement, (iii) any changes in applicable Law or GAAP or
the enforcement or interpretation thereof, (iv) any hostilities, acts of war, sabotage,
terrorism or military actions, or any escalation or worsening of any such hostilities, act of
war, sabotage, terrorism or military actions, (v) in the case of the Company or Flag, actions
taken with Purchaser’s consent, (vi) in the case of Purchaser, actions taken with the Company’s
or Flag’s consent, or (vii) any actions specifically permitted to be taken or omitted pursuant
to this Agreement, shall not constitute or be deemed to contribute to a Material Adverse
Effect, and otherwise

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shall not be taken into account in determining whether a Material Adverse Effect has
occurred or would be reasonably likely to occur.

          (j) The term “Order” shall mean any order, judgment, ruling, decree, writ, permit,
license or other requirement of any Governmental Entity.

          (k) The term “Person” shall mean any individual or legal entity, including any
partnership, joint venture, corporation, trust, unincorporated organization, limited liability
company or Governmental Entity.

          (l) The term “Purchaser Material Adverse Effect” means a Material Adverse Effect
(but only with respect to clause (y) of the definition thereof) on Purchaser.

          (m)  Interpretation. When a reference is made in this Agreement to an Article,
Section or Exhibit, such reference shall be to an Article or Section of, or an Exhibit to, this
Agreement unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words “without limitation.”
The words “hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the singular as well as
the plural forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means, in the case of any agreement or
instrument, such agreement or instrument as from time to time amended, modified or
supplemented, including by waiver or consent and, in the case of statutes, such statutes as in
effect on the date of this Agreement. References to a person are also to its permitted
successors and assigns. The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any Federal, state, local or foreign
statute or law shall be deemed to also refer to any amendments thereto and all rules and
regulations promulgated thereunder, unless the context requires otherwise.

[signature page follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement
to be executed effective as of the date and year first above written.

	 	 	 	 	 
	 	FX LUXURY REALTY, LLC

 	 
	 	By:  	 /s/
Paul C. Kanavos	 
	 	 	Name:  	Paul C. Kanavos	 
	 	 	Title:  	Chairman and Chief Executive Officer	 
	 
	 	FLAG LUXURY PROPERTIES, LLC

 	 
	 	By:  	 /s/
Paul C. Kanavos	 
	 	 	Name:  	Paul C. Kanavos	 
	 	 	Title:  	Chairman and Chief Executive Officer	 
	 
	 	CKX, INC.

 	 
	 	By:  	 /s/
Michael G. Ferrel	 
	 	 	Name:  	Michael G. Ferrel	 
	 	 	Title:  	PresidentEX-10.2

 

Exhibit 10.2

AMENDMENT NO 1.

TO

MEMBERSHIP INTEREST PURCHASE AGREEMENT

     This AMENDMENT NO. 1,
dated as of June 18, 2007 (this “Amendment”), to the MEMBERSHIP
INTEREST PURCHASE AGREEMENT (the “Agreement”), dated as of June 1, 2007, is entered into by
and among FX LUXURY REALTY, LLC, a Delaware limited liability company (the “Company”), CKX,
Inc., a Delaware corporation (“Purchaser”), and Flag Luxury Properties, LLC, a Delaware
limited liability company (“Flag”). Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in the Agreement.

     WHEREAS, Purchaser, Flag and the Company are parties to the Agreement; and

     WHEREAS, the parties desire to amend the Agreement to provide, among other things, that the
Reorganization shall occur in a more efficient manner.

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

ARTICLE I.

AMENDMENTS TO THE AGREEMENT

     1.1 Segregation of Securities for the Reorganization and Stockholder Distribution.
Article VII of the Agreement is hereby amended and restated in its entirety as follows:

     “7.1 Reorganization, Stockholder Distribution and Rights Offering. In connection with
the Stockholder Distribution, the parties agree that Purchaser may, on not less than three (3)
business days prior written notice, cause the Company and its members, and Flag, to take such
preliminary steps as may be required to be in a position to effect the Reorganization and Mandatory
Distribution in connection with the Stockholder Distribution; provided, that the Reorganization
shall only be effective immediately prior to the Stockholder Distribution. Notwithstanding
anything to the contrary contained herein, the parties agree to use their commercially reasonable
efforts (i) to effect the Stockholder Distribution as soon as reasonably practicable after the date
hereof and (ii) thereafter to effect the Rights Offering as soon as reasonably practicable
following the Stockholder Distribution. In that regard, but subject to the foregoing, the parties
hereto agree as follows:

 

 

          (a) Purchaser shall form FX Luxury Real Estate Inc. (formerly referred to as NEWCO Inc.
and hereafter referred to as “FXLRE”) as contemplated by clause (a) above and, in
connection therewith, contribute to the capital of FXLRE an aggregate 15.5% membership interest
in the Company.

          (b) Purchaser, as the sole stockholder of FXLRE as of the time of its formation, shall
transfer and assign all of the equity interests in FXLRE to Richard G. Cushing, as Trustee of
the CKX FXLR Stockholder Distribution Trust II, a conventional trust formed pursuant to the CKX
FXLR Stockholder Distribution Trust II Agreement dated the date hereof (the “C
Trust”).

          (c) Purchaser shall transfer and assign an aggregate 9.5% membership interest in the
Company to Richard G. Cushing, as Trustee of the CKX FXLR Stockholder Distribution Trust I, a
grantor trust formed pursuant to the CKX FXLR Stockholder Distribution Trust I Agreement dated
the date hereof (the “G Trust”).

          (d) In connection with the transfers of Company membership interests contemplated by this
Section 7.1(g), FXLRE and the G Trust shall be admitted as members of the Company pursuant to a
Second Amended and Restated Operating Agreement, substantially in the form of Exhibit I
hereto, which shall provide, among other things, that FXLRE, the C trust and the G Trust shall
be obligated to effect the Reorganization and the Stockholder Distribution with respect to the
membership interests held by such trusts to the same extent that Purchaser was obligated to do
so under the Agreement.

          (e) In connection with the foregoing, the parties acknowledge and agree that it is the
intent of this Section 7.1 that (i) Purchaser’s obligations under the Agreement to effect the
Reorganization and the Stockholder Distribution (solely with respect to the Membership
Interests to be transferred as contemplated hereby) may be effected (in whole or in part, as
applicable) pursuant to the transactions contemplated by this Section 7.1 and (ii) immediately
following the Reorganization and prior to the Stockholder Distribution, the Company shall be a
subsidiary of FXLRE and FXLRE shall have four stockholders: Purchaser (owning a 25% equity
interest therein), Flag (owning a 50% equity interest therein), and the C Trust and G Trust
(together beneficially owning an aggregate 25% equity interest therein).

          (f) Purchaser, and, if requested by Flag, the Designated Flag Members shall enter into a
registration rights agreement that provides for one demand registration right for each
Designated Flag Member with regards to a registration on Form S-3 and two piggy-back
registration rights on equity registrations effected by FXLRE for equity offerings of
stockholders of the Company (and not registrations in respect of Company shares only) , subject
to underwriter lock-up and cut back provisions, and such other terms and conditions as are
customary and are agreed to by the parties thereto.

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          (g) The parties agree that any shares of common stock of FXLRE distributed by Flag in the
Mandatory Distribution shall, at all applicable times, be subject to the Waiver of Rights and
Lock-Up Agreement, provided that the lock-up period with respect to members of Flag who are not
Designated Flag Members shall be one (1) year and not three (3) years, and stock certificates
representing such shares shall bear a legend identifying the foregoing restrictions.”

ARTICLE II.

MISCELLANEOUS

     2.1 Entire Agreement. This Amendment, the Agreement, the Exhibits and Schedules to
the Agreement constitute the entire agreement among the parties relating to the subject matter
hereof and supersede any and all prior agreements or understandings with respect to the subject
matter hereof.

     2.2 No Other Amendments or Modifications. Except as expressly provided in this
Amendment, the Agreement shall remain unmodified and in full force and effect in accordance with
its terms. The provisions of Article IX of the Agreement shall apply to this Amendment mutatis
mutandis.

[signature page follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Amendment or caused this Amendment
to be executed effective as of the date and year first above written.

	 	 	 	 	 
	 	FX LUXURY REALTY, LLC

 	 
	 	By:  	FLAG LUXURY PROPERTIES, LLC
Managing Member

 	 
	 	By:  	
/s/ Mitchell J. Nelson 	 
	 	 	Name:  	Mitchell J. Nelson	 
	 	 	Title:  	Senior Vice President	 
	 
	 	FLAG LUXURY PROPERTIES, LLC

 	 
	 	By:  	/s/
Mitchell J. Nelson 	 
	 	 	Name:  	Mitchell J. Nelson	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	CKX, INC.

 	 
	 	By:  	
/s/ Thomas P. Benson 	 
	 	 	Name:  	Thomas P. Benson	 
	 	 	Title:  	Chief Financial Officer

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