Document:

Exhibit 10.2

 

EXECUTION VERSION

 

AMENDMENT NO. 1 TO THE TRANSITION SERVICES
AGREEMENT

 

THIS AMENDMENT NO. 1 TO THE TRANSITION SERVICES AGREEMENT (the
“Agreement”), dated as of October 24, 2003, is by and between MGM MIRAGE,
a Delaware corporation (“Parent”), and Poster Financial Group, Inc., a Nevada
corporation (“Purchaser”), subject to the provisions of Section 8 of the
Agreement, and is dated as of December 15, 2003 (this “Amendment”).

 

WHEREAS, capitalized terms used but not defined in this Amendment shall
have the meanings ascribed thereto in the Agreement; and

 

WHEREAS, the parties to the Agreement desire to amend the terms of the
Agreement in accordance with Section 11.8 of the Agreement as set forth in
this Amendment.

 

NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, obligations and agreements set forth below, the parties to this
Amendment hereby agree as follows:

 

1.                                       The
last paragraph of Race and Sports Book Transition Services set forth on
Schedule A to the Agreement which relates to the sale of CBS writer
terminals from each of GNLV and GNL to Mirage shall be deleted in its entirety
and have no force or effect.

 

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

 

3.                                       Each
of the parties irrevocably submits to the exclusive jurisdiction of the United
States District Court for the District of Nevada or any court of the State of
Nevada located in Clark County in any action, suit or proceeding arising out of
or relating to this Amendment or any of the transactions contemplated hereby,
and agrees that any such action, suit or proceeding shall be brought only in
such court; provided, however, that such consent to jurisdiction
is solely for the purpose referred to in this paragraph and shall not be deemed
to be a general submission to the jurisdiction of said courts or in the State
of Nevada other than for such purpose. 
Each of the parties hereby irrevocably waives, to the fullest extent
permitted by Law, any objection that it may now or hereafter have to the laying
of the venue of any such action, suit or proceeding brought in such a
court.  Each of the parties further
irrevocably waives and agrees not to plead or claim that any such action, suit
or proceeding brought in such a court has been brought in an inconvenient forum.

 

 

4.                                       This
Amendment may not be amended or modified by the parties except by an instrument
in writing signed by each of the parties to this Amendment.

 

5.                                       Except
for the provisions of Section 9, this Amendment is for the sole benefit of
the parties and their permitted assigns and nothing herein expressed or implied
shall give or be construed to give any Person, other than the parties and such
assigns, any legal or equitable rights hereunder.

 

6.                                       This
Amendment constitutes the entire agreement of the parties to this Amendment
with respect to the matters set forth herein. 
In the event of any conflict or inconsistency between the provisions of
this Amendment and the provisions of the Agreement, including Schedule A
thereto, the provisions of this Amendment shall govern and control.  Each and every other term, condition,
covenant, representation, warranty and provision set forth in the Agreement
shall remain in full force and effect in accordance with the terms of the
Agreement.  All references to the Agreement
in any other agreement or document shall hereinafter be deemed to refer to the
Agreement as amended hereby.

 

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

 

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

 

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

 

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whatsoever against Mr. Kerkorian or Tracinda Corporation by reason of
such alleged breach, default or claim.

 

(The
remainder of this page is intentionally left blank.)

 

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IN WITNESS WHEREOF, an authorized representative of each of the parties
has duly executed this Amendment as of the date first written above.

 

	
   

  	
  MGM MIRAGE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BRYAN L. WRIGHT

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Bryan L. Wright

  
	
   

  	
   

  	
  Title:

  	
  Vice President - Assistant General Counsel

  and Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  POSTER FINANCIAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TIMOTHY POSTER

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy Poster

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief Executive OfficerExhibit 10.3

 

EXECUTION VERSION

 

 

 

PLEDGE AGREEMENT

 

by and among

 

POSTER FINANCIAL GROUP, INC.

 

 

HSBC Bank USA,

as Trustee

 

and

 

HSBC Bank USA,

as Agent

 

 

Dated as of December 3, 2003

 

 

1

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (this “Agreement”), dated as of December
3, 2003, is made by and among POSTER FINANCIAL GROUP, INC., a Nevada
corporation (the “Company”), HSBC Bank USA, a New York banking
corporation, as trustee under the Indenture referred to below (“Trustee”),
and HSBC Bank USA, a New York banking corporation, as agent and as securities
intermediary (“Agent”).

 

RECITALS

 

A.            The Notes.  Pursuant to that certain indenture (the “Indenture”),
dated as of December 3, 2003, by and among the Company, the guarantors from
time to time party thereto and the Trustee, the Company has on the date hereof
and concurrently with the execution of this Agreement issued $155,000,000 in
aggregate principal amount of its 8 3/4% Senior Secured Notes due 2011 (the “Notes”).  Simultaneously with the issuance of the
Notes (the “Deposit Time”), the net proceeds from the sale of the Notes
and additional cash as set forth herein shall be deposited into a segregated
cash collateral trust account with the Agent at its office at 452 Fifth Avenue,
New York, New York, Account No. 10-878424, in the name of HSBC Bank USA, as
Trustee for the ratable benefit of the Holders of the Notes (the “Proceeds
Account”).  The Proceeds Account and
all balances and investments from time to time therein (collectively, the “Account
Funds”) shall be under the control of the Trustee.  Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Indenture.

 

B.            Pending Acquisition.  The Company intends to use the net proceeds
of the Notes held in the Proceeds Account to pay a portion of the purchase
price of a pending acquisition of the issued and outstanding capital stock of
GNLV, CORP. and GNL, CORP. (“GNLV and GNL Stock”) from Mirage Resorts,
Incorporated (the “Acquisition”) pursuant to a stock purchase agreement
entered into on June 24, 2003 (the “Stock Purchase Agreement”) by and
among the Company, MGM MIRAGE, Mirage Resorts, Incorporated, GNLV, CORP., GNL,
CORP. and Golden Nugget Experience, LLC. 
If the Acquisition is terminated or otherwise does not close prior to
certain dates as specified in this Agreement, then the Notes must be redeemed
at a redemption price equal to 100% of the offering price plus accrued interest
to the redemption date.

 

C.            Purpose. The parties hereto
desire to set forth their agreement with regard to (1) the administration of
the Proceeds Account, (2) the creation and perfection of a security interest in
favor of the Trustee for the benefit of the Holders of the Notes in the
Collateral (as defined herein), and (3) the conditions upon which Account Funds
will be released from the Proceeds Account.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                                               Security
Interest.

 

1.1           Pledge and
Assignment.

 

(a)           At the Deposit Time,
the Company shall deposit or cause to be deposited into the Proceeds Account
(i) all of the proceeds from the sale of the Notes, net of all discounts

 

1

 

and fees owed to Lehman
Brothers Inc. and (ii) $10,883,159.72 of additional cash.  Concurrently with such deposit, the
Company’s chief executive officer shall provide a certificate to the Trustee
that the amount of such deposit is sufficient to make any payment that may be
required under Section 3.3 hereof.

 

(b)           The Company hereby
irrevocably pledges, assigns and sets over to the Trustee, and grants to the
Trustee, for the ratable benefit of the Holders of the Notes, a first priority
continuing security interest in all of the Company’s right, title and interest
in and to all of the following (whether consisting of investment securities,
book-entry securities or other securities, security entitlements, financial
assets or other investment property, accounts, general intangibles, instruments
or documents, securities accounts, deposit accounts or other bank, trust or
cash collateral accounts, or other property, assets or rights), whether now
owned or existing or hereafter acquired or created (collectively, the “Collateral”):

 

(i)    this
Agreement and the Proceeds Account;

 

(ii)   all
funds, letters of credit, depository receipts, investment securities,
book-entry securities or other securities, security entitlements, financial
assets or other investment property from time to time held or deposited in, or
credited to, the Proceeds Account, including, without limitation, the Account
Funds and all certificates and instruments, if any, from time to time,
representing or evidencing the Proceeds Account or the Account Funds;

 

(iii) 
all interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the then existing Collateral; and

 

(iv) 
to the extent not otherwise included, all Proceeds (as such term is defined in
the Code (as defined below)) in respect of the foregoing.

 

(c)           Except as expressly
permitted by this Agreement, the Company shall have no right to remove or
withdraw from the Proceeds Account or the Account Funds any financial asset,
cash or other property now or hereafter credited to the Proceeds Account or the
Account Funds without the prior written consent of the Trustee.  If at any time the Agent shall receive any
entitlement order from the Trustee (including, without limitation, any order
directing the sale, transfer or redemption of any financial asset, or cash or
other item credited, directly or indirectly, to, the Proceeds Account), the
Agent shall comply with such entitlement order, without further consent of the
Company or any other Person. 
Notwithstanding anything to the contrary contained herein, if at any
time the Agent shall receive conflicting entitlement orders from the Trustee
and the Company, the Agent shall follow the entitlement orders and instructions
of the Trustee and not the Company.

 

(d)           The Trustee hereby
appoints the Agent to act as the Trustee’s agent, on behalf of the Holders of
the Notes, for purposes of perfecting the foregoing pledge, assignment and
security interest in the Collateral, and the Agent hereby accepts such
appointment.  For so long as the
foregoing pledge, assignment and security interest remains in effect, the Agent
hereby waives any right of setoff, banker’s lien, deduction, counterclaim,
defense, recoupment or similar lien that it, in its individual capacity, may
have with respect to any or all of the Collateral.

 

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1.2           Secured
Obligations. This Agreement secures the due and punctual payment and
performance of all obligations and indebtedness of the Company, whether now or
hereafter existing, owing to the Holders of the Notes including, without
limitation, interest accrued thereon after the commencement of a bankruptcy,
reorganization or similar proceeding involving the Company to the extent
permitted by applicable law, whether or not an allowed claim (collectively, the
“Secured Obligations”).

 

1.3           Delivery of
Collateral.  All certificates or
instruments, if any, representing or evidencing the Collateral shall be held by
or on behalf of the Trustee pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignments in blank, all in form and substance reasonably
satisfactory to the Trustee, all in form and substance sufficient to convey a
valid security interest in such Collateral to the Trustee or shall be credited
to the Proceeds Account, which shall be a securities account maintained in
accordance with Section 1.3(b) hereof. 
The Company shall, upon the pledge of any Collateral hereunder, cause
all such Collateral, including all other accounts representing a security
entitlement to or containing any Collateral to be registered in the name of the
Trustee, for the ratable benefit of the Holders of the Notes, or such of its
nominees as the Trustee shall direct and the Company shall approve (which
approval shall not be unreasonably withheld), and to be under the control of
the Trustee, for the ratable benefit of the Holders of the Notes, which control
shall be agreed to and acknowledged (in a writing addressed to the Trustee) by
any securities intermediary, including the Agent, holding any such account in
an acknowledgment in form and substance reasonably satisfactory to the
Trustee.  In addition, the Trustee shall
have the right at any time to exchange certificates or instruments representing
or evidencing the Collateral for certificates or instruments of smaller or larger
denominations.

 

(a)           The Agent shall establish
and maintain the Proceeds Account on its books as an account segregated from
all other custodial or collateral accounts at its office at 452 Fifth Avenue,
New York, New York.

 

(b)           The Proceeds Account
is and shall be maintained as a “securities account” within the meaning of
Article 8 of the UCC, and the Agent, as securities intermediary, shall treat
all property (whether investment property, financial asset, security,
instrument, cash or otherwise) credited to the Proceeds Account as a “financial
asset” within the meaning of Section 8-102(a)(9) of the UCC, as in effect on
the date hereof and as “financial assets” under Section 8-501(a) of the UCC, as
in effect on the date hereof.  Subject
to the other terms and conditions of this Agreement, all funds or other
property accepted by the Agent pursuant to this Agreement shall be held in the
Proceeds Account for the benefit of the Trustee and for ratable benefit of the
Holders of the Notes.  All proceeds of
the Account Funds shall remain on deposit in the Proceeds Account until
withdrawn in accordance with this Agreement.

 

(c)           All Collateral shall
be retained in the Proceeds Account pending disbursement pursuant to the terms
hereof.  All proceeds of, interest
earned on, and other dividends, distributions or amounts paid with respect to,
any Collateral shall be credited to and retained in the Proceeds Account, and
the Agent shall invest and reinvest the same in accordance with Section 2.1
hereof.  In all events, any monies or
property so invested or reinvested and any securities, investment property and
financial assets acquired thereby shall be (i) held as Collateral in the
Proceeds Account, (ii) subject in all respects to the security interest created
hereby and shall be and remain under the control of the Agent, and (iii)
otherwise subject to the terms hereof.

 

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1.4           Further
Assurances.  Prior to,
contemporaneously herewith, and at any time and from time to time hereafter,
the Company shall, at its sole expense, execute and deliver to the Trustee such
other instruments and documents, and take all further action as the Trustee
deems necessary or as the Trustee may reasonably request to confirm, perfect or
maintain the perfection and priority of the security interest of the Trustee
granted or purported to be granted hereby or to enable the Trustee to exercise
and enforce its rights and remedies hereunder with respect to any Collateral,
and the Company shall take all necessary action to preserve and protect the security
interest created hereby as a first priority, perfected Lien and encumbrance
upon the Collateral.

 

1.5           Maintaining the
Proceeds Account.  So long as this
Agreement is in full force and effect:

 

(a)           The Company shall
establish and maintain the Proceeds Account with the Agent in accordance with
this Agreement, and the Proceeds Account shall at all times remain under the
exclusive dominion and control of the Trustee;

 

(b)           It shall be a term
and condition of the Proceeds Account, notwithstanding any term or condition to
the contrary in any other agreement relating to the Proceeds Account, that the
Account Funds shall only be used for either (i) the payment of a portion of the
purchase price of the Acquisition or (ii) the redemption of the Notes, in each case
pursuant to the provisions of Article 3 below;

 

(c)           The Agent shall
maintain the Proceeds Account and all securities entitlements and other
positions carried in the Proceeds Account solely in its capacity as Agent and
shall not assert any claim to or interest in the Proceeds Account or any such
securities entitlement or other positions except in such capacity; and

 

(d)           The Agent shall
maintain a record of all securities, instruments, checks and other remittance
items received in the Proceeds Account.

 

1.6           Transfer and
Other Liens.  The Company agrees
that it shall not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral or (ii) create or suffer to exist any Lien upon or with respect to
any of the Collateral, except for the security interest granted to the Trustee
pursuant to this Agreement or in connection with the Indenture and
non-consensual liens arising by operation of law.  The Trustee agrees that it shall not cause or permit the Proceeds
Account or any other security entitlements or other positions carried in the
Proceeds Account to become subject to any Lien created or arising through the
Trustee, except for the security interest granted to the Trustee pursuant to this
Agreement or in connection with the Indenture and non-consensual liens arising
by operation of law.  The Company shall
pay the fees and expenses of the Agent as provided in Section 5.3 below,
and the Agent shall have no right to lien, or attach the funds held in, the
Proceeds Account for any fees, expenses, costs or other amounts that may be due
to the Agent.

 

1.7           Attorneys-in-Fact.  The Company hereby irrevocably appoints each
of the Trustee and the Agent as its attorney-in-fact, coupled with an interest,
with full authority in the place and stead of the Company and in the name of
the Company or otherwise, from time to time in the Trustee’s or the Agent’s
reasonable discretion but without any obligation to take any action and to
execute any instrument which is necessary or advisable or which the Trustee or
the Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and collect all
instruments made payable to the Company

 

4

 

representing any interest
payment, dividend or other distribution in respect of the Collateral or any
part thereof and to give full discharge for the same, and the expenses
(including, without limitation, reasonable legal fees and expenses) of the
Trustee and the Agent incurred in connection therewith shall be payable by the
Company and shall be deemed Secured Obligations hereunder.

 

1.8           Trustee May
Perform.  Without limiting the
authority granted under Section 1.7 hereof and except with respect to
the failure of the Company to deliver investment instructions, which shall be
governed by Section 2.1 hereof, if the Company fails to perform any
agreement contained herein, the Trustee or the Agent may, but shall not be
obligated to, itself perform, or cause performance of, such agreement, and the
expenses of the Trustee or the Agent incurred in connection therewith shall be
payable by the Company and shall be deemed Secured Obligations hereunder.

 

2.                                       Investment
and Liquidation of Account Funds. 
Account Funds shall be invested and reinvested by the Agent on the
following terms and conditions:

 

2.1           Required
Investments.  As soon as practicable
upon deposit of the Account Funds, the Agent shall invest all amounts on deposit
in the Proceeds Account in readily accessible, unrestricted money market funds
that are solely invested in Government Securities.  Account Funds held by the Agent in the Proceeds Account shall, at
the written direction of the Company, be invested and reinvested by the Agent
prior to the occurrence of a Special Mandatory Redemption Event (as defined
below) or an Event of Default under the Indenture; provided, however,
that the Company’s directions shall be limited to investments or reinvestments
in readily accessible, unrestricted money market funds that are solely invested
in Government Securities.  The Agent
hereby agrees that any investments made in accordance with this Article 2
shall be permitted under this Agreement provided that the Trustee shall at all
times have control (as such term is defined in Section 8-106 of the UCC) over
such investments.

 

2.2           Interest.  All interest and other amounts earned on the
Account Funds shall be reinvested in accordance with the terms hereof and will
be subject to the security interest granted hereunder to the Trustee and to no
other Liens other than non-consensual liens arising by operation of law.

 

2.3           Limitation of
Trustee’s and Agent’s Liability.  In
no event shall the Trustee or the Agent have any liability to the Company or
any other Person for (a) investing the funds from time to time in the Proceeds
Account in accordance with the provisions of this Article 2, regardless
of whether greater income or a higher yield could have been obtained had the
Agent invested such funds in other money market funds, except for liability
arising out of the gross negligence, willful misconduct or bad faith of the
Trustee or the Agent or (b) not complying with any direction of the Company
with respect to the investment or reinvestment of funds in the Proceeds Account
to the extent that any such direction is inconsistent with this Article 2.

 

3.                                                               Disposition
of Collateral Upon Certain Events.

 

3.1           Release of
Account Funds for the Acquisition of GNLV and GNL Stock.  Subject to Section 3.2 below, at the sole
expense of the Company, and concurrently with, and conditioned upon, the
Agent’s and the Trustee’s receipt of (1) a certificate from the chief executive
officer of the Company substantially in the form of Exhibit A hereto
(the “Release Certificate”) and (2) the opinions of counsel
substantially in the forms of Exhibit B-1, Exhibit B-2

 

5

 

and Exhibit B-3 hereto
(including customary assumptions and qualifications and including opinions as
may be reasonably agreed to among the Agent, the Trustee and Company as to
other documents relating to the Collateral (as defined in the Indenture) as may
be entered into on the Acquisition Date) (the “Opinions of Counsel”),
(a) the Agent shall transfer the funds on deposit in the Proceeds Account in
immediately available funds in accordance with the transfer instructions
contained in such Release Certificate; (b) the Trustee and the Agent shall
deliver to the Company a release of security interest with respect to the
Collateral as of the Acquisition Date (as defined below), in the form of Exhibit
C hereto, duly executed by the Trustee and the Agent, and the Trustee and
the Agent shall take all further actions, if any, that are reasonably requested
and deemed necessary by the Company to terminate the Trustee’s security
interest in the Collateral as of the closing of the Acquisition (the “Acquisition
Date”) and, on the Acquisition Date, all funds transferred by the Agent in
accordance with the provisions of this Section 3.1 shall automatically
be deemed to be free and clear of the Trustee’s security interest provided
herein; and (c) the Agent shall release to the Company all funds remaining in
the Proceeds Account, if any, after complying with the transfer instructions in
the Release Certificate. 
Notwithstanding the above, the delivery of the Release Certificate and
the Opinions of Counsel shall be deemed to occur concurrently with the release
of funds in accordance with this Section 3.1 and the consummation of the
Acquisition.  The Company covenants and
agrees not to deliver a Release Certificate unless the conditions set forth in Section
3.2 below have been satisfied.  The
Agent and the Trustee may conclusively rely on the Release Certificate and the
Opinions of Counsel.

 

3.2           Conditions to
Release.  The funds on deposit in
the Proceeds Account shall be released in accordance with Section 3.1
concurrently with the consummation of the Acquisition if all of the following
conditions have been met (based solely on the Release Certificate confirming
that such conditions have been satisfied):

 

(a)           all conditions
precedent under the Stock Purchase Agreement to the Acquisition have been
satisfied or, in the case of immaterial conditions, waived by the parties
thereto, except for any condition that by its terms can only be satisfied at
the closing of the Acquisition; provided, however, that the
parties agree in advance that the waiver of Section 6.3(f) of the Stock
Purchase Agreement and Section 6.3(q) of the Stock Purchase Agreement with
respect to the landlord consent of the Trustees of Fraternal Order of Eagles,
Las Vegas Aerie 1213 shall be construed as a waiver of an immaterial condition;

 

(b)           the terms of the
Stock Purchase Agreement, as it may be amended through the date on which the
funds on deposit in the Proceeds Account are released in accordance with Section
3.1, are not materially less favorable in the aggregate to the Company or
the Holders of the Notes than the terms of the Stock Purchase Agreement in effect
on the date hereof, a copy of which is attached hereto as Exhibit B-4; provided,
however, an extension of the closing date shall not be deemed a “less
favorable” amendment;

 

(c)           the Company has
sufficient funds available, together with the amount held in the Proceeds
Account and amounts available under the Credit Agreement, to pay all amounts
payable for the GNLV and GNL Stock under the terms of the Stock Purchase
Agreement;

 

(d)           there are no Liens
on the assets of GNLV and GNL other than Permitted Liens;

 

6

 

(e)           no Event of Default
has occurred and is continuing under the Indenture; and

 

(f)            the Company has
delivered the Opinions of Counsel to the Trustee and the Agent.

 

3.3           Special Mandatory
Redemption.  If (i) the Stock
Purchase Agreement is terminated in accordance with its terms or (ii) the
Acquisition is otherwise not closed on or before December 31, 2003 (provided,
however, that if the only condition to the closing of the Acquisition
that remains unsatisfied, except for any condition that by its terms can only
be satisfied on the Acquisition Date, on December 31, 2003 is the Company’s
receipt of approvals from any Gaming Authority under applicable Gaming Laws
then the final termination date will be extended to March 31, 2004) (each, a “Special
Mandatory Redemption Event”), then the Company shall notify the Agent and
the Trustee of such Special Mandatory Redemption Event and instruct the Agent
to, and in accordance with such instruction the Agent shall, release the
Account Funds to the Company solely to redeem the Notes within two Business
Days of the date of termination in accordance with clause (i) above or the date
specified in clause (ii) above, as applicable, at a redemption price equal to
100% of the offering price of the Notes plus accrued and unpaid interest to the
redemption date (the “Redemption Payment”). The Company shall mail or
cause to be mailed on the Business Day following such date, by first class
mail, a notice of redemption to each holder of Notes at such holder’s
registered address appearing in the Security Register which notice shall state:

 

(a)           the redemption date
and the Redemption Payment; provided, that the redemption date shall be
the second Business Day after the first Special Mandatory Redemption Event (the
“Redemption Date”);

 

(b)           the name and address
of the Paying Agent;

 

(c)           that the Notes must
be surrendered to the Paying Agent to collect the redemption price;

 

(d)           that, unless the
Company defaults in making such Redemption Payment, interest on the Notes
ceases to accrue on and after the Redemption Date; and

 

(e)           that no
representation is made as to the correctness of the CUSIP and/or ISIN numbers,
if any, listed in such notice or printed on the Notes.

 

3.4           Use of Proceeds.  The Agent shall: (x) promptly liquidate all
of the Collateral in the Proceeds Account to obtain net cash proceeds by no
later than 12:00 noon (New York time) one Business Day after the occurrence of
the Special Mandatory Redemption Event; (y) on the Redemption Date transfer
such net cash proceeds to the Paying Agent to be used to redeem the Notes and,
after the Redemption Payment has been paid in full, any excess proceeds shall
be transferred to the Company.  The Company
shall, as promptly as practicable, notify the Trustee and the Agent in writing
if the Acquisition is terminated.

 

3.5           Payment of
Redemption Payment.  The Redemption
Payment will be considered paid on the date due if the Paying Agent, if other
than the Company or a Subsidiary thereof, holds as of 11:00 a.m. Eastern Time
on the Redemption Date money in immediately available funds and sufficient to
pay the Redemption Payment.  If the
Redemption Date is a Legal

 

7

 

Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue on such payment for the intervening
period.

 

3.6           Remedies Upon
Default.  If any Event of Default
shall have occurred and be continuing under the Indenture:

 

(a)           The Trustee may, but
shall not be obligated to, without notice to the Company except as required by
law and at any time or from time to time, direct the Agent to draw upon any
letters of credit, liquidate any Government Securities and transfer all funds
in the Proceeds Account to the Paying Agent to apply such funds in accordance
with Section 6.10 of the Indenture, and subject to the terms of this Agreement,
for the benefit of the Holders of the Notes.

 

(b)           The Agent and/or the
Trustee may also exercise in respect of the Collateral, in addition to the
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party under the UCC in effect at that time
in the State of New York (the “Code”) (whether or not the Code applies
to the affected Collateral), and may also, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sales, at any of the Trustee’s or the Agent’s offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Trustee may deem commercially reasonable. 
The Company agrees that, to the extent notice of sale shall be required by
applicable law, at least ten days’ notice to the Company of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification.  The
Trustee and the Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given.  The Trustee or the Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which
it was so adjourned.

 

(c)           Any cash held by the
Agent as Collateral and all net cash proceeds received by the Trustee or the
Agent in respect of any sale or liquidation of, collection from, or other
realization upon, all or any part of the Collateral may, in the sole discretion
of the Trustee, be held by the Trustee or the Agent as collateral for, and/or
then or at any time thereafter be applied (after payment of any costs and
expenses incurred in connection with any sale, liquidation or disposition of or
realization upon the Collateral, including reasonable attorney’s fees and
expenses, and the payment of any amounts payable to the Trustee or the Agent)
in whole or in part by the Trustee or the Agent for the ratable benefit of the
Holders of the Notes against, all or any part of the Secured Obligations in
such order as the Trustee shall elect. 
Any surplus of such cash or cash proceeds held by the Trustee or the
Agent and remaining after payment in full of all the Secured Obligations and
the reasonable out-of-pocket costs and expenses incurred by and amounts payable
to the Trustee or the Agent hereunder or under the Indenture shall be paid over
to the Company or as a court of competent jurisdiction shall direct in writing.

 

4.                                                               Representations
and Warranties.

 

4.1   Representation and
Warranties of the Company. The Company hereby represents and warrants that:

 

(a)           The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.

 

8

 

(b)           This Agreement has
been duly and validly authorized, executed and delivered by the Company and
(assuming due authorization, execution and delivery by the Trustee and the
Agent) constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforceability is considered in a proceeding at law or
in equity), and except that rights to indemnification and contribution
thereunder may be limited by public policy relating thereto.

 

(c)           The execution,
delivery and performance of this Agreement by the Company will not conflict
with or result in a breach or violation of any of the terms or provisions of,
impose any lien, charge or encumbrance (except as contemplated by this
Agreement) upon any property or assets of the Company pursuant to, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement, license or instrument to which the Company is a
party or by which the Company is bound or to which any of the property or
assets of the Company is subject, nor will such actions result in any violation
of the provisions of the charter or bylaws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or assets.

 

(d)           Except as has been
granted and is in full force and effect and except as may be required in
connection with consents and approvals required by Nevada State Gaming
Authorities, no consent, approval, authorization or order of, or filing,
registration or qualification with, any such court or governmental agency or
body is required for the execution, delivery and performance of this Agreement,
other than filings of UCC financing statements.

 

(e)           There are no legal
or governmental proceedings pending to which the Company is a party or of which
any property or assets of the Company is the subject which, if determined
adversely to the Company would reasonably be expected to have a material
adverse effect on the operations, management, financial position, results of
operations, business or prospects of the Company, and to the Company’s knowledge,
no such proceedings have been threatened by governmental authorities or others.

 

(f)            The Company has not
taken, and will not take, any action that might cause the pledge of the
Collateral pursuant to this Agreement to violate Section 7 of the Exchange Act,
or any rule or regulation thereunder, including, without limitation, Regulation
T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve System.

 

(g)           Upon the delivery to
the Agent of the Collateral and (as to certain proceeds therefrom) the filing
of a Uniform Commercial Code financing statement with the Secretary of State of
the State of New York, the Trustee will have a valid, duly perfected first
priority security interest in the Collateral to the extent the security
interest can be perfected in the Collateral by filing a Uniform Commercial Code
financing statement, as security for the payment and performance of the Secured
Obligations for the benefit of the Trustee and the Holders of the Notes, and
enforceable as such against all creditors of the Company and any Persons
purporting to purchase any of the Collateral from the Company.  The actions, recordings and filings described
in the immediately preceding sentence are the only actions, recordings and
filings necessary to publish notice of and perfect the rights of the Trustee in
all of the Collateral.

 

9

 

(h)           All information set
forth herein relating to the Collateral is accurate and complete in all
material respects.

 

4.2           Indemnity.  The Company shall indemnify and hold
harmless the Trustee, the Agent and their respective directors, officers,
agents and employees, from and against any and all claims, actions, obligations,
damages, losses, liabilities and expenses, including, without limitation,
defense costs, investigative fees and costs, reasonable legal fees and claims
for damages incurred in any action or proceeding between the parties hereto or
in disputes with third parties or otherwise, arising from or in connection with
the Trustee’s and/or the Agent’s acceptance of, or performance under, this
Agreement, except to the extent that such liability, expense or claim is
directly attributable to the gross negligence, willful misconduct or bad faith
of the Trustee or the Agent.

 

4.3           Termination.  This Agreement shall automatically terminate
upon the first to occur of (a) the release of all of the Collateral pursuant to
Section 3.1 hereof or (b) payment and performance in full in immediately
available funds of the Secured Obligations. 
The provisions of Section 4.2, Section 5.1 and Article
6 hereof shall survive any termination or discharge or satisfaction of this
Agreement as well as the resignation or removal of the Trustee or the Agent.

 

5.               Agent.

 

5.1           Limitation of the
Agent’s Liability; Responsibilities of the Agent.

 

(a)           Except as otherwise
provided herein, the Agent’s responsibility and liability under this Agreement
shall be limited as follows: (i) the Agent does not represent, warrant or
guaranty to the Trustee or the Holders of the Notes from time to time the
performance of the Company; (ii) the Agent shall have no responsibility to the
Company, the Holders of the Notes or the Trustee from time to time as a consequence
of the performance or non-performance by the Agent hereunder, except for any
bad faith, gross negligence or willful misconduct of the Agent; (iii) the
Company shall remain solely responsible for all aspects of its business and
conduct; and (iv) the Agent is not obligated to supervise, inspect or inform
the Company or any third party of any matter referred to in this Section
5.1(a).  In no event shall the Agent be
liable for acting in accordance with or relying upon any instruction, notice,
demand, certificate or document from the Company or any entity acting on behalf
of the Company delivered in accordance with the terms hereof.

 

(b)           No implied covenants
or obligations shall be inferred from this Agreement against the Agent, nor
shall the Agent be bound by the provisions of any agreement beyond the specific
terms hereof.  Specifically and without
limiting the foregoing, the Agent shall in no event have any liability in
connection with its investment, reinvestment or liquidation, in good faith and
in accordance with the terms hereof, of any funds held by it hereunder,
including without any limitation any liability for any delay not resulting from
its bad faith, gross negligence or willful misconduct in such investment,
reinvestment or liquidation, or any loss of principal or income incident to any
such delay.

 

(c)           The Agent shall not
be called upon to advise any party as to selling or retaining, or taking or
refraining from taking any action with respect to, any securities or other
property deposited hereunder.

 

10

 

(d)           No provision of this
Agreement shall require the Agent to expend its own funds or otherwise incur
any financial liability in the performance if any of its duties hereunder.

 

(e)           The Agent shall not
incur any liability for not performing any act or fulfilling any duty,
obligation or responsibility hereunder by reason of any occurrence beyond the
control of the Agent (including but not limited to any act or provision of any
present or future law or regulation or governmental authority, or any act of
God or war).

 

(f)            The Agent may act
through its agent and shall not be responsible for the misconduct or negligence
of any agent appointed with due care.

 

(g)           The Agent may
consult with counsel of its own selection and the advice of such counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

 

5.2           Substitution of
the Agent.  The Agent may resign by
giving no less than 30 Business Days’ prior written notice to the Company and
the Trustee.  Such resignation shall
take effect upon the later to occur of (i) delivery of all funds, any letters
of credit and any other Collateral maintained by the Agent hereunder and copies
of any books, records, plans and other documents in the Agent’s possession
relating to such funds, any letters of credit or other Collateral or this
Agreement to a successor agent approved by the Company (which approval shall
not be unreasonably withheld or delayed) and (ii) the Company, the Trustee and
such successor agent entering into this Agreement or any written successor
agreement no less favorable to the interests of the Holders of the Notes and
the Trustee than this Agreement and the taking of such other steps as may be
necessary to give the successor agent a first priority security interest in the
Proceeds Account and the other Collateral, and the Agent shall thereupon be
discharged of any obligations arising under this Agreement after the effective
date of such resignation.

 

5.3           Expenses.  The Company will upon demand pay to the
Agent the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of its counsel,
experts and agents retained by the Agent that the Agent may incur in connection
with (a) the custody or preservation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (b) the exercise or enforcement
of any of the rights of the Trustee and the Holders of the Notes hereunder or
(c) the failure by the Company to perform or observe any of the provisions
hereof.

 

6.               Miscellaneous.

 

6.1           Waiver.  The parties hereto may specifically waive
any breach of this Agreement by the other parties, but no such waiver shall be
deemed to have been given unless such waiver is in writing, signed by the
waiving party, and specifically designates the breach waived, nor shall any
such waiver constitute a continuing waiver of similar or other breaches.

 

6.2           Invalidity.  If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases,
such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the parties’
intent.

 

11

 

6.3           Assignment.  This Agreement shall inure to and be binding
upon the parties and their respective successors and permitted assigns; provided,
however, that the Company may not assign its rights or obligations
hereunder without the express prior written consent of the Trustee.  Any such purported assignment in violation
of this Section 6.3 shall be null and void.

 

6.4           Choice of Law.  The existence, validity, construction,
operation and effect of any and all terms and provisions of this Agreement
shall be determined in accordance with and governed by the laws of the State of
New York, without regard to the principles of choice of law thereof (other than
Section 5-1401 and Section 5-1402 of the New York General Obligations
Law).  Regardless of any provision in
any other agreement, New York shall be the “securities intermediary’s
jurisdiction” for purposes of Section 9-305 and Section 8-110 of the UCC.

 

6.5           Entire Agreement;
Amendments.  This Agreement and the
Indenture contain the entire agreement among the parties with respect to the
subject matter hereof and supersede any and all prior agreements,
understandings and commitments with respect thereto, whether oral or written; provided,
however, that this Agreement is executed and accepted by the Trustee and
the Agent subject to all terms and conditions of the Trustee’s acceptance of
the trust under the Indenture, as fully as if said terms and conditions were
set forth at length herein.  This
Agreement may be amended only by a writing signed by duly authorized
representatives of all parties.  The
Trustee and the Agent may execute an amendment to this Agreement only if the
requisite consent of the Holders of the Notes required by Section 9.02 of the
Indenture has been obtained, unless no such consent is required by such Section
9.01 of the Indenture.

 

6.6           Notices.  All notices, requests, instructions, orders
and other communications required or permitted to be given or made under this
Agreement to a party hereto shall be delivered in writing by hand delivery or
overnight delivery, or shall be delivered by facsimile or telephonically with
confirmation in writing not more than twenty-four hours following such
facsimile or telephonic notice.  A
notice given in accordance with the preceding sentence shall be deemed to have
been duly given upon the sending thereof, except for notice to the Trustee or
the Agent, which shall be deemed given only when received.  Notices should be addressed as follows:

 

	
  To the Company:

  
	
   

  
	
   

  	
  Poster Financial Group, Inc.

  
	
   

  	
  2960 West Sahara Avenue, Suite 200

  
	
   

  	
  Las Vegas, Nevada 89102

  
	
   

  	
  Attention:  Timothy N. Poster

  
	
   

  	
  Facsimile number: (702) 367-6143

  
	
   

  	
   

  
	
  With a copy to:

  
	
   

  
	
   

  	
  Skadden, Arps, Slate, Meagher & Flom, LLP

  
	
   

  	
  Four Times Square

  
	
   

  	
  New York, New York 10036

  
	
   

  	
  Attention:  Phyllis G. Korff, Esq.

  
	
   

  	
  Facsimile number: (212) 735-2000

  

 

12

 

	
  To Trustee:

  
	
   

  
	
   

  	
  HSBC Bank USA

  
	
   

  	
  452 Fifth Avenue

  
	
   

  	
  New York, New York 10018-2706

  
	
   

  	
  Attention:  Issuer Services

  
	
   

  	
  Facsimile number: (212) 525-1300

  
	
   

  	
   

  
	
  To the Agent:

  
	
   

  
	
   

  	
  HSBC Bank USA

  
	
   

  	
  452 Fifth Avenue

  
	
   

  	
  New York, New York 10018-2706

  
	
   

  	
  Attention:  Issuer Services

  
	
   

  	
  Facsimile number: (212) 525-1300

  

 

or at such other address,
facsimile number or phone number as the specified entity most recently may have
designated in writing in accordance with this Section 6.6 to the other
parties.

 

6.7           Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.  Delivery of an executed counterpart of a
signature page to this Agreement by facsimile shall be effective as delivery of
a manually executed counterpart of this Agreement.

 

6.8           Trustee.  In connection with the appointment and in
acting hereunder, the Trustee, in its capacity as Trustee, is entitled to all
rights, privileges, benefits, immunities, protection and indemnities provided
to it under the Indenture.

 

(Signature Page Follows)

 

13

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day first written above.

 

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  POSTER FINANCIAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
     /s/ Timothy N. Poster

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy N. Poster

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRUSTEE:

  
	
   

  	
   

  
	
   

  	
  HSBC BANK USA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
     /s/ Deirdra N. Ross

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Deirdra N. Ross

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  HSBC BANK USA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
     /s/ Deirdra N. Ross

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Deirdra N. Ross

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
					

 

 

SIGNATURE PAGE TO PLEDGE AGREEMENT

 

 

EXHIBIT A

 

[Form of Release Certificate]

 

POSTER FINANCIAL GROUP, INC.

Date:                   

 

The undersigned, Timothy N. Poster, hereby certifies to HSBC Bank USA,
as trustee (the “Trustee”) and HSBC Bank USA, as agent and as securities
intermediary (the “Agent”), pursuant to Section 3.1 of the Pledge Agreement
(the “Pledge Agreement”), dated as of December 3, 2003, by and among Poster
Financial Group. Inc. (the “Company”), the Trustee and the Agent, that he is
the chief executive officer of the Company and that:

 

(a)           All conditions
required pursuant to Section 3.2 of the Pledge Agreement have been satisfied.

 

(b)           Each Guarantor has
all requisite corporate or limited liability company, as the case may be, power
and authority to execute, deliver and perform its respective obligations under
each of the Operative Documents to which it is a party.

 

(c)           The Guarantor
Joinder Agreement to the Registration Rights Agreement has been duly and
validly authorized, executed and delivered by the Guarantors and, assuming due
authorization, execution and delivery by the other parties thereto, the
Registration Rights Agreement constitutes a valid and binding agreement of the
Guarantors, enforceable against the Guarantors in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforceability is considered in a
proceeding at law or in equity), and except that rights to indemnification and
contribution thereunder may be limited by the public policy underlying any law,
rule or regulation (including federal or state securities law, rule or
regulation).

 

(d)           The Supplemental Indenture,
by and among the Company, the Guarantors and the Trustee, to the Indenture has
been duly and validly authorized, executed and delivered by the Guarantors and,
assuming due authorization, execution and delivery by the other parties
thereto, the Indenture constitutes a valid and binding agreement of the
Guarantors, enforceable against the Guarantors in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforceability is considered in a proceeding at law or in equity).

 

(e)           The Note Security
Documents have been duly and validly authorized, executed and delivered by the
Company and the Guarantors and, assuming due authorization, execution and
delivery by the Collateral Agent and the other parties thereto, constitute
valid and binding agreements of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with their terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting

 

A-1

 

creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforceability is considered in a proceeding at law or
in equity).

 

(f)            The Guarantees have
been duly and validly authorized, executed and issued by the Guarantors and constitute
valid and binding agreements of the Guarantors, enforceable against the
Guarantors in accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforceability is considered in a proceeding at law or
in equity).

 

(g)           The Exchange
Guarantees have been duly and validly authorized by the Guarantors and if and
when duly endorsed on the Exchange Notes in accordance with the terms of the
Indenture and, assuming due authentication of the Exchange Notes by the
Trustee, if and when the Exchange Notes are delivered in accordance with the
Registered Exchange Offer contemplated by the Registration Rights Agreement,
will constitute valid and binding agreements of the Guarantors, enforceable against
the Guarantors in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforceability is considered in a proceeding at law or
in equity).

 

(h)           The Company and its
subsidiaries have all requisite corporate or limited liability company, as the
case may be, power and authority to execute, deliver and perform their
respective obligations under the Loan and Security Agreement, dated as of the
date hereof, by and among the Company, GNLV, GNL, Wells Fargo Foothill, Inc.,
as administrative agent, the lenders named therein and Lehman Brothers Inc., as
syndication agent (the “Loan and Security Agreement”), as
applicable.  The Loan and Security
Agreement has been duly and validly authorized, executed and delivered by the
Company and the subsidiaries of the Company required to be signatory thereto
and constitutes a valid and binding agreement of each of the Company and such
subsidiaries, enforceable against the Company and each of such subsidiaries in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforceability is considered in a proceeding at law or in equity).

 

(i)            The Loan and
Security Agreement conforms to the description thereof in the Offering
Memorandum in all material respects.

 

(j)            The execution,
delivery and performance of the Operative Documents, the Stock Purchase
Agreement and the Loan and Security Agreement by the Company and the Guarantors
and the consummation of the Transactions will not conflict with or result in a
breach or violation of any of the terms or provisions of, impose any lien,
charge or encumbrance (except as contemplated by the Operative Documents, the
Stock Purchase Agreement and the Credit Facility) upon any property or assets
of the Company or any of its subsidiaries pursuant to, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other

 

A-2

 

agreement, license or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject, nor
will such actions result in any violation of the provisions of the charter or
bylaws (or similar organizational document) of the Company or any of its
subsidiaries or any statute applicable to, or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over, the Company
or any of its subsidiaries or any of their properties or assets.

 

(k)           Except as has been
previously granted and is in full force and effect and except as may be
required in connection with (1) the registration of the Notes and the Exchange
Notes under the Securities Act in accordance with the Registration Rights
Agreement, (2) qualification of the Indenture under the Trust Indenture Act and
(3) compliance with the securities or Blue Sky laws of various jurisdictions,
no consent, approval, authorization or order of, or filing, registration or
qualification with, any such court or governmental agency or body is required
for the execution, delivery and performance of this Agreement, the other
Operative Documents, the Stock Purchase Agreement and the Loan and Security
Agreement by the Company and its subsidiaries and the consummation of the
transactions contemplated thereby.

 

(l)            There are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company or
any of its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries would reasonably be expected to have a
Material Adverse Effect, and to the Company’s and the Guarantors’ knowledge, no
such proceedings have been threatened by governmental authorities or others.

 

(m)          The Collateral Agent
has a valid, duly perfected second priority security interest in all of the
Collateral listed in the Note Security Documents, subject to any Liens
permitted by the Indenture and the Note Security Documents, as security for the
payment of the obligations of the Company and the Guarantors under the
Indenture, and all of the notes and guarantees issued pursuant to the
Indenture, including without limitation the Notes and the Guarantees.  The actions, recordings and filings
described in the immediately preceding sentence are the only actions,
recordings and filings necessary to publish notice of and perfect the rights of
the Collateral Agent in all of the Collateral, except for such additional
actions, recordings and filings as the Company and the Collateral Agent may
determine prior to the Closing Date.

 

(n)           With effect from the
closing of the Acquisition, the Company and each of its subsidiaries carry, or
are covered by, insurance as required by Section 4.23 of the Indenture.

 

(o)           With respect to real
property and personal property owned or leased by the Company and its
subsidiaries, the Company and each of its subsidiaries have received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and have duly effected all
recordings, filings and other actions necessary in all material respects to
establish, protect and perfect the Company’s and its subsidiaries’ right, title
and interest in all such property.

 

Capitalized terms used herein and not defined are used as defined in
the Purchase Agreement, dated November 18, 2003, between the Company and Lehman
Brothers Inc.

 

The Company hereby requests the Agent to transfer the funds on deposit
in the Proceeds Account in immediately available funds as follows:

 

A-3

 

	
  Payee

  	
   

  	
  Amount to
  be

  Transferred

  	
   

  	
  Wire
  Instructions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-4

 

The Company hereby requests the Trustee and the Agent to terminate and
release the Trustee’s security interest in the Collateral in accordance with
Section 3.1 of the Pledge Agreement.

 

 

	
   

  	
  POSTER FINANCIAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-5

 

EXHIBIT B-1

 

Opinion of Skadden, Arps, Slate, Meagher
& Flom LLP

 

Capitalized terms used herein are used as defined in the Purchase
Agreement, dated November 18, 2003, between the Company and Lehman Brothers
Inc.

 

1.               The Guarantor Joinder Agreement (the “Joinder
Agreement”) to the Registration Rights Agreement has been duly executed and
delivered by the Guarantors, to the extent such delivery and execution are
governed by New York law, and, assuming due authorization, execution and
delivery by the other parties thereto, the Registration Rights Agreement is a
valid and binding agreement of the Guarantors, enforceable against the
Guarantors in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity), and except that rights to indemnification and contribution
thereunder may be limited by the public policy underlying any law, rule or
regulation (including any federal or state securities law, rule or regulation).

 

2.               The Supplemental Indenture to the
Indenture has been duly executed and delivered by the Guarantors, to the extent
such delivery and execution are governed by New York law, and, assuming due authorization,
execution and delivery by the other parties thereto, the Indenture is a valid
and binding agreement of the Guarantors, enforceable against the Guarantors in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity).

 

3.               Each of the Note Security Documents to
which the Company and the Guarantors are a party has been duly executed and
delivered by the Company and the Guarantors, to the extent such delivery and
execution are governed by New York law, and assuming due authorization,
execution and delivery by the Collateral Agent and the other parties thereto,
constitutes a valid and binding obligation of the Company and the Guarantors,
as applicable, enforceable against the Company and the Guarantors, as
applicable, in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity).

 

4.               Under the New York UCC, the provisions
of the Security Agreement (as defined in the opinion) are effective to create a
valid security interest in the Company’s and Guarantors’ rights in the
Collateral (as defined therein) in favor of the Collateral Agent to secure the
Obligations (as defined therein).

 

5.               Under the New York UCC, the provisions
of the Pledge Agreement (as defined in the opinion) are effective to create a
valid security interest in the Company’s and Guarantors’ rights in the Pledged
Collateral (as defined therein) in favor of the Collateral Agent to secure the
Obligations (as defined therein).

 

6.               The Guarantees have been duly executed
and delivered by the Guarantors, to the extent such delivery and execution are
governed by New York law, and constitute the valid and binding

 

B-1-1

 

obligations of
the Guarantors, enforceable against the Guarantors in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally and by general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).

 

7.               The Exchange Guarantees, when duly
executed and delivered in exchange for the Guarantees in accordance with the
terms of the Indenture, the Registration Rights Agreement and the Exchange
Offer (as defined in the Registration Rights Agreement) and, assuming due
authentication of the Exchange Notes by the Trustee, will constitute valid and
binding obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity).

 

8.               The Loan and Security Agreement (as
defined in the opinion) has been duly executed and delivered by the Company,
GNLV and GNL, to the extent such delivery and execution are governed by
California law, and assuming due authorization, execution and delivery by the
other parties thereto, constitutes the valid and binding obligation of the
Company, GNLV and GNL, enforceable against the Company, GNLV and GNL in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).

 

9.               The execution and delivery by the
Company of the Note Security Documents and by the Guarantors of the Note
Security Documents, the Guarantees, the Exchange Guarantees, the Joinder
Agreement and the Supplemental Indenture, and the consummation of the
transactions contemplated thereby (a) will not constitute a violation of, or a
breach or default under, the terms of the Stock Purchase Agreement, the Loan
and Security Agreement and leases relating to real property leased by the
Company and the Guarantors and (b) will not violate or conflict with, or result
in any contravention of, any Applicable Law (as defined below) or any order,
rule or regulation of any federal or New York court or governmental agency or
body having jurisdiction over the Company or the Guarantors.  We do not express any opinion, however, as
to whether the execution, delivery or performance by the Company and the
Guarantors of the Note Security Documents, the Guarantees, the Exchange
Guarantees, the Joinder Agreement, the Registration Rights Agreement, the
Supplemental Indenture and the Indenture, as applicable, will constitute a violation
of, or a default under, any covenant, restriction or provision with respect to
financial ratios or tests or any aspect of the financial condition or results
of operations of the Company or any of its subsidiaries.

 

10.         The execution and delivery by the Company,
GNLV and GNL of the Loan and Security Agreement and the consummation of the
transactions contemplated thereby (a) will not constitute a violation of, or a
breach or default under, the terms of the Stock Purchase Agreement and leases
relating to real property leased by the Company and the Guarantors and (b) will
not violate or conflict with, or result in any contravention of, any Applicable
Law or any order, rule or regulation of any federal or New York court or
governmental agency or body having jurisdiction over the Company or the
Guarantors.  We do not express any
opinion, however, as to whether the execution, delivery or performance by the
Company,

 

B-1-2

 

GNLV and GNL
of the Loan and Security Agreement will constitute a violation of, or a default
under, any covenant, restriction or provision with respect to financial ratios
or tests or any aspect of the financial condition or results of operations of
the Company or any of its subsidiaries.

 

11.         No consent, approval, license, authorization
or validation of, or filing, qualification or registration with, any court or
governmental agency or body of the State of New York or the United States of
America having jurisdiction over the Company or the Guarantors under Applicable
Law (other than any consent, approval, license, authorization, validation,
filing, qualification or registration that may have become applicable as a
result of the involvement of any party (other than the Company or the
Guarantors) in the transactions contemplated by the Note Security Documents,
the Joinder Agreement, the Registration Rights Agreement, the Supplemental
Indenture, the Indenture, the Guarantees, the Exchange Guarantees and the Loan
and Security Agreement or because of such parties’ legal or regulatory status
or because of any other facts specifically pertaining to such parties), which
has not been obtained or taken and is not in full force and effect, is required
to authorize, or is required in connection with, the execution or delivery of
the Note Security Documents and the Loan and Security Agreement by the Company,
and the execution and delivery of the Note Security Documents, the Joinder
Agreement, the Supplemental Indenture, the Guarantees, the Exchange Guarantees
and the Loan and Security Agreement by the Guarantors, or the consummation by
the Company and the Guarantors of the transactions contemplated thereby.

 

We do not express any opinion as to any laws other than the laws, rules
and regulations of the State of New York (except, with respect to paragraph 7
above, the laws, rules and regulations of the State of California) and the
federal laws, rules and regulations of the United States of America, in each
case that, in our experience, are normally applicable to transactions of the
type contemplated by the Note Security Documents, the Loan and Security
Agreement, the Joinder Agreement, the Supplemental Indenture, the Guarantees
and the Exchange Guarantees (other than the United States federal securities
laws, state securities or blue sky laws, antifraud laws and the rules and
regulations of the National Association of Securities Dealers, Inc.), but
without our having made any special investigation of any specific law, rule or
regulation (the “Applicable Law”).

 

B-1-3

 

EXHIBIT B-2

 

Opinion of Schreck Brignone

 

Capitalized terms used herein are used as defined in the Purchase
Agreement, dated November 18, 2003, between the Company and Lehman Brothers
Inc.

 

1.               Each of the Guarantors has been duly
incorporated or organized, as the case may be, is validly existing as a
corporation or limited liability company, as the case may be, in good standing
under the laws of the State of Nevada and has all corporate or limited
liability company, as the case may be, power and authority necessary to own or
hold its properties and to conduct the business in which it is engaged as
described in the Offering Memorandum.

 

2.               All of the issued shares of capital
stock or member’s interests of each subsidiary of the Company other than The
Fremont Street Experience Limited Liability Company (“FSELLC”), and a
17.65% voting interest and 50% non-voting interest in FSELLC, are owned
directly or indirectly by the Company, and to our knowledge (based solely on
our review of the UCC Search Reports and the original stock or membership
certificates evidencing such capital stock or member’s interests, which have
been delivered to the [Collateral Agent] [agent of the Collateral Agent] in
Nevada), are owned free and clear of all liens, encumbrances or claims, other
than liens, encumbrances or claims contemplated under the Credit Facility, the
Note Security Documents or otherwise as described in the Offering
Memorandum.  The term “UCC Search
Reports” is defined as those reports generated and certified by the Nevada
Secretary of State in response to a search request on Form UCC-11 on a date
prior to the Acquisition Date with respect to financing statements on Form
UCC-1, amendments thereto and continuations thereof naming the Company or any
of its subsidiaries as debtors, on file with the office of the Nevada Secretary
of State as of 5:00 p.m. on the date indicated in the response.

 

3.               Each Guarantor has all requisite
corporate or limited liability company, as the case may be, power and authority
to execute, deliver and perform its respective obligations under each of the
Operative Documents to which it is a party.

 

4.               The
Registration Rights Agreement has been duly authorized, executed and delivered
by the Guarantors.

 

5.               The
Indenture has been duly authorized, executed and delivered by the Guarantors.

 

6.               The Note Security Documents have been
duly authorized, executed and delivered by the Company and the Guarantors, to
the extent a party thereto.

 

7.               Assuming
due authorization, execution and delivery by the other parties thereto and to
the extent they are governed by Nevada law, the Nevada Deeds of Trust are the
valid and binding agreements of the Guarantors to the extent a party thereto,
enforceable against such Guarantors in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforceability is considered in a
proceeding at law or in equity).

 

B-2-1

 

8.               The UCC financing statements are in appropriate
form for filing in the office of the Secretary of State of Nevada.  Assuming the provisions of the Note Security
Documents (other than the Nevada Deeds of Trust) are effective under New York
law to create a valid security interest in such Collateral, upon the later of
attachment of the security interest and the proper filing of the UCC financing
statements in the office of the Nevada Secretary of State, the security
interest in favor of the Trustee for the benefit of the holders of the Notes in
the Collateral described in the financing statements and the Note Security
Documents (including the Nevada Deeds of Trust) is perfected to the extent a
security interest in such Collateral can be perfected by filing a financing
statement in the State of Nevada under the provisions of Section 104.9310 of
the Nevada UCC.

 

9.               The Guarantees have been duly authorized
and executed by the Guarantors.

 

10.         The Exchange Guarantees have been duly
authorized by the Guarantors.

 

11.         The Company and the Guarantors have all
requisite corporate or limited liability company, as the case may be, power and
authority to execute, deliver and perform their respective obligations under
the Loan and Security Agreement (as defined in the opinion), as
applicable.  The Loan and Security
Agreement has been duly authorized, executed and delivered by the Company, GNLV
and GNL.

 

12.         The execution, delivery and performance of the
Operative Documents, the Stock Purchase Agreement and the Loan and Security
Agreement by the Company and the Guarantors and the consummation of the
Transactions do not result in a breach or violation of, or constitute a default
under, (a) the provisions of the articles of incorporation or bylaws (or
similar organizational document) of the Company and the Guarantors or
(b) any applicable Nevada statute or, to our knowledge, any order, rule or
regulation of any Nevada court or Nevada governmental agency or body having
jurisdiction over the Company, the Guarantors or any of their respective
properties or assets (other than state securities or Blue Sky laws, as to which
we express no opinion).

 

13.         No consent, approval, authorization or order
of, or filing, registration or qualification with, any Nevada court or Nevada
governmental agency or body is required under applicable Nevada law for the
execution, delivery and performance of the Operative Documents, the Stock
Purchase Agreement and the Loan and Security Agreement by the Company and the
Guarantors and the consummation of the transactions contemplated thereby,
except for (a) state securities or Blue Sky laws (as to which we express no
opinion), (b) consents and approvals required by the Nevada Gaming Authorities
and (c) filings and recording of documents as necessary to perfect liens and
security interests (and to register trademarks, patents and copyrights, as to
which we express no opinion, except to the extent perfection is achieved by
filing in the office of the Nevada Secretary of State under the Nevada UCC).

 

Please note that, with respect to our opinion as to the due
incorporation of GNLV, CORP., we have reviewed and relied only upon a copy of
the articles of incorporation and amendments thereto on file with the Nevada
Secretary of State and on a certificate of existence issued by the Nevada
Secretary of State.

 

We are assuming, in the case of GNLV, CORP., that all of its issued
shares of capital stock were validly issued to Golden Nugget, Inc. and that
there was a valid transfer of

 

B-2-2

 

such shares to Mirage Resorts,
Incorporated, prior to the acquisition by the Company of such shares pursuant
to the Stock Purchase Agreement.

 

We are assuming that GNLV, CORP.’s Bylaws were duly adopted by the
board of directors and/or stockholders of that entity.

 

B-2-3

 

EXHIBIT B-3

 

Opinion of Fennemore Craig

 

Capitalized terms used herein are used as defined in the Purchase
Agreement, dated November 18, 2003, between the Company and Lehman Brothers
Inc.

 

1.               The
Arizona Deed of Trust has been duly executed and delivered by GNL, to the
extent such delivery and execution are governed by Arizona law, and, assuming
due authorization, execution and delivery by the other parties thereto, is a
valid and binding agreement of GNL, enforceable against the GNL, in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforceability is considered in a proceeding at law or in equity).

 

2.               The UCC fixture filing is in appropriate form for
filing in the office of the Secretary of State of Arizona.  Assuming the provisions of the Note Security
Documents (other than the Arizona Deed of Trust) are effective under New York
law to create a valid security interest in such Collateral, upon the later of
attachment of the security interest and the proper filing of the fixture filing
in the office of the Arizona Secretary of State, the security interest in favor
of the Trustee for the benefit of the holders of the Notes in the Collateral
described in the fixture filing and the Note Security Documents (including the
Arizona Deed of Trust) is perfected to the extent a security interest in such
Collateral can be perfected by filing a fixture filing in the State of Arizona
under the provisions of Section 104.9310 of the Arizona UCC.

 

B-3-1

 

EXHIBIT
B-4

 

Stock Purchase Agreement

 

B-4-1

 

EXHIBIT C

 

[Form of Release of Security Interest]

 

HSBC Bank USA

452 Fifth Avenue

New York, New York 10018

 

Date:                   

Poster Financial Group, Inc.

2960 West Sahara, Suite 200

Las Vegas, Nevada  89102

Attention:  Chief Executive
Officer

 

Re:  Release of Security
Interest

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Pledge Agreement dated as of
December 3, 2003, by and among Poster Financial Group, Inc. (the “Company”),
HSBC Bank USA, as Trustee, and HSBC Bank USA, as Agent.

 

By its signature below, and in reliance on the Release Certificate of
the Company dated as of the date hereof, each of the Agent and the Trustee
hereby terminates and releases the Trustee’s security interest in the
Collateral.

 

C-1

 

This Release of Security Interest may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original and all of which, taken together, shall constitute one and the same
instrument.

 

 

	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  HSBC Bank USA,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HSBC Bank USA,

  
	
   

  	
  as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

C-2

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