Document:

Exhibit
4.2

 

AMENDMENT NO. 1 TO LOAN
AGREEMENT

 

This Amendment No. 1 to Loan Agreement (this
“Amendment”) dated as of July 23, 2003 is entered into with reference to the
Loan Agreement dated as of January 24, 2003 among The United Auburn Indian
Community, a federally recognized Indian tribe (“Borrower”), the Lenders
referred to therein, Wells Fargo Bank, N.A., as Syndication Agent, and Bank of
America, N.A., as Administrative Agent (the “Loan Agreement”), and with
reference to the following facts:

 

A.                                   The
Auburn Casino was opened for business to gaming patrons on June 9, 2003.

 

B.                                     By
way of a Joinder Agreement dated as of June 30, 2003, the Term Commitment was
increased by $72,500,000 (resulting in the aggregate principal amount of the
Commitments being increased to $215,000,000), and Bank of America, N.A.,
Deutschebank Trust Company Americas and Credit Lyonnais New York Branch funded
additional Term Loans in the aggregate principal amount of $72,500,000.

 

C.                                     Concurrently
with the making of the additional Term Loans referred to above, Station
received payment of the “Existing Station Sub Debt” in the amount of
$36,798,151, with the balance of the principal amount of such additional Terms
being applied in reduction of the outstanding principal balance of the Revolving
Loans (without any reduction in the Revolving Commitment).

 

D.                                    The
Completion Date has not yet occurred, however the Borrower desires to begin the
making of Distributions of the type contemplated by Section 6.5(b).

 

E.                                      The
Lenders are willing to permit the making of such Distributions on the basis of
the calculation of a Monthly Pro Forma Fixed Charge Coverage Ratio, as provided
for and limited herein.

 

NOW, THEREFORE, the Borrower and the Administrative
Agent, acting with the consent of the Requisite Lenders pursuant to Section
12.2 of the Loan Agreement, hereby agree to amend the Loan Agreement as
follows:

 

1.                                       Defined
Terms.  This Amendment is one of the
Loan Documents referred to in the Loan Agreement, and capitalized terms used
but not defined herein are used with the meanings set forth for those terms in
the Loan Agreement.

 

2.                                       Stipulation
Re Opening Date.  For the avoidance
of doubt, the parties stipulate and agree that the “Opening Date” referred to
in the Loan Agreement occurred on June 9, 2003, and that the first Post Opening
Fiscal Quarter will be the Fiscal Quarter ending September 30, 2003.

 

3.                                       Monthly
Distributions and Sub Debt Prepayments. 
It is agreed that monthly Distributions and the making of any prepayment
of Subordinated Obligations shall be governed by the Monthly Pro Forma Fixed
Charge Coverage Ratio, and made pursuant to Section 6.1 or 6.5(b) of the Loan
Agreement (in each case as applicable, and as amended hereby).  While the Monthly Pro Forma Fixed Charge
Coverage Ratio shall limit the amount of prepayments of Subordinated
Obligations permitted by Section 6.1 and of the Distributions permitted by
Section 6.5(b), the parties confirm that the Fixed Charge Coverage Ratio shall
continue to be calculated only on a quarterly basis as of the last day of each
Fiscal Quarter.

 

4.                                       Additional
Defined Terms.  The following
definitions are added to those set forth in Section 1.1 of the Loan Agreement:

 

1

 

“Monthly Pro Forma
Fixed Charge Coverage Ratio” means the ratio, determined as of the date of
the making of each prepayment of Subordinated Obligations under Section 6.1,
and of each proposed Distribution pursuant to Section 6.5(b), of (a) the
sum of (i) Gaming EBITDAM for the most recent period of twelve calendar months
ending on or immediately prior to that date (excluding any such calendar month
prior to June, 2003) plus (ii) any increase in the outstanding
principal balance of the Sub Debt Contributions (or minus any reduction
in the outstanding principal balance of the Sub Debt Contributions other
than any reduction resulting from the prepayment of Existing Station Sub
Debt in the manner contemplated by Section 6.1(d)) during the period for
which Gaming EBITDAM is calculated minus (iii) any Maintenance
Capital Expenditures incurred in the same period, minus (iv) any
Distributions made during that period, minus (v) without
duplication as to clause (iv), any prepayments of Subordinated Obligations or
Distributions made following the last day of that period (including the
proposed prepayment or Distribution), minus, (vi) the aggregate amount
of federal, state and local taxes, if any, paid with respect to the income or
revenue derived from the Gaming Assets, to the extent not deducted in arriving at
Gaming EBITDAM, during the same period minus (vii) all fees paid or
payable to Station, Station Management, Station Development or their respective
Affiliates under the Management Agreement or the Development Agreement during
the same period to (b) Fixed Charges determined as of the same date.

 

“Payment Certificate”
means a Certificate, substantially in the form of Exhibit L, signed by a
Responsible Official of Borrower on its behalf and by Station Management, and
properly completed to provide all information required to be included therein

 

5.                                       Amended
Defined Terms.  The following
definitions set forth in Section 1.1 of the Loan Agreement are amended to read
in full as follows:

 

“Fixed Charges”
means, as of each date of determination of the Fixed Charge Coverage Ratio or
the Monthly Pro Forma Fixed Charge Coverage Ratio the sum of:

 

(a)                                  all
of Borrower’s Interest Expense paid in cash during the twelve month period
ending on that date (but excluding any portion thereof which is prior to June
9, 2003); plus

 

(b) all scheduled
payments of principal in respect of Recourse Obligations during the twelve
month period following such date (or, to the extent that the period
in (a) is less than twelve months, the number of months in the period for which
Interest Expense has been determined), in the case of any revolving line of
credit, being equal to the amount, if any by which the outstanding balance of
such line of credit exceeds any amount to which the principal amount of that
line of credit must be reduced in accordance with its terms during that period.

 

6.                                       Representations
and Warranties.  In order to induce
the Administrative Agent to enter into this Amendment, Borrower represents and
warrants to the Administrative Agent and the Lenders as follows:

 

a.                                       Giving
effect to the repayment of the Existing Station Sub Debt, the aggregate
principal balance of the Subordinated Obligations owed to Station and its
Affiliates as of the date of this Amendment is $10,097,181;

 

b.                                      As
of June 30, 2003, the aggregate amount expended by the Borrower in respect of
the design and construction of the Thunder Valley Casino in accordance with the
Approved Budget was $187,408,971.

 

2

 

c.                                       As
of June 30, 2003, the only items described in the Approved Plans which have not
yet been completed are as described on Exhibit A.

 

d.                                      As
of June 30, 2003, the remaining costs for the design and construction of the
Thunder Valley Casino which have not yet been paid are as set forth on Exhibit
B, and there are no material costs associated with design and construction of
the Thunder Valley Casino which are not part of the Approved Budget or
described on Exhibit B.

 

e.                                       As
of the date of this Amendment, and giving effect hereto, no Default or Event of
Default has occurred and remains continuing;

 

7.                                       Section
6.1 – Payment of Subordinated Obligations. 
Section 6.1 of the Loan Agreement is hereby amended to read in full as
follows:

 

“Payment of Subordinated Obligations.  Prepay any principal (including sinking fund
payments), interest or any other amount with respect to any Subordinated
Obligations, or purchase or redeem (or offer to purchase or redeem) any
Subordinated Obligations, or deposit any monies, securities or other Property
with any trustee or other Person to provide assurance that the principal or any
portion thereof of any Subordinated Obligations will be paid when due or
otherwise provide for the defeasance of any Subordinated Obligations provided
that so long as no Default or Event of Default exists, or would result
therefrom, Borrower may:

 

(a) make scheduled
payments of interest in respect of the Subordinated Obligations;

 

(b) make scheduled
payments under the Management Agreement and the Development Agreement;

 

(c) prepay Subordinated
Obligations (including, without limitation, Sub Debt Contributions) to the
extent such prepayments are made out of Available Cash Flow after the payment
of the Obligations then due and to the extent that, giving pro forma effect to
any such prepayments made in the current Fiscal Quarter, as of the last day of
the immediately preceding Fiscal Quarter, Borrower’s Monthly Pro Forma Fixed
Charge Coverage Ratio, calculated on a pro forma basis as of the last day of
the immediately preceding calendar month, is not less than 1.10:1.00 (or, if
the Make-Well Release Date has occurred, 1.25:1.00), and provided that
during the ten Business Day period prior to the making of any prepayment under
this clause (c), Borrower and Station Management shall have provided the
Administrative Agent with a Payment Certificate certifying as to such matters.”

 

8.                                       Section
6.5(b) – Distributions.  Section
6.5(b) of the Loan Agreement is hereby amended to read in full as follows:

 

“(b) following the
Opening Date, other Distributions to Borrower made during any calendar month in
an amount not to exceed Available Cash Flow for the immediately preceding
calendar month; provided that:

 

(i)  giving effect to the making of such
Distribution, the Monthly Pro Forma Fixed Charge Coverage Ratio, calculated on
a pro forma basis as of the last day of the immediately preceding calendar
month, is not less than 1.10:1.00 (or, if the Make-Well Release Date has
occurred, 1.25:1.00);

 

(ii) the aggregate amount
of the Distributions made pursuant to this clause (b)

 

3

 

shall not exceed, during any Fiscal Quarter ending
prior to the Make-Well Release Date, 25% of Gaming EBITDAM for that Fiscal
Quarter;

 

(iii) giving effect to
the making of the Distribution, no Default or Event of Default exists;

 

(iv) during the ten
Business Day period prior to the making of any Distribution under this clause
(b), Borrower and Station Management shall have provided the Administrative
Agent with a Payment Certificate certifying as to such matters.”

 

9.                                       Section
6.14(a) – Capital Expenditures. 
Section 6.14(a) of the Loan Agreement is hereby amended to read in full
as follows:

 

“(a) Capital Expenditures
made in accordance with the Approved Plans and Approved Budget for the
construction of the Thunder Valley Casino in an aggregate amount not to exceed
$270,000,000, provided that to the extent that such Capital Expenditures
exceed $215,000,000, Station shall have complied with its obligations to make
Sub Debt Contributions in respect of such excess amounts, as and when required
by the Completion Guaranty.”

 

10.                                 Form
of Payment Certificate.  Exhibit L
to this Agreement is hereby deemed attached to the Loan Agreement as Exhibit L
thereto, the form of the Payment Certificate.

 

11.                                 Conditions
Precedent.  This Amendment shall be
subject to the fulfillment of each of the following conditions precedent:

 

a.                                       The
Administrative Agent shall have received written consents hereto executed by
the Requisite Lenders, substantially in the form of Exhibit C hereto;

 

b.                                      Each
of the representations and warranties of the Borrower set forth herein shall be
true and correct; and

 

c.                                       Station
and Station Management shall each have executed the consent hereto appended
following the signature pages hereof.

 

12.                                 Reservation.  The Administrative Agent and the Lenders
specifically reserve all of their rights under the Completion Guaranty.

 

[Remainder of this page intentionally left blank –
signatures follow]

 

4

 

13.                                 Confirmation.  The other provisions of the Loan Agreement
and the Loan Documents are hereby confirmed. 
Without limitation on the foregoing, the Borrower confirms that the
waiver of sovereign immunity set forth in Section 12.31 of the Loan Agreement
applies to this Amendment.

 

IN WITNESS WHEREOF, the Borrower and the
Administrative Agent have executed this Amendment by their duly authorized
representatives.

 

	
   

  	
  THE UNITED AUBURN INDIAN COMMUNITY

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Jessica Tavares,
  Chairperson

  	
   

  
	
   

  
	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as Administrative Agent

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Janice Hammond, Vice
  President

  	
   

  
						

 

The undersigned hereby consent to the execution, delivery and delivery
of the foregoing Amendment, and confirm that, to the best knowledge of the
undersigned, the representations and warranties of the Borrower set forth in
Sections 7(a) through (d), above, are correct. 
Station further acknowledges (a) the continuing effect of its
obligation, pursuant to the Completion Guaranty, to make Sub Debt Contributions
to the Borrower to the extent that construction costs of the Thunder Valley
Casino exceed $215,000,000, to the extent that the Borrower has not dedicated
Available Cash Flow to the payment of such amounts as determined by
Administrative Agent in its sole discretion, and (b) that the Administrative
Agent and the Lenders have reserved all of their rights under the Completion
Guaranty.

 

	
  STATION CASINOS, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
  STATION CALIFORNIA, LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
					

 

5

 

Exhibit A

 

Items remaining to be completed:

 

1. Asian gaming room

 

2. VIP gaming room

 

3. Three restaurants (Steakhouse, Coffee Shop and Asian)

 

4. Expansion of Sunset Road

 

5. Bridge over wetlands

 

6. Improvements on Fiddyment Road

 

6

 

Exhibit B

 

Remaining costs as of June 30, 2003 to complete Thunder Valley Casino:
$60,945,496

 

7

 

Exhibit C

 

CONSENT OF LENDER

 

Reference is hereby made to the Loan Agreement dated
as of January 24, 2003 (the “Loan Agreement”) among The United Auburn Indian
Community, a federally recognized Indian tribe (“Borrower”) the Lenders
referred to therein, Wells Fargo Bank, N.A., as Syndication Agent, and Bank of
America, N.A., as Administrative Agent.

 

The undersigned Lender hereby consents to the
execution and delivery of Amendment No. 1 to Loan Agreement by the
Administrative Agent on its behalf, substantially in the form of the most
recent draft thereof presented to the undersigned Lender.

 

Dated as of July      , 2003.

 

 

	
   

  	
   

  
	
  [Name of Lender]

  	
   

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
				

 

8

 

[Exhibit L to Loan
Agreement and to Amendment No. 1 to Loan Agreement]

 

PAYMENT CERTIFICATE

 

This Payment Certificate is delivered to Bank of
America, N.A., as Administrative Agent, with reference to the Loan Agreement
dated as of January 24, 2003 among The United Auburn Indian Community, a
federally recognized Indian tribe (“Borrower”), the Lenders referred to
therein, Wells Fargo Bank, N.A., as Syndication Agent, and Bank of America,
N.A., as Administrative Agent (as amended, the “Loan Agreement”).  Within the ten Business Day period following
the delivery of this Certificate, the Borrower intends to [check one]:

 

o                                    Make
a prepayment of Subordinated Obligations pursuant to Section 6.1 of the Loan
Agreement in the principal amount of
$                                  .

 

o                                    Make
a Distribution in the amount of
$                                  
pursuant to Section 6.5(b) of the Loan Agreement.

 

In connection the prepayment of Sub Debt Contributions
or Distribution (the “Payment”) described above,  the undersigned hereby certifies that:

 

(a)                                  Available
Cash Flow for the calendar month (the “Test Month”) immediately preceding the
date of this Certificate was
$                                       .

 

(b)                                 giving
pro forma effect to the Payment and all other Payments heretofore made or to be
made during the current month, as of the last day of the Test Month the Monthly
Pro Forma Fixed Charge Coverage Ratio is not less than 1.10:1.00 (or, if the
Make-Well Release Date has occurred, 1.25:1.00).

 

Calculations supporting the above certifications are
attached hereto and incorporated herein by this reference.

 

IN WITNESS WHEREOF, the undersigned have executed this
Amendment by its duly authorized representatives.

 

 

	
  THE UNITED AUBURN INDIAN COMMUNITY

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  STATION CALIFORNIA, LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
				

 

9Exhibit
10.1

 

EXECUTIVE
EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(this “Agreement”)
is made and entered into as of the 20th day of May, 2003, by and between
Station Casinos, Inc., a Nevada corporation, with its principal offices located
at 2411 West Sahara Avenue, Las Vegas, Nevada 
89102 (the “Company”), and FRANK J. FERTITTA III (the “Executive”).

 

WHEREAS, the
Company and the Executive are parties to an Amended and Restated Employment
Agreement dated as of December 1, 1999 (the “Former Agreement”); and

 

WHEREAS, the
Executive has agreed to continue his employment with the Company on the terms
and conditions set forth herein; and

 

WHEREAS, the
parties to this Agreement desire to replace the Former Agreement in its
entirety with this Agreement, and the Former Agreement shall no longer be of
any force or effect;

 

NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the Company and the Executive (each
individually a “Party” and together the “Parties”) agree as follows.

 

1.                                       DEFINITIONS.  In addition to certain terms defined
elsewhere in this Agreement, the following terms shall have the following
respective meanings:

 

1.1                                 “Affiliate”
shall mean any Person controlling, controlled by or under common control with
the Company,

 

1.2                                 “Base Salary”
shall mean the greater of (a) the salary provided for in Subsection 3.1
of this Agreement, or (b) any increased salary granted to the Executive (a) by
the Board or (b) pursuant to the provisions of Subsection 3.1 or
Subsection 7.1(b).

 

1.3                                 “Board”
shall mean the Board of Directors of the Company, including any successor of
the Company in the event of a Change in Control.

 

1.4                                 “Cause”
shall mean that the Executive:

 

(a)                                  has
been convicted of a felony;

 

(b)                                 has
been found unsuitable to hold a gaming license by final, non-appealable
decision of the Nevada Gaming Commission; or

 

 

(c)                                  in
carrying out his duties under this Agreement, has engaged in acts or omissions
constituting gross negligence or willful misconduct resulting, in either case,
in material economic harm to the Company, unless such act, or failure to act,
was believed by the Executive in good faith to be in the best interests of the
Company or any Affiliate.

 

1.5                                 A
“Change
in Control”

 

(a)                                  shall
be deemed to have occurred if:

 

(1)  any Person, corporation, entity or group
(other than the Existing Equity Holders) is or becomes the beneficial owner,
directly or indirectly, of securities representing 50% or more of the combined
voting power of the Company’s Voting Stock (an “Acquisition Event”), or

 

(2)  the Company consolidates with or merges into
another corporation or entity, or any corporation or entity consolidates with
or merges into the Company, with the effect that the beneficial owners of the
Company’s Voting Stock held immediately prior to the consummation of such
consolidation or merger cease to beneficially own, directly or indirectly,
securities representing 50% or more of the combined voting power of the
Company’s Voting Stock (or if the Company is not the surviving entity, the
surviving company’s voting securities) upon the consummation of such
consolidation or merger (a “Merger Event”), or

 

(3)  the Company sells, conveys, transfers or
leases to any person, corporation, entity or group, directly or indirectly, in
one transaction or series of related transactions, properties and/or assets
that accounted for 75% or more of the earnings (before interest, taxes,
depreciation and amortization) of the Company, on a consolidated basis for the
four-fiscal quarter period immediately preceding the date of consummation of
such transaction (a “Sale Event”).

 

(b)                                 Notwithstanding
the foregoing, a reincorporation, spin-off, split-off or other reorganization
transaction (a “Reorganization Event”), or series of related transactions, in
which either the “beneficial owners” of the Company’s Voting Stock or the
Existing Equity Holders beneficially own securities representing 50% or more of
the combined voting power of the Company’s Voting Stock upon the consummation
of such transaction shall not constitute an Acquisition Event, Merger Event or
Sale Event for purposes of this definition. 
For purposes of this definition, “beneficial ownership” shall have the
same meaning as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, as amended, except that a Person shall be deemed to have
“beneficial ownership” of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time.

 

2

 

(c)                                  For
the purposes of this definition, upon consummation of an Acquisition Event,
Merger Event, Sale Event or Reorganization Event, the “Company’s Board” and the
“Company’s Shareholders” shall refer to (i) in the case of an Acquisition
Event, the Company, (ii) in the case of a Merger Event, the company surviving
the merger or consolidation, (iii) in the case of a Sale Event, the transferee
of the properties, and/or assets, and (iv) in the case of a Reorganization
Event, the entity or entities surviving such Reorganization Event on a
consolidated basis.

 

1.6                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

1.7                                 “Company
Property” shall mean all items and materials provided by the Company
to the Executive, or to which the Executive has access, in the course of his
employment, including, without limitation, all files, records, documents,
drawings, specifications, memoranda, notes, reports, manuals, equipment,
computer disks, videotapes, drawings, blueprints and other documents and
similar items relating to the Company, its Affiliates or their respective
customers, whether prepared by the Executive or others, and any and all copies,
abstracts and summaries thereof.

 

1.8                                 “Confidential
Information” shall mean all nonpublic and/or proprietary information
respecting the business of the Company or any Affiliate, including, without
limitation, its products, programs, projects, promotions, marketing plans and
strategies, business plans or practices, business operations, employees,
research and development, intellectual property, software, databases,
trademarks, pricing information and accounting and financing data.  Confidential Information also includes
information concerning the Company’s or any Affiliate’s customers, such as
their identity, address, preferences, playing patterns and ratings or any other
information kept by the Company or any Affiliate concerning its customers
whether or not such information has been reduced to documentary form.  Confidential Information does not include
information that is, or becomes, available to the public unless such
availability occurs through an unauthorized act on the part of the Executive.

 

1.9                                 “Deferred
Compensation Plan for Executives” shall mean the Company’s Deferred
Compensation Plan for Executives, effective as of November 30, 1994, as the
same may be amended from time to time.

 

1.10                           “Disability”
shall mean a physical or mental incapacity that prevents the Executive from
performing the essential functions of his position with the Company for a
minimum period of ninety (90) days as determined (a) in accordance with any
long-term disability plan provided by the Company of which the Executive is a
participant, or (b) by the following procedure:  The Executive agrees to submit to medical examinations by a
licensed healthcare professional selected by the Company, in its sole
discretion, to determine whether a Disability exists.  In addition, the Executive may submit to the Company documentation
of a Disability, or lack thereof, from a licensed healthcare professional of
his choice.  Following a determination
of a Disability or lack of Disability by the Company’s or the Executive’s
licensed healthcare professional, the other Party may submit subsequent
documentation relating to the existence of a Disability from a licensed
healthcare professional selected by such other party.  In the event that the medical opinions of such licensed
healthcare professionals conflict, such

 

3

 

licensed healthcare professionals shall appoint a third licensed
healthcare professional to examine the Executive, and the opinion of such third
licensed healthcare professional shall be dispositive.

 

1.11                           “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

1.12                           “Existing
Equity Holders” shall mean, in addition to the Executive, Blake L.
Sartini, Delise F. Sartini, Lorenzo J. Fertitta, Glenn C. Christenson and Scott
M Nielson and their executors, administrators or the legal representatives of
their estates, their heirs, distributees and beneficiaries, and any trust as to
which any of the foregoing is a settlor or co-settlor and any corporation,
partnership or other entity which is an Affiliate of any of the foregoing, and
any lineal descendants of such persons (but only to the extent that the
beneficial ownership of the Voting Stock held by such lineal descendants was
directly received by gift, trust or sale from any such person).

 

1.13                           “Good Reason”
shall mean and exist if, without the Executive’s prior written consent, one or
more of the following events occurs:

 

(a)                                  the
Executive is not appointed to or is otherwise removed from the office(s)
provided for in Subsection 2.3, for any reason other than the
termination of his employment;

 

(b)                                 the
Executive is assigned any duties or responsibilities that are inconsistent with
the scope of duties and responsibilities associated with the Executive’s
position as described in Subsection 2.3;

 

(c)                                  the
Company gives the Executive notice pursuant to Subsection 2.2 that it
does not intend to extend the Term of Employment for an additional five year
period;

 

(d)                                 the
Executive is not appointed to or is removed from membership on the Board;

 

(e)                                  the
Executive is required to relocate from, or maintain his principal office
outside of, Las Vegas, Nevada;

 

(f)                                    the
Executive suffers a material reduction in the authorities, duties or
responsibilities associated with his position as described in Subsection 2.3;

 

(g)                                 the
Executive’s Base Salary is decreased by the Company or is not increased as
provided for in Subsection 3.1 and/or Subsection 7.1(b),

 

4

 

(h)                                 the
Executive is excluded from participation in any employee benefit or incentive
plan or program offered to other executives of the Company or his benefits or
opportunities under any employee benefit or incentive plan or program of the
Company is or are materially reduced;

 

(i)                                     the
Executive is not permitted to participate in the Deferred Compensation Plan for
Executives or any other incentive compensation plans or programs offered by the
Company to senior executives;

 

(j)                                     the
Company fails to pay the Executive any deferred payments that have become
payable under the Deferred Compensation Plan for Executives or any other bonus
or incentive plans;

 

(k)                                  the
Company fails to reimburse the Executive for business expenses in accordance
with the Company’s policies, procedures or practices;

 

(l)                                     the
Company fails to agree to or to actually indemnify the Executive for his
actions and/or inactions, as either a director or officer of the Company, to
the fullest extent permitted by Nevada law and the Company’s by-laws, and/or
the Company fails to maintain reasonably sufficient levels of directors’ and
officers’ liability insurance coverage for the Executive when such insurance is
available;

 

(m)                               the
Company fails to make any of the payments or to provide any of the benefits
required under Subsection 7.1.

 

(n)                                 the
Company fails to obtain a written agreement satisfactory to the Executive from
any successor or assign of the Company to assume and perform this Agreement; or

 

(o)                                 the
Company purports to terminate the Executive’s employment for Cause but such
purported termination is not effected in accordance with Section 6.2 of
this Agreement.

 

For purposes of
this Agreement, a determination by the Executive that the Executive has “Good
Reason” shall be final and binding on the Company and the Executive absent a
showing of bad faith on the part of the Executive.

 

1.14                           “Person”
shall mean any individual, firm, partnership, association, trust, company,
corporation or other entity.

 

1.15                           “Pro Rata Bonus” shall mean an amount equal
to one hundred twenty percent (120%) of the Executive’s current Base Salary,
multiplied by a fraction, the numerator of which is the number of days in such
year during which the Executive was actually employed by the Company and the
denominator of which is 365.

 

5

 

1.16                           “Special
Long-Term Disability Plan” shall mean the Company’s Special
Long-Term Disability Plan, effective as of November 30, 1994, as the same may
be amended from time to time.

 

1.17                           “Supplemental
Executive Retirement Plan” shall mean the Company’s Supplemental
Executive Retirement Plan, effective as of November 30, 1994, as the same may
be amended from time to time.

 

1.18                           “Term of
Employment” shall mean the period specified in Subsection 2.2.

 

1.19                           “Voting Stock”
shall mean capital stock of any class or classes having general voting power
under ordinary circumstances, in the absence of contingencies, to elect the
directors of a corporation.

 

2.                                       TERM OF EMPLOYMENT, POSITIONS AND RESPONSIBILITIES.

 

2.1                                 Employment
Accepted.  The Company
hereby employs the Executive, and the Executive hereby accepts employment with
the Company, for the Term of Employment, in the positions and with the duties
and responsibilities set forth in Subsection 2.3, and upon such
other terms and conditions as are stated in this Agreement.

 

2.2                                 Term of
Employment.  The initial
Term of Employment shall commence upon the date of this Agreement and, unless
earlier terminated pursuant to the provisions of this Agreement, shall
terminate upon the close of business on the day immediately preceding the fifth
anniversary of the date of this Agreement; provided, however,
that the initial Term of Employment shall automatically be extended for
successive five-year periods if neither Party has advised the other in writing
in accordance with Section 13 at least twelve (12) months prior to the
end of the then current Term of Employment that such Term of Employment will
not be extended for an additional five (5) year period.  In the event that such notice is given, the
Executive’s employment shall terminate upon the close of business on the day
immediately preceding the fifth anniversary of the date that such notice is
given.

 

2.3                                 Title and
Responsibilities.  During
the Term of Employment, the Executive shall be employed as the Chief Executive
Officer and Chairman of the Board of the Company and shall serve as a member of
the Board. In carrying out his duties under this Agreement, the Executive shall
only report to the Board.  During the
Term of Employment, the Executive shall devote reasonable time and attention to
the business and affairs of the Company and shall use his best efforts, skills
and abilities to promote the Company’s interests.  Anything herein to the contrary notwithstanding, the Executive
shall not be precluded from engaging in charitable and community affairs and
managing his personal investments.  It
is expressly understood and agreed that, to the extent any such activities have
been conducted by the Executive prior to the date of this Agreement and disclosed
to the Board, the continued conduct of such activities (or activities similar
in nature and scope thereto) after the date of this Agreement shall be deemed
not to interfere with the Executive’s duties and obligations to the Company
under this Agreement.  The Executive may
serve as a member of the board of directors 

 

6

 

of other corporations, subject to the approval of a majority of the
Board, which approval shall not be unreasonably withheld or delayed.

 

3.                                       COMPENSATION.

 

3.1                                 Base
Salary.  During the Term
of Employment, the Executive shall be entitled to receive a base salary (the “Base
Salary”) payable no less frequently than in equal bi-weekly installments at
an annualized rate of no less than $1,495,000. 
Such Base Salary shall be reviewed annually for increase (but not
decrease) in the discretion of the Human Resources Committee of the Board.  In conducting any such annual review, the
Human Resources Committee shall take into account any change in the Executive’s
responsibilities, increases in the compensation of other executives of the
Company or any Affiliate (or any competitor(s) of either or both), the
performance of the Executive and/or other pertinent factors.  Such increased Base Salary shall then
constitute the Executive’s “Base Salary” for purposes of this Agreement.

 

3.2                                 Annual
Bonus.  The Company may
pay the Executive an annual discretionary bonus for each calendar year ending
during the Term of Employment in an amount that will be determined by the Human
Resources Committee based on the Executive’s performance.  Any annual bonus that may be awarded to the
Executive shall be paid at the same time as annual bonuses are paid to other
senior officers of the Company, unless the Executive has elected to defer
receipt of all or part of the bonus amounts to which he is entitled in respect
of any such calendar year, in accordance with the terms and provisions of any
deferred compensation program maintained by the Company.

 

3.3                                 Deferred
Compensation.  The
Executive shall be eligible to participate in the Company’s Deferred
Compensation Plan for Executives, and any other deferred compensation plans
that the Company may adopt for executives, pursuant to the terms of the plans.

 

4.                                       EMPLOYEE
BENEFIT PROGRAMS.

 

4.1                                 Pension and Welfare Benefit Plans.  During the Term of Employment, the Executive
shall be entitled to participate in all employee benefit programs made
available to the Company’s executives or salaried employees generally, as such
programs may be in effect from time to time, including, without limitation,
pension and other retirement plans, profit sharing plans, group life insurance,
group health insurance, accidental death and dismemberment insurance, long-term
disability, sick leave (including salary continuation arrangements), vacations,
holidays and other employee benefit programs sponsored by the Company.

 

4.2                                 Additional Pension and Welfare Benefits.  In addition to the foregoing, the Company
shall provide the Executive with the following benefits:

 

(a)                                  Executive
Group Health Insurance coverage pursuant to such plan or plans as the Company
may select and which shall be fully paid for by the Company;

 

(b)                                 full
salary continuation during the first ninety (90) days of any physical or mental
incapacity that prevents the Executive from performing his duties

 

7

 

and,
for any Disability that continues thereafter, benefits pursuant to the
Company’s Special Long-Term Disability Plan and any other long-term disability
benefits pursuant to any other disability plan of which the Executive is a
participant;

 

(c)                                  an
annual supplemental retirement benefit as set forth in the Supplemental
Executive Retirement Plan, in addition to any other benefit pursuant to any
other retirement plan under which the Executive is covered;

 

(d)                                 life
insurance coverage in an aggregate amount of not less than $70,000,000 through
individual and/or group policies, including split dollar policies and term life
policies; and

 

(e)                                  the
Executive shall be eligible to participate in any long-term compensation
programs maintained by the Company to the extent provided in the applicable
plan documents.

 

5.                                       BUSINESS
EXPENSE REIMBURSEMENT AND PERQUISITES.

 

5.1                                 Expense Reimbursement;
Security Arrangements. 
During the Term of Employment, the Executive shall be entitled to
receive reimbursement by the Company for all reasonable out-of-pocket expenses
incurred by him in performing services under this Agreement, subject to
providing the proper documentation of said expenses.  During the Term of Employment, the Company shall also provide the
Executive, if he so chooses, with appropriate security arrangements (as
approved by the Board) at his residences; provided, however, that
any security equipment installed at such residences shall become the sole
property of the Executive upon the expiration or earlier termination of this
Agreement.

 

5.2                                 Perquisites.  During the Term of Employment, the Executive
shall also be entitled to any of the Company’s executive perquisites in
accordance with the terms and provisions of the applicable policies, including,
without limitation:

 

(a)                                  use
of an automobile;

 

(b)                                 payment
or reimbursement of the cost of an annual physical examination;

 

(c)                                  vacation
of at least four weeks per year;

 

(d)                                 payment
or reimbursement of initiation fees and annual membership fees and assessments
for a country club, a luncheon club and a physical fitness program of the
Executive’s choice; and

 

(e)                                  payment
or reimbursement of fees and expenses, up to a maximum amount of $10,000.00,
incurred in connection with having this Agreement reviewed by legal counsel
prior to execution.

 

8

 

6.                                       TERMINATION OF EMPLOYMENT.

 

6.1                                 Termination
Due to Death or Disability. 
The Executive’s employment shall be terminated immediately in the event
of his death or Disability.  In the
event of a termination due to the Executive’s death or Disability, the
Executive or his estate, as the case may be, shall be entitled, in lieu of any
other compensation whatsoever, to:

 

(a)                                  Base
Salary at the rate in effect at the time of his termination, in the case of
death, for a period of twenty-four (24) months following the termination of
employment;

 

(b)                                 any
annual bonus awarded but not yet paid;

 

(c)                                  a
Pro Rata Bonus for the fiscal year in which death or Disability occurs;

 

(d)                                 any
deferred compensation or bonuses, including interest or other credits on the
deferred amounts to the extent provided in the plans or programs providing for
deferral;

 

(e)                                  immediate
vesting of all restricted stock stock options, phantom stock units, stock
appreciation rights and similar stock-based or performance-based interests,
which stock options, stock appreciation rights and similar exercisable
interests shall continue to be and shall remain exercisable for the remaining
term of such stock options, stock appreciation rights and similar exercisable
interests, as applicable, as set forth in the agreement granting or otherwise
awarding such stock option, stock appreciation right or similar exercisable interest
as if no termination of employment had occurred;

 

(f)                                    reimbursement
for expenses incurred but not paid prior to such termination of employment;

 

(g)                                 in
the case of Disability, (i) continuation of the Executive’s health and welfare
benefits at the level in effect on the date of termination through the end of
the 60th month following the termination of the Executive’s employment, or (ii)
at the Executive’s option, a lump-sum payment to the Executive of the economic
equivalent thereof, as if the Executive’s employment had continued during such
period; and

 

(h)                                 such
rights to other compensation and benefits as may be provided in applicable
plans and programs of the Company, including, without limitation, applicable
employee benefit plans and programs, according to the terms and provisions of
such plans and programs.

 

6.2                                 Termination
by the Company for Cause. 
The Company may terminate the Executive’s employment for Cause at any
time during the Term of Employment by giving written notice to the Executive,
authorized by a vote of at least a majority of the members of the Board, that
the Company intends to terminate his employment for Cause.  Such written notice 

 

9

 

shall specify the particular act or acts, or failure to act, providing
the basis for termination.  The
Executive shall be given the opportunity within thirty (30) days of the receipt
of such notice to meet with the Board to defend such act or acts, or failure to
act.  If at the conclusion of the
Executive’s presentation of his defense, a majority of the Board, nonetheless,
determines that the Executive’s employment is terminable for Cause, the
Executive shall be given thirty (30) days after such meeting to correct such
acts or failure to act, unless the Board also determines that the Executive’s
acts or failure to act are incapable of correction.  Upon failure of the Executive, within thirty (30) days, to
correct such acts or failure to act, or upon the Board’s determination that
correction is not possible, the Executive’s employment by the Company shall
automatically be terminated under this Subsection 6.2 for Cause.  During the pendency of the foregoing
process, the Executive shall continue to be paid his Base Salary but shall be
placed on leave of absence status.

 

In the event of a
termination for Cause, the Executive shall be entitled, in lieu of any other
compensation whatsoever, to:

 

(a)                                  Base
Salary at the rate in effect at the time of his termination through the date of
termination of employment;

 

(b)                                 any
bonus awarded but not yet paid;

 

(c)                                  any
deferred compensation or bonuses, including interest or other credits on the
deferred amounts to the extent provided in the plans or programs providing for
deferral;

 

(d)                                 reimbursement
for expenses incurred but not paid prior to such termination of employment; and

 

(e)                                  such
rights to other benefits as may be provided in applicable plans and programs of
the Company, including, without limitation, applicable employee benefit plans
and programs, according to the terms and conditions of such plans and programs.

 

Notwithstanding anything
to the contrary in this Subsection 6.2, if the Executive’s employment is
terminated for Cause due to his having been convicted pursuant to Subsection
1.4(a) but said conviction is subsequently overturned on appeal and he is
not required to submit to re-trial within six (6) months thereafter, the
Executive shall be entitled to the payments and the economic equivalent of the
benefits he would have received if his employment had been terminated without
Cause under Subsection 6.4.

 

6.3                                 Termination
by the Executive Without Good Reason Prior to a Change in Control.  The Executive may terminate his employment
on his own initiative for any reason prior to a Change in Control upon thirty
(30) days prior written notice to the Company. 
Such termination shall have the same consequences as a termination for
Cause under Subsection 6.2.

 

10

 

6.4                                 Termination
by the Company Without Cause Prior to Change in Control.  Notwithstanding any other provision of this
Agreement, the Company may terminate the Executive’s employment without Cause,
other than due to death or Disability, at any time during the Term of
Employment by giving written notice to the Executive.  In the event that the Company terminates the Executive’s
employment without Cause prior to a Change in Control, the Executive shall be
entitled, in lieu of any other compensation whatsoever, to:

 

(a)                                  a
lump-sum payment equal to four times two hundred twenty percent (220%) of the
Executive’s Base Salary at the rate in effect at the time of his termination;

 

(b)                                 any
bonus awarded but not yet paid;

 

(c)                                  a
Pro-Rata Bonus for the fiscal year in which such termination of employment
occurs;

 

(d)                                 any
deferred bonus, including interest or other credits on the deferred amounts, to
the extent provided in the Deferred Compensation Plan for Executives;

 

(e)                                  immediate
vesting of all restricted stock, stock options, phantom stock units, stock
appreciation rights and similar stock-based or performance-based interests,
which stock options, stock appreciation right and similar exercisable interests
shall continue to be and shall remain exercisable for the remaining term of
such stock options, stock appreciation rights and similar exercisable
interests, as applicable, as set forth in the agreement granting or otherwise
awarding such stock option, stock appreciation right or similar exercisable
interest as if no termination of employment had occurred;

 

(f)                                    reimbursement
of expenses incurred but not paid prior to such termination of employment;

 

(g)                                 (i)
continuation of all benefits provided to the Executive pursuant to Subsection
4.2, including, without limitation, the Executive’s group health insurance
and participation in the Company’s Special Long-Term Disability Plan and any
other long-term disability insurance generally provided to senior executives of
the Company, at the level in effect at the time of his termination of
employment, through the end of the 60th month following such termination, or
(ii) at the Executive’s option, a lump-sum payment to the Executive of the
economic equivalent thereof, as if such Executive were employed during such
period; and

 

(h)                                 such
rights to other benefits as may be provided in applicable plans and programs of
the Company, including, without limitation, applicable employee benefit plans
and programs, according to the terms and conditions of such plans and programs.

 

11

 

6.5                                 Termination
by the Executive With Good Reason Prior to a Change in Control.  The Executive may terminate his employment
on his own initiative for Good Reason prior to a Change in Control upon thirty
(30) days prior written notice to the Company. 
Such termination shall have the same consequences as a termination
without Cause under Subsection 6.4.

 

7.                                       CHANGE IN CONTROL.

 

7.1                                 Change in
Control.  Immediately
upon a Change in Control, in addition to any other compensation or benefits
payable pursuant to this Agreement or otherwise, the Executive shall be
entitled to:

 

(a)                                  minimum
annual increases in the Executive’s Base Salary equal to the greater of (i)
five percent, or (ii) the percentage of increase in the Consumer Price Index
for the Las Vegas, Nevada, metropolitan area as reported by the United States
Department of Labor for the immediately preceding calendar year;

 

(b)                                 annual
bonuses of at least one hundred twenty percent (120%) of his Base Salary;

 

(c)                                  immediate
vesting of all benefits, without penalty or reduction in rights or benefits,
including, without limitation, immediate vesting of all restricted stock, stock
options, phantom stock units, stock appreciation rights and similar stock-based
or performance-based interests, which stock options, stock appreciation rights
and similar exercisable interests shall continue to be and shall remain
exercisable for the remaining term of such stock options, stock appreciation
rights and similar exercisable interests, as applicable, as set forth in the
agreement granting or otherwise awarding such stock option, stock appreciation
right, or similar exercisable interest;

 

(d)                                 reimbursement
of expenses incurred but not paid prior to such termination of employment;

 

(e)                                  (i)
immediate eligibility for retirement under the Supplemental Executive
Retirement Plan without penalty for early retirement, or (ii) at the
Executive’s option, a lump-sum payment to the Executive of the economic
equivalent thereof, as if the Executive received payments under such Plan for a
period of fifteen (15) years;

 

(f)                                    immediate
vesting of any deferred compensation or bonuses, including interest or other
credits on the deferred amount to the extent provided in the plans or programs
providing for deferral;

 

(g)                                 (i)
continued funding of the Executive’s split dollar and term life insurance
policies and any other life insurance policies maintained by the Company on
behalf of the Executive as of the date of the Change in Control, as if the
Executive were employed by the Company through the maturity date of such 

 

12

 

policies
or payment in full of all premium obligations under such policies, or (ii) at
the Executive’s option, a lump-sum payment to the Executive of the economic
equivalent thereof, as if the Executive were employed by the Company through
the maturity date of such policies; and

 

(h)                                 such
rights to other benefits as may be provided in applicable plans and programs of
the Company, including, without limitation, applicable employee benefit plans
and programs, according to the terms and conditions of such plans and programs.

 

7.2                                 Termination
of the Executive’s Employment After a Change in Control.  If subsequent to a Change in Control, the
Executive’s employment is terminated by the Company without Cause or by Executive
for Good Reason, the Executive shall be entitled, in addition to any
compensation and benefits provided pursuant to Subsection 7.1 above, to:

 

(a)                                  a
lump-sum payment equal to the greater of (i) four times two hundred twenty
percent (220%) of his Base Salary at the time of the Change in Control or
(ii) four times two hundred twenty percent (220%) of his Base Salary at
the time of the termination of his employment;

 

(b)                                 any
annual bonus awarded but not yet paid;

 

(c)                                  a
Pro Rata Bonus for the fiscal year in which such termination of employment
occurs; and

 

(d)                                 (i)
continuation of all employee benefits provided to the Executive pursuant to Subsection
4.2 for a period of sixty (60) months following such termination of
employment, or (ii) at the Executive’s option, a lump-sum payment to the
Executive of the economic equivalent thereof, as if the Executive were an
employee of the Company during such period.

 

7.3                                 Termination
by Executive without Good Reason After a Change in Control.  If the Executive terminates his
employment without Good Reason following a Change in Control, in addition to
any compensation and benefits provided pursuant to Subsection 7.1, but
in lieu of any other compensation and benefits whatsoever, he shall be entitled
to the following:

 

(a)                                  if
such termination occurs in the first twelve (12) months following a Change in
Control, the Executive shall be entitled to (i) a lump-sum payment equal to
eighty percent (80%) of the amount payable to the Executive pursuant to Subsection
7.2(a), and (ii) all of the benefits provided in Subsection 6.4(b), (c),
(f) and (g);

 

(b)                                 if
such termination occurs at any time after the first twelve (12) months
following a Change in Control, the Executive shall be entitled to (i) one
hundred percent (100%) of the amount payable to the Executive pursuant to Subsection
7.2(a), and (ii) all of the benefits provided in Subsections 6.4 (b),
(c), (f) and (g), and

 

13

 

(c)                                  in
either instance, the Executive shall be entitled to such rights to benefits as
may be provided in applicable plans and programs of the Company, including,
without limitation, applicable employee benefit plans and programs, according
to the terms and conditions of such plans and programs.

 

7.4                                 Termination
for Other Reasons After a Change in Control.  If the Executive’s employment is terminated
by the Company for any reason not provided by Subsection 7.2 or Subsection
7.3, his rights shall be determined in accordance with the applicable
Subsection of Section 6.

 

7.5                                 Funding
of Payments.  All
payments payable to the Executive pursuant to this Section 7, except for
payments payable as a lump sum, shall be made to a trust which shall be
established for such purpose and shall provide for Towers Perrin (or such other
trustee mutually acceptable to the Company and the Executive) to serve as the
trustee thereof.

 

8.                                       CONDITIONS
TO PAYMENTS.

 

8.1                                 Timing of
Payments.  Unless
otherwise provided herein, any payments to which the Executive shall be
entitled under Sections 6 and 7 following the termination of his
employment shall be made as promptly as possible and in no event later than
five business days following such termination of employment.

 

8.2                                 No
Mitigation; No Offset. 
In the event of any termination of employment under Sections 6 or 7,
the Executive shall be under no obligation to seek other employment and there
shall be no offset against amounts due to the Executive on account of any
remuneration attributable to any subsequent employment that the Executive may
obtain.  Any amounts payable to the
Executive are in the nature of severance payments, or liquidated damages, or
both, and are not in the nature of a penalty.

 

9.                                       SPECIAL
REIMBURSEMENT.  

 

9.1                                 If
any payment or benefit paid or payable, or received or to be received, by or on
behalf of the Executive, whether any such payments or benefits are pursuant to
the terms of this Agreement or any other plan, program, arrangement or
agreement of or with the Company, any Affiliate, any Person, or otherwise (the
“Total
Payments”), will or would be subject to the excise tax imposed under
Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the
Executive an additional amount (the “Gross-Up Payment”) such that, after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes) imposed upon or in respect of the Total Payments and the
Gross-Up Payments, including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and any Excise Tax imposed
thereon, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments.

 

9.2                                 For
purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax,

 

(a)                                  the
Total Payments shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess parachute 

 

14

 

payments”
within the meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel selected by the
Company and reasonably acceptable to the Executive (which opinion shall be
provided to the Executive) such Total Payments (in whole or in part) (i) do not
constitute parachute payments, including (without limitation) by reason of
Section 280G(b)(4)(A) of the Code, (ii) such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4)(B) of the
Code, or (iii) are not, in the opinion of legal counsel, otherwise subject
to the Excise Tax, and

 

(b)                                 the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company’s independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.

 

9.3                                 In
the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder, the Executive shall repay to the Company,
at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction
plus interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code.  In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive’s employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the initial Gross-Up Payment), the Company shall make
an additional Gross-Up Payment in accordance with Subsection 9.1 in
respect of such excess Excise Tax (plus any interest, penalties or additions
payable by the Executive with respect to such excess Excise Tax) at the time
that the amount of such excess Excise Tax is finally determined.  The Executive and the Company shall each
reasonably cooperate with each other in connection with any administrative or
judicial proceedings concerning the existence or amount of any such subsequent
liability for Excise Tax with respect to the Total Payments.

 

10.                                 INDEMNIFICATION.

 

10.1                           General.  The Company agrees that if the Executive is
made a party or is threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (an “Indemnifiable
Action”), by reason of the fact that he is or was a director or
officer of the Company or is or was serving at the request of the Company as a
director, officer, member, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether or not the basis of such
Indemnifiable Action is alleged action in an official capacity as a director,
officer, member, employee or agent he shall be indemnified and held harmless by
the Company to the fullest extent authorized by Nevada law and the Company’s
by-laws, as the same exist or may hereafter be amended (but, in the case of any
such amendment to the Company’s by-laws, only to the extent such amendment
permits the Company to provide broader indemnification rights than the
Company’s by-laws permitted the Company to provide before such amendment),
against all expense, liability and loss (including, without limitation,
attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) incurred or suffered by the Executive in
connection therewith.

 

15

 

10.2                           Procedure.  The indemnification provided pursuant to
this Section 10 shall be subject to the following conditions:

 

(a)                                  The
Executive must promptly give the Company written notice of any actual or
threatened Indemnifiable Action and, upon providing such notice, the Executive
shall be presumed to be entitled to indemnification under this Agreement and
the Company shall have the burden of proof to overcome that presumption in
reaching any contrary determination; provided, however, that the
Executive’s failure to give such notice shall not affect the Company’s
obligations hereunder;

 

(b)                                 The
Company will be permitted, at its option, to participate in, or to assume, the
defense of any Indemnifiable Action, with counsel approved by the Executive; provided,
however, that (i) the Executive shall have the right to employ his own
counsel in such Indemnifiable Action at the Executive’s expense; and (ii) if
(A) the retention of counsel by the Executive has been previously authorized by
the Company, (B) the Executive shall have concluded, based on the advice of his
legal counsel, that there may be a conflict of interest between the Company and
the Executive in the conduct of any such defense, or (C) the Company shall not,
in fact, have retained counsel to assume the defense of such Indemnifiable
Action, the fees and expenses of the Executive’s counsel shall be at the
expense of the Company; and provided, further, that the Company
shall not settle any action or claim that would impose any limitation or
penalty on the Executive without obtaining the Executive’s prior written
consent, which consent shall not be unreasonably withheld;

 

(c)                                  The
Executive must provide reasonable cooperation to the Company in the defense of
any Indemnifiable Action; and

 

(d)                                 The
Executive must refrain from settling any Indemnifiable Action without obtaining
the Company’s prior written consent, which consent shall not be unreasonably
withheld.

 

10.3                           Advancement
of Costs and Expenses. 
The Company agrees to advance all costs and expenses referred to in Subsection
10.1 and 10.6; provided, however, that the Executive
agrees to repay to the Company any amounts so advanced only if, and to the
extent that, it shall ultimately be determined by a court of competent
jurisdiction that the Executive is not entitled to be indemnified by the
Company as authorized by this Agreement. 
The advances to be made hereunder shall be paid by the Company to or on
behalf of the Executive within twenty (20) days following delivery of a written
request therefor by the Executive to the Company.  The Executive’s entitlement to advancement of costs and expenses
hereunder shall include those incurred in connection with any action, suit or
proceeding by the Executive seeking a determination, adjudication or
arbitration in award with respect to his rights and/or obligations under this
Section 10.

 

16

 

10.4                           Non-Exclusivity
of Rights.  The right to
indemnification and the payment of expenses incurred in defending an
Indemnifiable Action in advance of its final disposition conferred in this Section 10
shall not be exclusive of any other right which the Executive may have or
hereafter may acquire under any statute, provision of the certificate of
incorporation or by-laws of the Company, agreement, vote of stockholders or
disinterested directors or otherwise.

 

10.5                           D&O
Insurance.  The Company
will maintain a directors’ and officers’ liability insurance policy covering
the Executive that provides coverage that is reasonable in relation to the
Executive’s position during the Term of Employment.

 

10.6                           Witness
Expenses. 
Notwithstanding any other provision of this Agreement, the Company shall
indemnify the Executive if and whenever he is a witness or threatened to be made
a witness to any action, suit or proceeding to which the Executive is not a
party, by reason of the fact that the Executive is or was a director or officer
of the Company or its Affiliates or by reason of anything done or not done by
him in such capacity, against all expense, liability and loss incurred or
suffered by the Executive in connection therewith; provided, however,
that if the Executive is no longer employed by the Company, the Company will
compensate him, on an hourly basis, for all time spent, at either his then
current compensation rate or his Base Salary at the rate in effect as of the
termination of his employment, whichever is higher.

 

10.7                           Survival.  The provisions of this Section 10
shall survive the expiration or earlier termination of this Agreement,
regardless of the reason for such termination.

 

11.                                 CONFIDENTIAL
INFORMATION AND COMPANY PROPERTY.

 

11.1                           Confidential
Information.  The
Executive understands and acknowledges that Confidential Information
constitutes a valuable asset of the Company and its Affiliates and may not be
converted to the Executive’s own or any third party’s use.  Accordingly, the Executive hereby agrees
that he shall not, directly or indirectly, during the Term of Employment or for
a period of twelve (12) months after the termination of his employment,
disclose any Confidential Information to any Person not expressly authorized by
the Company to receive such Confidential Information.  The Executive further agrees that he shall not directly or
indirectly, during the Term of Employment or for a period of twelve (12) months
after the termination of his employment, use or make use of any Confidential
Information in connection with any business activity other than that of the
Company.  The Parties acknowledge and
agree that this Agreement is not intended to, and does not, alter either the
Company’s rights or the Executive’s obligations under any state or federal
statutory or common law regarding trade secrets and unfair trade practices.

 

17

 

11.2                           Company
Property.  All Company
Property is and shall remain exclusively the property of the Company.  Unless authorized in writing to the
contrary, the Executive shall promptly, and without charge, deliver to the
Company on the termination of employment hereunder, or at any other time the
Company may so request, all Company Property that the Executive may then
possess or have under his control.

 

11.3                           Required
Disclosure.  In the event
the Executive is required by law or court order to disclose any Confidential
Information or to produce any Company Property, the Executive shall promptly
notify the Company of such requirement and provide the Company with a copy of
any court order or of any law which requires such disclosure and, if the
Company so elects, to the extent permitted by applicable law, give the Company
an adequate opportunity, at its own expense, to contest such law or court order
prior to any such required disclosure or production by the Executive.

 

11.4                           Survival.  The Executive agrees that the provisions of
this Section 11 shall survive the termination of this Agreement and
the termination of the Executive’s employment.

 

12.                                 DISPUTE
RESOLUTION.  Except as
otherwise provided in Subsection 10.3, the Company agrees that in the
event the Executive finds it necessary to initiate any legal action to obtain
any payments, benefits or rights provided by this Agreement to him, the Company
shall reimburse the Executive for all attorney’s fees and other related
expenses incurred by him to the extent the Executive is successful in such
action.

 

13.                                 NOTICES.
 All notices, demands and requests
required or permitted to be given to either Party under this Agreement shall be
in writing and shall be deemed to have been given when delivered personally or
sent by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address indicated below
or to such changed address as such Party may subsequently give notice of:

 

	
  If to the Company:

  	
  Station Casinos, Inc.

  
	
   

  	
  2411 West Sahara Avenue

  
	
   

  	
  Las Vegas, NV  89102

  
	
   

  	
  Attn:  Scott M Nielson

  
	
   

  	
   

  
	
  With a copy to:

  	
  Milbank, Tweed, Hadley
  & McCloy

  
	
   

  	
  601 South Figueroa
  Street, 30th Floor

  
	
   

  	
  Los Angeles, CA  90017

  
	
   

  	
  Attn:  Kenneth J. Baronsky

  
	
   

  	
   

  
	
  If to the Executive:

  	
  Frank J.
  Fertitta III

  
	
   

  	
  2411 West Sahara Avenue

  
	
   

  	
  Las Vegas, NV 89102

  

 

14.                                 EMPLOYEE
BENEFIT PLAN DOCUMENTS. 
In the event that any provision of this Agreement conflicts with the
terms and provisions of any employee benefit plan document, the provisions of
this Agreement shall govern; and the Company shall take any and all 

 

18

 

actions that may be necessary, including amendment of any plan
document, to the extent necessary to effect the provision of benefits expressly
provided upon termination of the Executive’s employment pursuant to Sections 6
and 7.

 

15.                                 BENEFICIARIES/REFERENCES.  The Executive shall be entitled to select a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive’s death, and may change such election, by
giving the Company written notice thereof. 
In the event of the Executive’s death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.

 

16.                                 SURVIVORSHIP.  The respective rights and obligations of the
Parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.  The provisions of this Section 16
are in addition to the survivorship provisions of any other Section of this
Agreement.

 

17.                                 REPRESENTATIONS
AND WARRANTIES.  Each
Party represents and warrants that he or it is fully authorized and empowered
to enter into this Agreement and that the performance of his or its obligations
under this Agreement will not violate any agreement between that Party and any
other Person.

 

18.                                 ENTIRE
AGREEMENT.  This Agreement
contains the entire agreement between the Parties concerning the subject matter
hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Parties
with respect thereto. No representations, inducements, promises or agreements
not embodied herein shall be of any force or effect.

 

19.                                 ASSIGNABILITY;
BINDING NATURE.  This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs and assigns; provided, however,
that no rights or obligations of the executive under this Agreement may be
assigned or transferred by the Executive, other than rights to compensation and
benefits hereunder, which may be transferred only by will or operation of law
and subject to the limitations of this Agreement; and provided, further,
that no rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company, except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations
and duties of the Company under this Agreement, either contractually or as a
matter of law.

 

20.                                 AMENDMENT
OR WAIVER.  No provision
in this Agreement may be amended or waived unless such amendment or waiver is
agreed to in writing, signed by both Parties. 
No waiver by one Party of any breach by the other Party of any condition
or provision of this Agreement to be performed by such other Party shall be
deemed a waiver of a similar or dissimilar condition or provision at the same
or any prior or subsequent time.  No
failure of the

 

19

 

Company to exercise any power given it hereunder or to insist upon
strict compliance by the Executive with any obligation hereunder, and no custom
or practice at variance with the terms hereof, shall constitute a waiver of the
right of the Company to demand strict compliance with the terms hereof.

 

21.                                 SEVERABILITY.
 In the event that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable
for any reason, in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and effect to the
fullest extent permitted by law.

 

22.                                 GOVERNING
LAW.  This Agreement
shall be governed by and construed and interpreted in accordance with the laws
of the State of Nevada without reference to the principles of conflict of laws
thereof.  In the event of any dispute or
controversy arising out of or relating to this Agreement, the Parties mutually
and irrevocably consent to, and waive any objection to, the exclusive
jurisdiction of any court of competent jurisdiction in Clark County, Nevada, to
resolve such dispute or controversy.

 

23.                                 HEADINGS.  The headings of the Sections and Subsections
contained in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any provision of this Agreement.

 

24.                                 COUNTERPARTS.  This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement with the same effect as if all Parties
had signed the same signature page.  Any
signature page of this Agreement may be detached from any counterpart of this
Agreement and reattached to any other counterpart of this Agreement identical
in form hereto but having attached to it one or more additional signature
pages.

 

IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the date first written above.

 

	
   

  	
  STATION CASINOS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FRANK J. FERTITTA III

  
					

 

20

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