Document:

EX-10.1

 

Exhibit 10.1

ASSET PURCHASE AGREEMENT

dated as of November 28, 2005

by and among

HARRAH’S OPERATING COMPANY, INC.

(Solely for the purposes of Section 12.16 hereof)

FLAMINGO-LAUGHLIN, INC.,

BOARDWALK REGENCY CORPORATION,

MARTIAL DEVELOPMENT CORPORATION

and

AREP BOARDWALK LLC

and

AREP LAUGHLIN CORPORATION

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	ARTICLE I
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	PURCHASE AND SALE OF ASSETS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 1.1	 	Purchase and Sale of Assets
	 	 	1	 
	Section 1.2	 	Excluded Assets
	 	 	3	 
	Section 1.3	 	Assumed Liabilities
	 	 	5	 
	Section 1.4	 	Excluded Liabilities
	 	 	6	 
	Section 1.5	 	Retention and Removal of Excluded Assets
	 	 	8	 
	Section 1.6	 	Assignability and Consents
	 	 	9	 
	Section 1.7	 	Other Assets; Other Property
	 	 	10	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE II
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	PURCHASE PRICE AND DEPOSIT
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 2.1	 	Purchase Price
	 	 	10	 
	Section 2.2	 	Deposit
	 	 	11	 
	Section 2.3	 	Allocation of Purchase Price
	 	 	11	 
	Section 2.4	 	Initial Estimated Adjustments
	 	 	13	 
	Section 2.5	 	Final Working Capital Adjustment
	 	 	14	 
	Section 2.6	 	Final Traymore Adjustment
	 	 	15	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE III
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	ADJUSTMENTS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 3.1	 	Property Taxes 
	 	 	16	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE IV
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	CLOSING
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 4.1	 	Closing
	 	 	17	 
	Section 4.2	 	Deliveries at Closing
	 	 	19	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE V
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES OF SELLERS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 5.1	 	Organization of Seller
	 	 	22	 
	Section 5.2	 	Authority; No Conflict; Required Filings and Consents
	 	 	22	 
	Section 5.3	 	Financial Statements
	 	 	24	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 5.4	 	Flamingo Real Estate
	 	 	24	 
	Section 5.5	 	Intellectual Property
	 	 	24	 
	Section 5.6	 	Agreements, Contracts and Commitments
	 	 	24	 
	Section 5.7	 	Litigation
	 	 	25	 
	Section 5.8	 	Environmental Matters
	 	 	25	 
	Section 5.9	 	Permits; Compliance with Laws
	 	 	26	 
	Section 5.10	 	Labor Matters
	 	 	26	 
	Section 5.11	 	Employee Benefits
	 	 	27	 
	Section 5.12	 	Brokers
	 	 	27	 
	Section 5.13	 	Insurance
	 	 	27	 
	Section 5.14	 	Personal Property
	 	 	27	 
	Section 5.15	 	Assets
	 	 	28	 
	Section 5.16	 	Condemnation Proceedings
	 	 	28	 
	Section 5.17	 	Fee Ownership
	 	 	28	 
	Section 5.18	 	Solvency
	 	 	28	 
	Section 5.19	 	Special Assessments
	 	 	28	 
	Section 5.20	 	Traymore Condemnation
	 	 	28	 
	Section 5.21	 	Traymore Litigation
	 	 	28	 
	Section 5.22	 	Traymore Leases
	 	 	28	 
	Section 5.23	 	Options
	 	 	28	 
	Section 5.24	 	Service Contracts
	 	 	28	 
	Section 5.25	 	Compliance With Laws
	 	 	28	 
	Section 5.26	 	Traymore Environmental Matters
	 	 	29	 
	Section 5.27	 	Absence of Certain Changes or Events
	 	 	29	 
	Section 5.28	 	Transactions with Directors, Officers and Other Affiliates
	 	 	30	 
	Section 5.29	 	Absence of Undisclosed Liabilities
	 	 	30	 
	Section 5.30	 	Tax Matters
	 	 	30	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VI
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES OF BUYERS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 6.1	 	Organization
	 	 	30	 
	Section 6.2	 	Authority; No Conflict; Required Filings and Consents
	 	 	31	 
	Section 6.3	 	Brokers
	 	 	32	 
	Section 6.4	 	Financing
	 	 	32	 
	Section 6.5	 	Licensability of Principals
	 	 	32	 
	Section 6.6	 	Compliance with Gaming Laws
	 	 	32	 
	Section 6.7	 	Litigation
	 	 	33	 
	Section 6.8	 	Inspection
	 	 	33	 
	Section 6.9	 	Employee Benefits
	 	 	33	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VII
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	COVENANTS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 7.1	 	Conduct of Business
	 	 	34	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 7.2	 	Cooperation; Notice; Cure
	 	 	36	 
	Section 7.3	 	No Solicitation
	 	 	36	 
	Section 7.4	 	Employee Matters
	 	 	36	 
	Section 7.5	 	Access to Information and the Properties
	 	 	39	 
	Section 7.6	 	Governmental Approvals
	 	 	41	 
	Section 7.7	 	Publicity
	 	 	44	 
	Section 7.8	 	Further Assurances and Actions
	 	 	44	 
	Section 7.9	 	Transfer Taxes; HSR Filing Fee
	 	 	45	 
	Section 7.10	 	Accounts Receivable; Accounts Payable
	 	 	45	 
	Section 7.11	 	Reservations; Chips; Front Money; Guests; Keys
	 	 	46	 
	Section 7.12	 	Insurance Policies
	 	 	47	 
	Section 7.13	 	Certain Transactions
	 	 	47	 
	Section 7.14	 	Insurance; Casualty and Condemnation
	 	 	47	 
	Section 7.15	 	License of Excluded Software
	 	 	48	 
	Section 7.16	 	Non-Solicitation
	 	 	49	 
	Section 7.17	 	Termination of Billboard Lease
	 	 	49	 
	Section 7.18	 	No Control
	 	 	49	 
	Section 7.19	 	Estoppel Certificate
	 	 	49	 
	Section 7.20	 	2005 Audited Financial Statements
	 	 	49	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VIII
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	CONDITIONS TO CLOSING
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 8.1	 	Conditions to Each Party’s Obligation to Effect the Closing
	 	 	50	 
	Section 8.2	 	Additional Conditions to Obligations of Buyers
	 	 	50	 
	Section 8.3	 	Additional Conditions to Obligations of Sellers
	 	 	51	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE IX
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	TERMINATION AND AMENDMENT
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 9.1	 	Termination
	 	 	51	 
	Section 9.2	 	Effect of Termination
	 	 	53	 
	Section 9.3	 	Application of the Deposit; Liquidated Damages
	 	 	53	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE X
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	SURVIVAL; INDEMNIFICATION
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 10.1	 	Survival of Representations, Warranties, Covenants and Agreements
	 	 	54	 
	Section 10.2	 	Indemnification
	 	 	54	 
	Section 10.3	 	Interpretation
	 	 	56	 
	Section 10.4	 	Procedure for Claims between Parties
	 	 	56	 
	Section 10.5	 	Defense of Third Party Claims
	 	 	56	 
	Section 10.6	 	Limitations on Indemnity
	 	 	57	 
	Section 10.7	 	Payment of Damages
	 	 	58	 

iii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 10.8	 	Exclusive Remedy
	 	 	58	 
	Section 10.9	 	Treatment of Indemnification Payments
	 	 	58	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE XI
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	PROPERTY
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 11.1	 	As Is
	 	 	58	 
	Section 11.2	 	Title to Casino Land
	 	 	59	 
	Section 11.3	 	Title to the Traymore Site Land
	 	 	61	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE XII
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	MISCELLANEOUS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 12.1	 	Definitions
	 	 	61	 
	Section 12.2	 	Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury
	 	 	73	 
	Section 12.3	 	Notices
	 	 	74	 
	Section 12.4	 	Interpretation
	 	 	76	 
	Section 12.5	 	Headings
	 	 	76	 
	Section 12.6	 	Entire Agreement; No Third Party Beneficiaries
	 	 	76	 
	Section 12.7	 	Severability
	 	 	77	 
	Section 12.8	 	Assignment
	 	 	77	 
	Section 12.9	 	Parties of Interest
	 	 	77	 
	Section 12.10	 	Counterparts
	 	 	77	 
	Section 12.11	 	Mutual Drafting
	 	 	77	 
	Section 12.12	 	Amendment
	 	 	78	 
	Section 12.13	 	Extension; Waiver
	 	 	78	 
	Section 12.14	 	Time of Essence
	 	 	78	 
	Section 12.15	 	Disclosure Letters
	 	 	78	 
	Section 12.16	 	Guarantee
	 	 	78	 
	 	 	 
	 	 	 	 
	EXHIBITS	 	 
	 	 	 	 
	 	 	 
	 	 	 	 
	Exhibit A	 	Deposit Escrow Agreement
	 	 	 	 
	Exhibit B	 	Form of Bill of Sale and Assignment
	 	 	 	 
	Exhibit C	 	Form of Assignment and Assumption Agreement—Assumed Contracts and Assumed Liabilities
	 	 	 	 
	Exhibit D	 	Forms of Non-Foreign Affidavits
	 	 	 	 
	Exhibit E	 	Form of Confirmation of Transfer of Guest Items
	 	 	 	 
	Exhibit F	 	Form of Confirmation of Transfer of Guest Baggage
	 	 	 	 
	Exhibit G	 	Form of Bill of Sale—Passenger/Delivery Vehicles
	 	 	 	 
	Exhibit H	 	Form of Grant, Bargain, Sale Deed (Flamingo)
	 	 	 	 
	Exhibit I	 	Form of Bargain and Sale Deed (Boardwalk)
	 	 	 	 
	Exhibit J	 	Form of Trademark License Agreement
	 	 	 	 
	Exhibit K	 	Excluded Software License Agreement
	 	 	 	 
	Exhibit L	 	Form of Assignment and Assumption Agreement—Traymore Lease
	 	 	 	 

iv

 

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
November 28, 2005, by and among Harrah’s Operating Company, Inc. (“Harrah’s”),
Flamingo-Laughlin, Inc., a Nevada corporation (“Flamingo”), Martial Development Corp., a
New Jersey corporation, Boardwalk Regency Corporation, a New Jersey corporation (together,
“Boardwalk,” and with Flamingo, each a “Seller” and collectively, the
“Sellers”) and AREP Laughlin Corporation, a Delaware corporation (“Flamingo Buyer”)
and AREP Boardwalk LLC, a Delaware limited liability company (“Boardwalk Buyer” and with
Flamingo Buyer, each a “Buyer” and collectively, the “Buyers”). Capitalized terms
used herein and not otherwise defined shall have the meanings set forth in Section 12.1 hereof.

     WHEREAS, Flamingo owns and operates the Casino Property (commonly known as Flamingo Laughlin)
and Boardwalk owns the Traymore Site; and

     WHEREAS, Flamingo Buyer desires to purchase Flamingo’s interest in the Casino Property and
assume certain Liabilities related thereto and Boardwalk Buyer desires to purchase Boardwalk’s
interest in the Traymore Site and assume certain Liabilities related thereto, all on the terms and
subject to the conditions set forth herein;

     NOW, THEREFORE, the parties hereto, in consideration of the premises and of the mutual
representations, warranties and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS

     Section 1.1 Purchase and Sale of Assets.

     (a) Upon the terms and subject to the conditions set forth in this Agreement, at the Closing,
Flamingo shall sell, convey, assign and transfer to Flamingo Buyer, and Flamingo Buyer shall
purchase and acquire from Flamingo, all of Flamingo’s right, title and interest in and to
Flamingo’s assets, properties and rights, tangible and intangible, of every type and description,
wherever located, in each case which are used or employed primarily in connection with the Casino
Property, including without limitation, Flamingo’s assets, properties and rights set forth below,
but excluding the Flamingo Excluded Assets and except as set forth on the Detailed Balance Sheet
(the “Flamingo Purchased Assets”):

          (i) the Casino Property, including the Casino Land;

          (ii) all items of the type designated to be transferred to Flamingo Buyer on the
Detailed Balance Sheet, including without limitation, all cash and cash equivalent balances
of Flamingo and outstanding accounts receivable as of the Closing Date;

 

 

          (iii) the Assumed Contracts, including the Material Assumed Contracts;

          (iv) the Acquired Personal Property;

          (v) the Transferred Intellectual Property;

          (vi) the Books and Records;

          (vii) the Transferred Data;

          (viii) the Governmental Approvals, and pending applications therefor, to the extent
transferable by Law, all of which are set forth on Section 1.1(a)(viii) of the Flamingo
Disclosure Letter;

          (ix) the Transferred Employee Records;

          (x) the Flamingo Customer List, the Affiliate Customer List and the Flamingo
Databases;

          (xi) all assets to which Buyer is entitled under the proration and adjustment
provisions of Article III hereof.

     (b) Upon the terms and subject to the conditions set forth in this Agreement, at the Closing,
Boardwalk shall sell, convey, assign and transfer to Boardwalk Buyer, and Boardwalk Buyer shall
purchase and acquire from Boardwalk, all of Boardwalk’s right, title and interest in and to
Boardwalk’s assets, properties and rights, tangible and intangible, of every type and description,
wherever located, in each case which are used or employed primarily in connection with the Traymore
Site, including without limitation, Boardwalk’s assets, properties and rights set forth below, but
excluding the Boardwalk Excluded Assets (the “Boardwalk Purchased Assets,” and together
with the Flamingo Purchased Assets, the “Purchased Assets”):

          (i) the land located in the City of Atlantic City, Atlantic County, New Jersey known
and designated as Lots 13 through 18 in Block 47, Lots 11 through 14, 19 and 25 in Block
48, and Lot 12 in Block 49 (the “Traymore Site Land”);

          (ii) all buildings, structures and other improvements now or hereafter located on the
Traymore Site Land (collectively, the “Traymore Site Improvements”);

          (iii) the Traymore Contracts;

          (iv) any and all (A) drawings, specifications, surveys, architectural, engineering,
soils, seismic, geological and environmental reports, studies and certificates, and other
technical descriptions in Boardwalk’s possession relating to the Boardwalk Purchased Assets
(collectively, the “Traymore Plans”), (B) third-party warranties, guaranties and
indemnities relating to the Boardwalk Purchased Assets (collectively, the “Traymore
Warranties”), (C) all licenses, permits, governmental approvals, utility commitments,
utility rights, development rights or approvals or other similar rights relating to the
Boardwalk Purchased Assets, all of which are set forth on Section 1.1(b)(iv)

2

 

of the Boardwalk Disclosure Letter (collectively, the “Traymore Licenses”) and
(D) any and all books and records relating exclusively to the Boardwalk Purchased Assets,
including without limitation, any rent rolls;

          (v) all right, title and interest, if any, of Boardwalk in and to any land lying in
the bed of any street, road, highway or avenue, open or proposed, in front of or adjoining
all or any part of the Traymore Site Land and in all strips, gores or rights-of-way,
riparian rights and easements; and

          (vi) all other property, real, personal or mixed, owned or held by Boardwalk (or
Boardwalk’s representatives) which relates, in any way, to the design, construction,
ownership, use, leasing, advertising, maintenance or operation of the Boardwalk Purchased
Assets.

     Section 1.2 Excluded Assets.

     (a) Notwithstanding anything to the contrary contained in this Agreement, from and after the
Closing, Flamingo shall retain all of its right, title and interest in and to each and all of the
following assets, except as may otherwise be set forth on the Detailed Balance sheet (the
“Flamingo Excluded Assets”):

          (i) all items of the type designated to be retained by Flamingo on the Detailed
Balance Sheet;

          (ii) the Excluded Contracts;.

          (iii) any rights, claims, causes of action and credits (including all indemnities,
warranties and similar rights) in favor of Flamingo or any of its Affiliates or
Representatives to the extent relating to (A) any other Flamingo Excluded Asset or (B) any
Flamingo Excluded Liability;

          (iv) the corporate charter or other organizational documents, minute and stock books
and records, corporate seals, Tax Returns (including supporting schedules) of Flamingo or
any of its Affiliates;

          (v) all of its human resources and other employee-related files and records, other
than the Transferred Employee Records;

          (vi) all indebtedness or accounts payable owing from any Affiliate of Flamingo to
Flamingo, all of which are set forth on Section 1.2(a)(vi) of the Flamingo Disclosure
Letter;

          (vii) subject to Section 3.1 hereof, any refund, credit, claim or entitlement with
respect to Taxes of Flamingo or its Affiliates, or with respect to the Flamingo Purchased
Assets, to the extent attributable to Tax periods (or portions thereof) ending on or before
the Closing Date;

          (viii) the Excluded Personal Property;

3

 

          (ix) the Excluded Intellectual Property;

          (x) the Customer Database;

          (xi) the Excluded Software;

          (xii) all assets and properties of Flamingo neither used primarily in connection with
the business operated at the Casino Property nor located at the Casino Property and all
assets and properties owned by Affiliates of Flamingo (other than the CS3 Assets) to the
extent such assets and properties are not used primarily in connection with the business
operated at the Casino Property;

          (xiii) all data, files and other materials located on any storage device (including
such data, files and/or materials located on personal computers and servers) located at the
Casino Property other than the Books and Records, the Flamingo Customer List, the Affiliate
Customer List and the Transferred Data;

          (xiv) all assets to which Flamingo is entitled under the proration and adjustment
provisions of Article III hereof;

          (xv) the Total Rewards and any player loyalty or rewards program of Harrah’s or its
Affiliates; and

          (xvi) any assets set forth on Section 1.2(a)(xvi) of the Flamingo Disclosure Letter.

     (b) Notwithstanding anything to the contrary contained in this Agreement, from and after the
Closing, Boardwalk shall retain all of its right, title and interest in and to each and all of the
following assets (the “Boardwalk Excluded Assets” and together with the Flamingo Excluded
Assets, the “Excluded Assets”):

          (i) all assets and properties of Boardwalk not located at the Traymore Site,
including, without limitation, the Other Assets and Other Property; and all assets and
properties owned by Affiliates of Boardwalk;

          (ii) the Other Assets and Other Property;

          (iii) the corporate charter or other organizational documents, minute and stock books
and records, corporate seals, Tax Returns (including supporting schedules) of Boardwalk or
any of its Affiliates;

          (iv) subject to Section 3.1 hereof, any refund, credit, claim or entitlement with
respect to Taxes of Boardwalk or its Affiliates, or with respect to the Boardwalk Purchased
Assets, to the extent attributable to Tax periods (or portions thereof) ending on or before
the Closing Date;

          (v) all assets to which Boardwalk is entitled under the proration and adjustment
provisions of Article III hereof; and

4

 

          (vi) any assets set forth on Section 1.2(b) of the Boardwalk Disclosure Letter.

     Section 1.3 Assumed Liabilities.

     (a) Upon the terms and subject to the conditions set forth in this Agreement, as of the
Closing Date, Flamingo Buyer agrees to assume, satisfy, perform, pay, discharge and be solely
responsible for the following Liabilities of Flamingo (the “Flamingo Assumed Liabilities”):

          (i) all Liabilities of the type designated on the Detailed Balance Sheet as being
assumed by Buyer;

          (ii) all Liabilities to the extent solely relating to, or arising in respect of, (A)
the Flamingo Purchased Assets accruing, arising out of, or relating to events, occurrences,
acts or omissions happening from and after the Closing Date and (B) all Assumed Contracts
which were not fully performed and were not required to have been so performed, prior to
the Closing Date;

          (iii) all Liabilities with respect to entertainment, hotel, dining and other
reservations made by patrons relating to the Casino Property from and after the Closing;

          (iv) except as provided for in Sections 3.1 and 7.9, all Liabilities for Taxes arising
from and attributable to the ownership of any portion of the Flamingo Purchased Assets from
and after the Closing Date and any Taxes that are included in the calculation of the Final
Working Capital Adjustment;

          (v) (A) all Liabilities relating to Transferred Employees accruing from and after the
Closing Date and (B) all obligations and Liabilities relating to severance provided for in
Section 7.4(c) hereof;

          (vi) all Liabilities of Buyer pursuant to the proration and adjustment provisions of
Article III hereof;

          (vii) all Liabilities with respect to claims, acts, omissions, events or occurrences
relating to the Flamingo Purchased Assets, which occur or arise on or after the Closing
Date;

          (viii) all Liabilities under Environmental Laws, including without limitation
Environmental Liabilities, relating to, resulting from, caused by or arising out of
ownership, operation or control of the Casino Property, whether arising before or after the
Closing Date, including, without limitation, any Liability relating to contamination or
exposure to Hazardous Substances at or attributable to the Casino Property, but excluding
the Flamingo Excluded Environmental Liabilities; and

          (ix) to the extent lawfully transferable, all obligations, commitments and Liabilities
under any Governmental Approvals assigned to Buyer pursuant to Section 1.1(a)(vii) hereof
to the extent arising on or after the Closing Date.

5

 

     (b) Upon the terms and subject to the conditions set forth in this Agreement, as of the
Closing Date, Boardwalk Buyer agrees to assume, satisfy, perform, pay, discharge and be solely
responsible for all Liabilities of Boardwalk, of any kind of nature whatsoever, whether known or
unknown, fixed or contingent, but including, without limitation, and except for the Boardwalk
Excluded Liabilities (the “Boardwalk Assumed Liabilities,” and together with the Flamingo
Assumed Liabilities, the “Assumed Liabilities”):

          (i) except as provided for in Sections 3.1 and 7.9, all Liabilities for Taxes arising
from and attributable to the ownership of any portion of the Boardwalk Purchased Assets
from and after the Closing Date and any Taxes that are included in the calculation of the
Final Working Capital Adjustment;

          (ii) all Liabilities of Buyer pursuant to the proration and adjustment provisions of
Article III hereof;

          (iii) all Liabilities with respect to (A) claims, acts, omissions, events or
occurrences relating to the Boardwalk Purchased Assets, which occur or arise on or after
the Closing Date and (B) all Traymore Contracts and Traymore Leases which were not fully
performed and were not required to have been so performed, prior to the Closing Date;

          (iv) all Liabilities under Environmental Laws, including without limitation
Environmental Liabilities, relating to, resulting from, caused by or arising out of
ownership, operation or control of the Traymore Site, whether arising before or after the
Closing Date, including, without limitation, any Liability relating to contamination or
exposure to Hazardous Substances at or attributable to the Traymore Site, but excluding the
Boardwalk Excluded Environmental Liabilities; and

          (v) to the extent lawfully transferable, all obligations, commitments and Liabilities
under any Governmental Approvals assigned to Buyer pursuant to Section 1.1(b)(iv) hereof to
the extent arising on or after the Closing Date.

     Section 1.4 Excluded Liabilities.

     (a) Flamingo Buyer shall not assume, or in any way be liable or responsible for any
Liabilities of Flamingo, other than the Flamingo Assumed Liabilities (collectively, the
“Flamingo Excluded Liabilities”). Without limiting the generality of the foregoing,
Flamingo Buyer shall not assume any of the following, all of which shall be Flamingo Excluded
Liabilities for purposes of this Agreement:

          (i) any Liability in respect of any Flamingo Excluded Asset;

          (ii) all Liabilities of the type designated to be retained by Flamingo on the Detailed
Balance Sheet;

          (iii) all Liabilities set forth on Section 1.4(a) of the Flamingo Disclosure Letter;

6

 

          (iv) all indebtedness or accounts payable owing from Flamingo to any Affiliate of
Flamingo;

          (v) all Pre-Closing Tax Liabilities;

          (vi) all Pre-Closing Employee Liabilities;

          (vii) all Liabilities under Environmental Laws for (i) matters set forth at Sections
5.8(1), (2) and (3) of the Flamingo Disclosure Letter or (ii) any tort claim made prior to
the expiration of the applicable statute of limitations which is directly related to
contamination or exposure to Hazardous Substances at the Casino Property, but, if and only
if, such contamination or exposure occurred solely prior to Closing (collectively, the
“Flamingo Excluded Environmental Liabilities”);

          (viii) all Liabilities of Flamingo pursuant to the proration and adjustment provisions
of Article III hereof; and

          (ix) all Liabilities of Flamingo that (A) by their terms should have been performed on
or prior to the Transfer Time, and/or (B) relate to events or circumstances, including
claims, pending or threatened litigation, acts, omissions, events or occurrences relating
to the Flamingo Purchased Assets, arising on or prior to the Transfer Time, in each case,
other than the Flamingo Assumed Liabilities.

     (b) Boardwalk shall retain and shall be responsible for each of the following Liabilities
(collectively, the “Boardwalk Excluded Liabilities”), including, without limitation:

          (i) any Liability in respect of any Boardwalk Excluded Asset, including the Other
Assets and the Other Property;

          (ii) all Liabilities set forth on Section 1.4(b) of the Boardwalk Disclosure Letter;

          (iii) all indebtedness or accounts payable owing from Boardwalk to any Affiliate of
Seller;

          (iv) all Pre-Closing Tax Liabilities;

          (v) all Liabilities under Environmental Laws for matters set forth on Section 5.26 of
the Boardwalk Disclosure Letter (the “Boardwalk Excluded Environmental
Liabilities”);

          (vi) all Liabilities of Boardwalk pursuant to the proration and adjustment provisions
of Article III hereof; and

          (vii) all Liabilities of Boardwalk that (A) by their terms should have been performed
on or prior to the Transfer Time, and/or (B) relate to events or circumstances, including
claims, pending or threatened litigation, acts, omissions, events or occurrences relating
to the Boardwalk Purchased Assets, arising on or prior to the

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Transfer Time, in each case, other than the Boardwalk Assumed Liabilities specifically
enumerated in Section 1.3(b)(i) through (v).

     Section 1.5 Retention and Removal of Excluded Assets.

     (a) Notwithstanding anything to the contrary contained in this Agreement, each Seller and
their respective Affiliates may retain and use, at their own expense, archival copies of, with
respect to Flamingo, all Assumed Contracts and all other documents or materials transferred
hereunder (but excluding the Flamingo Customer List), and with respect to Boardwalk, all Traymore
Contracts and all other documents or materials transferred hereunder, in each case, which any such
Seller in good faith determines is reasonably likely to be needed in connection with the defense
(or any counterclaim, cross-claim or similar claim in connection therewith) of any suit, claim,
action, proceeding or investigation against or by such Seller or any of its Affiliates pending or
threatened as of the Closing Date; or (ii) any such Seller in good faith determines is reasonably
likely to be needed in connection with any filing, report, or investigation to or by any
Governmental Authority. Notwithstanding the above, Flamingo and its Affiliates shall retain the
Affiliate Customer List, which Flamingo and its Affiliates shall retain unlimited rights to use in
perpetuity in connection with its marketing and loyalty programs and otherwise.

     (b) All items located at each Seller’s Property that constitute Excluded Assets may be removed
on or prior to the Closing Date and, subject to the immediately succeeding sentence, within thirty
(30) days after the Closing Date by such Seller, its Affiliates, the owners of the Excluded Assets,
or their respective Representatives, with the removing party making all repairs necessitated by
such removal, but without any obligation on the part of such Seller, its Affiliates, or any
removing party to replace any item so removed. Sellers hereby reserve unto themselves and their
Affiliates and the owners of the Excluded Assets, and their respective Representatives, a right of
entry into each Seller’s Property at reasonable times after the Closing Date and within such thirty
(30) day period to effect such removal; provided that following the Closing each Seller provide the
applicable Buyer with reasonable prior written notice of the times at which such Seller proposes to
effect such removal and; provided, further, that such Buyer may, promptly upon
receipt of any such notice, designate an alternative reasonable time to effect such removal if such
Buyer in good faith determines that the time proposed by Seller would materially interfere with
such Buyer’s operation of the Purchased Assets. All risk of loss relative to any Excluded Assets
that are located on any Seller’s Property after the Closing Date shall remain with such Seller.

     (c) Flamingo recognizes that Flamingo Buyer will be replacing the Excluded Software at the
Casino Property and that Flamingo Buyer intends that its replacement software will be operational
as of, or promptly after, the Closing Date and, with respect to any Excluded Software that may be
licensed to Flamingo Buyer pursuant to the Excluded Software License Agreement, prior to the
expiration or earlier termination of such Excluded Software License Agreement. Subject to Sections
1.6(c) and 7.15 hereof, Flamingo agrees to cooperate reasonably with Flamingo Buyer in Flamingo
Buyer’s efforts to effect the transition from Excluded Software to replacement software, including
but not limited to assisting Flamingo Buyer with an assignment or transfer of any applicable
Excluded Contracts with InfoGenesis; provided that: (i) there shall be no material
interference with Flamingo’s operation of the Casino Property before

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the Closing Date; (ii) there shall be no out-of-pocket cost or expense incurred by Flamingo or
any of its Affiliates in connection with such cooperation, including any costs associated with
wages for Flamingo’s employees or agents who will be assisting in the process; (iii) Flamingo shall
not be required to reveal proprietary information to Buyer (except as otherwise agreed to by the
parties in any Excluded Software License) and (iv) with respect to the assignment or transfer of
any InfoGenesis Excluded Contract, Flamingo shall not be required to assign any such agreement if
such assignment would make Flamingo Buyer and any Affiliates of Flamingo co-parties to the same
agreement. Flamingo shall uninstall Excluded Software at the Casino Property that is now installed
on personal computers at the Casino Property on or immediately prior to the Closing Date (except as
otherwise agreed to by the parties in any Excluded Software License Agreement).

     Section 1.6 Assignability and Consents.

     (a) Prior to Closing, Buyers and Sellers shall all cooperate and be responsible for obtaining
any necessary consents to assign the Purchased Assets, including the Assumed Contracts, which for
the purposes of this Section 1.6(a) shall be deemed to include the Traymore Contracts, from any
Seller to any Buyer at the Closing, and all costs (including legal fees) related to such process
shall be borne one half by the applicable Buyer and one half by the applicable Seller.
Notwithstanding anything to the contrary contained in this Agreement, if the sale, conveyance,
assignment, attempted sale, conveyance, assignment or transfer to Buyers of any Purchased Asset is,
by its terms, nonassignable without the consent of a third party (other than an Affiliate of any
Seller, in which case the applicable Seller covenants and agrees to cause such Affiliate to render
such consent) and such authorizations, approvals, consents or waivers shall not have been obtained
prior to the Closing Date (each, a “Non-Assignable Asset”), in either case, subject to the
other provisions of this Section 1.6 and subject to Section 8.2(c) and the receipt of any consents,
waivers, authorizations or approvals set forth on Section 8.2(c) of the Buyer Disclosure Letter,
the Closing shall proceed, but the Closing shall not constitute the sale, conveyance, assignment,
transfer or delivery of any such Non-Assignable Asset, and this Agreement shall not constitute a
sale, conveyance, assignment, transfer or delivery of any such Non-Assignable Asset unless and
until such authorization, approval, consent or waiver is obtained. After the Closing, the
applicable Seller and the applicable Buyer shall use commercially reasonable efforts to obtain any
such authorizations, approvals, consents or waivers related to the Non-Assignable Assets, and the
applicable Buyer and the applicable Seller shall cooperate with each other in any arrangement
commercially reasonable to provide that the applicable Buyer shall receive the interest of such
Seller in the benefits under any such Non-Assignable Asset until such time as such third party
consent, approval or waiver shall have been obtained, and such Buyer and such Seller shall
cooperate with the other party in any such commercially reasonable arrangement, including
performance by the applicable Seller as agent if commercially reasonable to such Seller, and, in
such case, the applicable Buyer shall be liable to such Seller in a fashion equivalent to what such
Buyer’s Liabilities would be under any such Non-Assignable Asset as if it were assigned. The
applicable Seller shall promptly pay over to the applicable Buyer the net amount (after
out-of-pocket expenses) of all payments received by it in respect of all of its Non-Assignable
Assets. In complying with the foregoing, no Seller shall be required, in any manner, to waive,
relinquish or forego any right or claim available to such Seller with respect to any such
Non-Assignable Asset in order to provide such assignment, transfer or benefit. Each Buyer
understands and agrees that the assignment of certain Contracts

9

 

as contemplated hereunder may require the delivery by such Buyer of certain deposits to the
third parties that are party to such Contracts and that each Buyer shall be responsible for the
timely delivery of such deposits in accordance with requirements of such third parties.

     (b) Once authorization, approval or waiver of or consent for the sale, conveyance, assignment
or transfer of any such Non-Assignable Asset is obtained, the applicable Seller shall convey,
assign, transfer and deliver any such Non-Assignable Asset at no additional cost to the applicable
Buyer, and such Non-Assignable Asset shall thereafter constitute a Purchased Asset.
Notwithstanding anything to the contrary contained in this Agreement, the applicable Buyer shall
assume all Liabilities in respect of any Non-Assignable Asset to the extent such Liabilities
constitute Assumed Liabilities hereunder if it is receiving the benefits thereof in accordance with
Section 1.6(a); provided, further, that the parties hereto shall also be liable to
each other for performing their respective obligations under the arrangements described in Section
1.6(a) hereof.

     (c) Buyers understand and agree that (i) subject to Seller obligations set forth in this
Section 1.6(a), it is solely Buyers’ responsibility to obtain any and all Contracts necessary to
conduct business at the Properties from and after the Closing Date, including, without limitation,
with respect to the Casino Property and replacement software license agreements for the software
which will replace the Excluded Software and (ii) except as set forth in Sections 1.1(a)(vii) and
1.1(b)(iv) hereof, no licenses or permits will be transferred by Sellers in connection with the
sale of the Purchased Assets and Buyers shall therefore be responsible for obtaining any new or
other licenses and permits for the operation of the Properties.

     Section 1.7 Other Assets; Other Property. Buyers agree and acknowledge that in addition to
owning the Boardwalk Purchased Assets, Boardwalk owns and operates the hotel casino commonly known
as Caesars Atlantic City (the “Other Property”) and owns certain other assets that are not
located at the Traymore Site (collectively, the “Other Assets”). Notwithstanding anything
to the contrary contained in this Agreement, the parties hereto agree that: (i) Boardwalk is not
making any representations or warranties with respect to the Other Property or the Other Assets;
(ii) Boardwalk is not assigning or transferring any assets or properties related solely to the
Other Assets or the Other Property; and (iii) neither Boardwalk nor Buyer is assuming or incurring
any obligations or Liabilities under this Agreement with respect to the Other Property and Other
Assets, nor are the Other Assets or the Other Property subject to any restrictions by virtue of the
Agreement.

ARTICLE II

PURCHASE PRICE AND DEPOSIT

     Section 2.1 Purchase Price. In consideration for the sale and transfer of the Flamingo
Purchased Assets and the Boardwalk Purchased Assets, as provided for herein, at the Closing, Buyers
shall deliver or cause to be delivered by electronic transfer of immediately available funds to an
account designated by each of the Sellers to Buyers in writing at least two (2) business days prior
to the Closing Date, an aggregate of One Hundred Seventy Million United States Dollars
($170,000,000), PLUS OR
MINUS the Working Capital Adjustment, if any, as provided for in Sections 2.4(a) and 2.5 hereof,
PLUS OR MINUS the Traymore Adjustment, if any, provided for in Sections 2.4(b) and 2.6 hereof
(collectively, the “Purchase Price”); provided,

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however, that for the avoidance of doubt, a
portion of the Purchase Price shall be paid by the release of the Deposit to Sellers pursuant to
Section 2.2(a) and the terms of the Deposit Escrow Agreement. At Closing, in lieu of the final
full Working Capital Adjustment, the Purchase Price shall be calculated using the Initial Working
Capital Adjustment as determined in accordance with Section 2.4(a) hereof, with subsequent final
adjustment as provided for in Section 2.5(c) hereof and in lieu of the final full Traymore
Adjustment, the Purchase Price shall be calculated using the Initial Traymore Adjustment as
determined in accordance with Section 2.4(b) hereof, with subsequent final adjustment as provided
for in Section 2.6(c) hereof.

     Section 2.2 Deposit.

     (a) On the date hereof, Buyers shall deposit Twelve Million United States Dollars
($12,000,000) (such amount, including the interest accrued thereon and any additional funds
deposited by Buyers with the Escrow Agent pursuant to Section 4.1, the “Deposit”) with
Lawyers Title of Nevada, Inc. (the “Escrow Agent”) pursuant to an escrow agreement dated as
of the date hereof and attached hereto as Exhibit A (the “Deposit Escrow
Agreement”) executed and delivered by Sellers, Buyers and the Escrow Agent. At the Closing,
the Deposit shall be credited against the Purchase Price and the Deposit shall be promptly released
and paid by the Escrow Agent to Sellers pursuant to this Section 2.2(a) and the terms of the
Deposit Escrow Agreement. Upon the termination of this Agreement, the Deposit shall be payable
pursuant to Section 9.3 hereof, and thereafter shall be promptly released by the Escrow Agent to
Buyers or Sellers, as applicable, pursuant to Section 9.3 hereof and the terms of the Deposit
Escrow Agreement.

     (b) Each Seller and each Buyer agree to execute and be bound by such other reasonable and
customary escrow instructions as may be necessary or reasonably required by the Escrow Agent or the
parties hereto in order to consummate the purchase and sale contemplated herein, or otherwise to
distribute and pay the funds held in escrow as provided in this Agreement and the Deposit Escrow
Agreement; provided that such escrow instructions are consistent with the terms of this
Agreement and the Deposit Escrow Agreement. In the event of any inconsistency between the terms
and provisions of such supplemental escrow instructions and the terms and provisions of this
Agreement, or any inconsistency between the terms and provisions of the Deposit Escrow Agreement
and the terms and provisions of this Agreement, the terms and provisions of this Agreement shall
control, absent an express written agreement between the parties hereto to the contrary which
acknowledges this Section 2.2(b).

     Section 2.3 Allocation of Purchase Price.

     (a) No later than sixty (60) days following the Closing, Flamingo Buyer shall prepare a draft
schedule allocating a portion of the Purchase Price (as determined for federal income tax purposes,
including any Flamingo Assumed Liabilities that are required to be treated as part of such portion
of the Purchase Price for federal income tax purposes) among the Flamingo Purchased Assets (and any
other assets that are considered to be acquired for federal income tax purposes) on or prior to the
Closing Date in accordance with Section 1060 of the Code and the
Treasury Regulations thereunder and applicable Law (the “Flamingo Purchase Price
Allocation”) and provide such schedule to Flamingo for review and comment. Flamingo and
Flamingo Buyer shall use commercially reasonable efforts to agree upon the final Flamingo Purchase
Price

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Allocation and if Flamingo Buyer and Flamingo are unable to resolve such disagreement within
ten (10) days following Flamingo Buyer’s submission of the draft allocation schedule to Flamingo,
then any disputed matter(s) will be finally and conclusively resolved by an independent accounting
firm of recognized national standing with no existing relationship with either party that is
mutually selected by Flamingo Buyer and Flamingo (the “Auditor”) as promptly as
practicable, and such resolution(s) will be reflected on the Flamingo Purchase Price Allocation.
The fees and expenses of the Auditor shall be borne equally by Flamingo Buyer and Flamingo. Except
as required by any applicable Law, Flamingo Buyer and Flamingo agree to (a) be bound by the
Flamingo Purchase Price Allocation, (b) act in accordance with the Flamingo Purchase Price
Allocation in the filing of all Tax Returns (including, without limitation, filing IRS Form 8594
(and any supplemental or amended Form 8594) with their United States federal income Tax Return for
the taxable year that includes the Closing Date) and in the course of any Tax audit, Tax review or
Tax litigation relating thereto, and (c) take no position and cause its Affiliates to take no
position inconsistent with the Flamingo Purchase Price Allocation for Tax purposes, unless
otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of
the Code. Flamingo Buyer and Flamingo shall promptly inform one another of any challenge by any
Governmental Authority to any allocation made pursuant to this Section 2.3(a) and shall consult and
keep one another informed with respect to the status of, and any discussion, proposal or submission
with respect to, such challenge.

     (b) No later than sixty (60) days following the Closing, Boardwalk Buyer shall prepare a draft
allocation schedule of a portion of the Purchase Price (as determined for federal income tax
purposes, including any Boardwalk Assumed Liabilities that are required to be treated as part of
such portion of the Purchase Price for federal income tax purposes) among the Boardwalk Purchased
Assets (and any other assets that are considered to be acquired for federal income tax purposes) on
or prior to the Closing Date in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder and applicable Law (the “Boardwalk Purchase Price Allocation”) and
provide such schedule to Boardwalk for review and comment. Boardwalk Buyer and Boardwalk shall use
commercially reasonable efforts to agree upon the final Boardwalk Purchase Price Allocation and if
Boardwalk Buyer and Boardwalk are unable to resolve such disagreement within ten (10) days
following Boardwalk Buyer’s submission of the draft allocation schedule to Boardwalk, then any
disputed matter(s) will be finally and conclusively resolved by the Auditor as promptly as
practicable, and such resolution(s) will be reflected on the Boardwalk Purchase Price Allocation.
The fees and expenses of the Auditor shall be borne equally by Boardwalk Buyer and Boardwalk.
Except as required by any applicable Law, Boardwalk Buyer and Boardwalk agree to (a) be bound by
the Boardwalk Purchase Price Allocation, (b) act in accordance with the Boardwalk Purchase Price
Allocation in the filing of all Tax Returns (including, without limitation, filing IRS Form 8594
(and any supplemental or amended Form 8594) with their United States federal income Tax Return for
the taxable year that includes the Closing Date) and in the course of any Tax audit, Tax review or
Tax litigation relating thereto, and (c) take no position and cause its Affiliates to take no
position inconsistent with the Boardwalk Purchase Price Allocation for Tax purposes, unless
otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of
the Code. Boardwalk Buyer and Boardwalk shall promptly inform one another of any challenge by any
Governmental Authority to any allocation made pursuant to this Section 2.3(a) and shall
consult and keep one another informed with respect to the status of, and any discussion, proposal
or submission with respect to, such challenge.

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     (c) No less than fourteen (14) days prior to the Closing (i) Flamingo Buyer shall determine
and submit to Flamingo for review and approval, which approval will not be unreasonably withheld,
all information required for completion of the State of Nevada Declaration of Value Form including
the value of real estate (including, but not limited to, any real property or interests therein and
buildings) relating to the Casino Property and (ii) Boardwalk Buyer shall determine and submit to
Boardwalk for review and approval, which approval will not be unreasonably withheld, the value of
real estate (including, but not limited to, any real property or interests therein and buildings)
relating to the Traymore Site. Such values shall be determinative for purposes of the Flamingo
Purchase Price Allocation and the Boardwalk Purchase Price Allocation. To the extent that the
applicable Buyer and the applicable Seller cannot agree upon these values, any disputed matter(s)
will be finally and conclusively resolved by the Auditor as promptly as practicable and in any
event prior to the Closing Date.

     Section 2.4 Initial Estimated Adjustments.

     (a) At least five (5) business days prior to the Closing Date, Flamingo shall deliver to
Flamingo Buyer a statement of Working Capital substantially in the form of the Detailed Balance
Sheet (the “Pre-Closing Working Capital Statement”). The Pre-Closing Working Capital
Statement shall be prepared on a basis consistent with the accounting policies, practices,
procedures and principles used in preparing the Detailed Balance Sheet. The Pre-Closing Working
Capital Statement will contain a good faith estimate of the amount of Working Capital of Flamingo
on the Closing Date (the “Pre-Closing Working Capital”). Flamingo and Flamingo Buyer each
shall bear its own expenses in the preparation and review of the Pre-Closing Working Capital
Statement. The “Initial Working Capital Adjustment” (which may be a positive or negative
number) shall equal the Pre-Closing Working Capital. On or about the Transfer Time, Flamingo shall
conduct a cash count and a drop of 100 percent of the gaming device “hoppers” and Flamingo
shall provide reasonable advance notice to Flamingo Buyer thereof and a representative of Flamingo
Buyer may, subject to applicable Gaming Laws, if any, be present to observe such hopper drop if it
so elects. Such cash count and hopper drop shall be used in the preparation of the Working Capital
Statement.

     (b) At least five (5) business days prior to the Closing Date, Boardwalk shall deliver to
Boardwalk Buyer a written closing statement (an “Estimated Closing Statement”) setting
forth a good faith estimated accounting for the Traymore Site of the items set forth in subclauses
(i) through (iii) of this Section 2.4(b) and Section 3.1 hereof, which amount may be a positive or
negative number and shall be deemed the “Initial Traymore Adjustment.” Boardwalk and
Boardwalk Buyer each shall bear its own expenses in the preparation and review of the Estimated
Closing Statement.

          (i) Utilities. Utility meters will be read, to the extent that the utility
company will do so, during the daylight hours on the Closing Date (or as near as
practicable prior thereto), with charges to that time paid by Boardwalk and charges
thereafter paid by Boardwalk Buyer. Prepaid utility charges shall be adjusted on the
Estimated Closing Statement. Charges for utilities which are un-metered, or the
meters for which have not been read on the Closing Date, will be prorated between Boardwalk
Buyer and Boardwalk as of the Transfer Time. Boardwalk or Boardwalk Buyer, as appropriate,
shall, upon receipt, submit a copy of the utility billings for any such charges

13

 

to the
other party and such party shall pay its pro-rata share of such charges to the other party
within seven (7) days from the date of any such request.

          (ii) Traymore Contracts and Traymore Leases. All income and expenses pursuant
to the Traymore Contracts and Traymore Leases will be prorated between Boardwalk Buyer and
Boardwalk as of the Closing Date on the Estimated Closing Statement. Any amounts received
by Boardwalk Buyer under its Traymore Contracts and Traymore Leases related to any period
prior to the Closing shall be promptly paid to Boardwalk without set-off of any kind
whatsoever as promptly as possible. Any amounts received by any Seller under the Traymore
Contracts and Traymore Leases related to any period after the Closing shall be promptly
paid to Boardwalk Buyer without set-off of any kind whatsoever as promptly as possible.
All security deposits held by Boardwalk for the account of tenants shall be transferred to
Boardwalk Buyer on the Estimated Closing Statement. All security deposits of Boardwalk
held by any landlord shall be transferred to Boardwalk Buyer and credited to Boardwalk on
the Estimated Closing Statement.

          (iii) Assessments. Assessments, if any, shall be paid and allowed by
Boardwalk on account of the Purchase Price, if the improvement or work has been commenced
on or before the Closing Date. If the Traymore Site or any part thereof is subject to an
assessment or assessments which are payable in annual installments, all unpaid installments
of any such assessment which are to become due and payable after the Closing shall be
deemed to be liens on the Traymore Site and shall be paid and discharged by Boardwalk at or
prior to Closing. Unconfirmed assessments, if any, shall be paid by Boardwalk at or prior
to Closing. Any assessments for work commenced after the Closing Date shall be the sole
responsibility of Boardwalk Buyer.

     Section 2.5 Final Working Capital Adjustment.

     (a) As soon as reasonably practicable following the Closing Date, but in no event more than
sixty (60) days after the Closing Date, Flamingo Buyer shall cause to be prepared and delivered to
Flamingo a statement of Working Capital of Flamingo substantially in the form of the Pre-Closing
Working Capital Statement and the Detailed Balance Sheet (the “Working Capital Statement”).
The Working Capital Statement shall be prepared on a basis consistent with the accounting
policies, practices, procedures and principles used in preparing the Detailed Balance Sheet. The
Working Capital Statement will contain the amount of Working Capital as of the Closing Date (the
“Closing Date Working Capital”). Flamingo Buyer shall give Flamingo reasonable prior
written notice of any cash counts and physical inventories that will be taken by Flamingo Buyer in
connection with its preparation of the Working Capital Statement. Notwithstanding any provision of
this Agreement to the contrary, Flamingo shall, subject to applicable Gaming Laws, if any, be
permitted to have a representative of Flamingo present to observe such cash counts and physical
inventories if it so elects. Flamingo Buyer and Flamingo each shall bear its own expenses in the
preparation and review of the Working Capital Statement.
Subject to applicable Law, Flamingo Buyer will provide Flamingo reasonable access to any of
Flamingo Buyer or Casino Property records not otherwise available to Flamingo as a result of the
transactions contemplated by this Agreement, to the extent reasonably related to the preparation of
the Working Capital Statement and the calculation of Closing Date Working Capital.

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     (b) If Flamingo shall disagree with the calculation of Closing Date Working Capital or any
element of the Working Capital Statement relevant thereto, it shall, within twenty (20) business
days after its receipt of the Working Capital Statement, notify Flamingo Buyer of such disagreement
in writing, setting forth in detail the particulars of such disagreement. In connection therewith
and subject to applicable Law, Flamingo Buyer will provide Flamingo reasonable access to any of
Flamingo Buyer’s records not otherwise available to Flamingo as a result of the transactions
contemplated by this Agreement, to the extent reasonably related to Flamingo’s review of the
Working Capital Statement and the calculation of Closing Date Working Capital. In the event that
Flamingo does not provide such notice of disagreement within such twenty (20) business day period,
Flamingo shall be deemed to have accepted the Working Capital Statement and the calculation of the
Closing Date Working Capital delivered by Flamingo Buyer, which shall be final, binding and
conclusive for purposes of this Agreement and not subject to any further recourse by Flamingo under
any provision hereof, including Article X hereof. In the event any such notice of
disagreement is timely provided, Flamingo Buyer and Flamingo, in conjunction with their respective
independent accounting firms, shall use reasonable best efforts for a period of ten (10) business
days (or such longer period as they may mutually agree) to resolve any disagreements with respect
to the calculation of Closing Date Working Capital. If, at the end of such period, they are unable
to resolve such disagreements, then the Auditor shall resolve any remaining disagreements. The
Auditor shall determine as promptly as practicable whether the Working Capital Statement was
prepared in accordance with the standards set forth in this Agreement and, only with respect to the
disagreements submitted to the Auditor, whether and to what extent (if any) Closing Date Working
Capital requires adjustment. The Auditor shall promptly deliver to Flamingo Buyer and Flamingo its
determination in writing, which determination shall be made subject to the definitions and
principles set forth in this Agreement, and shall be (i) consistent with either the position of
Flamingo or Flamingo Buyer or (ii) between the positions of Flamingo and Flamingo Buyer. The fees
and expenses of the Auditor shall be paid one-half by Flamingo Buyer and one-half by Flamingo. The
determination of the Auditor shall be final, binding and conclusive for purposes of this Agreement
and not subject to any further recourse by Flamingo Buyer or Flamingo under any provision hereof,
including Article X. The date on which Closing Date Working Capital is finally determined
in accordance with this Section 2.5 is hereinafter referred to as the “Flamingo Determination
Date.”

     (c) Within ten (10) business days of the Flamingo Determination Date, the amount (which may be
a positive or negative number) equal to (i) the Closing Date Working Capital MINUS (ii) the
Pre-Closing Working Capital (the “Final Working Capital Adjustment”) shall be paid in cash
by wire transfer of immediately available funds from Flamingo Buyer to Flamingo (if the Final
Working Capital Adjustment is a positive amount), or from Flamingo to Flamingo Buyer (if the Final
Working Capital Adjustment is a negative amount).

     Section 2.6 Final Traymore Adjustment.

     (a) As soon as reasonably practicable following the Closing Date, but in no event more than
thirty (30) days after the Closing Date, Boardwalk Buyer shall prepare and deliver to Boardwalk a
final accounting of the items set forth in subclauses (i) through (iii) of Section 2.4(b) and
Section 3.1 hereof (a “Final Closing Statement”) as of the Closing Date which shall set
forth the “Actual Traymore Adjustment,” which may be a positive or negative number.

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Notwithstanding the above, final adjustments with respect to real and personal property Taxes may
continue to be made pursuant to Section 3.1 hereof.

     (b) If Boardwalk shall disagree with the calculation of Final Closing Statement, it shall,
within ten (10) business days after its receipt of the Final Closing Statement, notify Boardwalk
Buyer of such disagreement in writing, setting forth in detail the particulars of such
disagreement. In connection therewith and subject to applicable Law, Boardwalk Buyer will provide
Boardwalk reasonable access to any of Boardwalk Buyer’s records not otherwise available to
Boardwalk, to the extent reasonably related to Boardwalk’s review of the Final Closing Statement.
In the event that Boardwalk does not provide such notice of disagreement within such ten (10)
business day period, Boardwalk shall be deemed to have accepted the Final Closing Statement, which
shall be final, binding and conclusive for purposes of this Agreement and not subject to any
further recourse by Boardwalk under any provision hereof, including Article X hereof. In
the event any such notice of disagreement is timely provided, Boardwalk Buyer and Boardwalk, in
conjunction with their respective independent accounting firms, shall use reasonable best efforts
for a period of ten (10) business days (or such longer period as they may mutually agree) to
resolve any disagreements with respect to the Final Closing Statement. If, at the end of such
period, they are unable to resolve such disagreements, then the Auditor shall resolve any remaining
disagreements. The Auditor shall promptly deliver to Boardwalk Buyer and Boardwalk its
determination in writing, which determination shall be made subject to the terms of this Agreement,
and shall be (i) consistent with either the position of Boardwalk or Boardwalk Buyer or (ii)
between the positions of Boardwalk and Boardwalk Buyer. The fees and expenses of the Auditor shall
be paid one-half by Boardwalk Buyer and one-half by Boardwalk. The determination of the Auditor
shall be final, binding and conclusive for purposes of this Agreement and not subject to any
further recourse by Boardwalk Buyer or Boardwalk under any provision hereof, including Article
X. The date on which Final Closing Statement is finally determined in accordance with this
Section 2.6 is hereinafter referred to as the “Boardwalk Determination Date.”

     (c) Within ten (10) business days of the Boardwalk Determination Date, the amount (which may
be a positive or negative number) equal to (i) the Initial Traymore Adjustment MINUS (ii) the
Actual Traymore Adjustment (the “Final Traymore Adjustment”) shall be paid in cash by wire
transfer of immediately available funds from Boardwalk Buyer to Boardwalk (if the Traymore
Adjustment is a positive amount), or from Boardwalk to Boardwalk Buyer (if the Traymore Adjustment
is a negative amount).

ARTICLE III

ADJUSTMENTS

     Section 3.1 Property Taxes. As of the Closing, with respect to both the Flamingo Purchased Assets and Boardwalk Purchased
Assets, all real and personal property Taxes for Tax periods beginning before and ending on or
after the Closing Date shall be prorated separately on a per diem basis as of the Closing Date
using the latest available rates and assessments, and each Seller shall be responsible for only
such Seller’s proportionate share of its property Taxes (which shall be determined on a per diem
basis from the beginning of the relevant Tax period through the Closing Date). Buyers shall
provide a copy of each final tax bill to each Seller within seven

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(7) days of its receipt of such
bill, and such Seller shall pay to the applicable Buyer such Seller’s proportionate share of
property Taxes shown on such final tax bill within fourteen (14) days of the applicable Buyer’s
receipt of such bill. Any Tax refunds, credits, claims, entitlements or rebates attributable to
Tax periods (or portions thereof) ending on or before the Closing Date shall be the property of the
applicable Seller, and the applicable Buyer shall pay promptly to such Seller any such amounts that
it receives. With the exception of the Pre-Closing Tax Liabilities, all Taxes becoming a Lien on
any of the assets of any Seller on or after the Closing Date or which become due and payable on or
after the Closing Date (other than those that are prorated pursuant to this Section 3.1) shall be
paid solely by the applicable Buyer.

ARTICLE IV

CLOSING

     Section 4.1 Closing. 

     (a) Unless this Agreement is earlier terminated pursuant to Article IX hereof, the closing of
the transactions contemplated by this Agreement, including the purchase and sale of the Flamingo
Purchased Assets and the Boardwalk Purchased Assets (the “Closing”), shall take place on
the third business day following satisfaction or waiver of the conditions set forth in Article VIII
hereof (other than those conditions to be satisfied or waived at the Closing), at 9:00 a.m., New
York City time, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, unless another time and
place are agreed to by the parties (the “Closing Date”), provided, however, in the event
one or both Buyers, or, if applicable, a Third Party Operator, has not obtained all Necessary
Gaming Approvals and all the other conditions set forth in Article VIII hereof have been satisfied
or waived, the Closing shall take place on the fifth business day following Buyer’s receipt of the
Necessary Gaming Approvals, subject to Buyers’ and Sellers’ right to terminate this Agreement
pursuant to Section 9.1 hereof; provided, further, that the Closing Date shall not be after that
date which is 120 days following the date hereof (the “Initial Outside Date”), unless
Buyers deposit with the Escrow Agent an additional Three Million Four Hundred Thousand Dollars
($3,400,000) (which amount shall be included in the Deposit for all purposes of this Agreement), in
which case, the Initial Outside Date shall be extended to the earlier of (A) five (5) business days
after all Necessary Gaming Approvals have been received and (B) 30 days after the Initial Outside
Date (the “First Extended Outside Date”); provided, further, that if (i) all Necessary
Gaming Approvals have not been received on or before five (5) business days before the First
Extended Outside Date and (ii) Buyers deposit with the Escrow Agent an additional Three Million
Four Hundred Thousand Dollars ($3,400,000) (which amount shall be included in the Deposit for all
purposes of this Agreement), the First Extended Outside Date shall be extended to the earlier of
(A) five (5) business days after all Necessary Gaming Approvals have been received and (B) 30 days
after the First Extended Outside Date (the “Second Extended 
Outside Date”); provided, further, that if (i) all Necessary Gaming Approvals have not
been received on or before five (5) business days before the Second Extended Outside Date and (ii)
Buyers deposit with the Escrow Agent an additional Three Million Four Hundred Thousand Dollars
($3,400,000) (which amount shall be included in the Deposit for all purposes of this Agreement),
the Second Extended Outside Date shall be extended to the earlier of (A) five (5) business days
after all Necessary Gaming Approvals have been received and (B) 30 days after the Second Extended
Outside Date (the “Third Extended Outside Date”); provided, further, that

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if (i) all Necessary Gaming Approvals have not been received on or before five (5) Business Days before the
Third Extended Outside Date and (ii) Buyers deposit with the Escrow Agent an additional Three
Million Four Hundred Thousand Dollars ($3,400,000) (which amount shall be included in the Deposit
for all purposes of this Agreement), the Third Extended Outside Date shall be extended to the
earlier of (A) five (5) business days after all Necessary Gaming Approvals have been received and
(B) 30 days after the Third Extended Outside Date (the “Fourth Extended Outside Date”);
provided, further, that if (i) all Necessary Gaming Approvals have not been received on or before
five (5) Business Days before the Fourth Extended Outside date and (ii) Buyers deposit with the
Escrow Agent an additional Three Million Four Hundred Thousand Dollars ($3,400,000) (which amount
shall be included in the Deposit for all purposes of this Agreement), the Fourth Extended Outside
Date shall be extended to the earlier of (A) five (5) Business Days after all Necessary Gaming
Approvals have been received and (B) 30 days after the Fourth Extended Outside Date (the “Fifth
Extended Outside Date”); provided, further, that if (i) all Necessary Gaming Approvals have not
been received on or before five (5) Business Days before the Fifth Extended Outside date and (ii)
Buyers deposit with the Escrow Agent an additional Five Million One Hundred Thousand Dollars
($5,100,000) (which amount shall be included in the Deposit for all purposes of this Agreement),
the Fifth Extended Outside Date shall be extended to the earlier of (A) five (5) Business Days
after all Necessary Gaming Approvals have been received and (B) 30 days after the Fifth Extended
Outside Date (the “Sixth Extended Outside Date”); provided, further, that if (i) all
Necessary Gaming Approvals have not been received on or before five (5) Business Days before the
Sixth Extended Outside date and (ii) Buyers deposit with the Escrow Agent an additional Five
Million One Hundred Thousand Dollars ($5,100,000) (which amount shall be included in the Deposit
for all purposes of this Agreement), the Sixth Extended Outside Date shall be extended to the
earlier of (A) five (5) Business Days after all Necessary Gaming Approvals have been received and
(B) 30 days after the Sixth Extended Outside Date (the “Seventh Extended Outside Date”);
provided, further, that if (i) all Necessary Gaming Approvals have not been received on or before
five (5) Business Days before the Seventh Extended Outside date and (ii) Buyers deposit with the
Escrow Agent an additional Five Million One Hundred Thousand Dollars ($5,100,000) (which amount
shall be included in the Deposit for all purposes of this Agreement), the Seventh Extended Outside
Date shall be extended to the earlier of (A) five (5) Business Days after all Necessary Gaming
Approvals have been received and (B) 30 days after the Seventh Extended Outside Date (the
“Eighth Extended Outside Date”). If on the Eighth Extended Outside Date, the Buyers have
not received all Necessary Gaming Approvals and the Buyers have not retained a Third Party Operator
in accordance with the terms of Section 7.6(a) hereof, Buyers shall not have an obligation to
consummate the transactions contemplated hereby and Buyers or Sellers shall have the right to
terminate the Agreement pursuant to Section 9.1(b), subject to the provisions thereof.

     (b) Subject in all cases to the terms of Section 4.1(a) above, in the event that the Buyer
retains a Third Party Operator in accordance with the terms of Section 7.6(a) hereof, and
such Third Party Operator has not obtained all Necessary Gaming Approvals and all the other
conditions set forth in Article VIII hereof have been satisfied or waived, the Closing shall take
place on the fifth business day following such Third Party Operator’s receipt of the Necessary
Gaming Approvals, subject to Buyers’ and Sellers’ right to terminate this Agreement pursuant to
Section 9.1 hereof; provided, further, that the Buyer shall have the option to extend the Closing
Date after the Eighth Extended Outside Date if Buyers deposit with the Escrow Agent an additional
Five Million One Hundred Thousand Dollars ($5,100,000) (which amount shall be

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included in the
Deposit for all purposes of this Agreement), in which case, the Eighth Outside Date shall be
extended to the earlier of (A) five (5) business days after all Necessary Gaming Approvals have
been received by the Third Party Operator and (B) 30 days after the Eighth Extended Outside Date
(the “Ninth Extended Outside Date”); provided, further, that if (i) all Necessary Gaming
Approvals have not been received by the Third Party Operator on or before five (5) business days
before the Ninth Extended Outside Date and (ii) Buyers deposit with the Escrow Agent an additional
Five Million One Hundred Thousand Dollars ($5,100,000) (which amount shall be included in the
Deposit for all purposes of this Agreement), the Ninth Extended Outside Date shall be extended to
the earlier of (A) five (5) business days after all Necessary Gaming Approvals have been received
by the Third Party Operator and (B) 30 days after the First Extended Outside Date (the “Tenth
Extended Outside Date”); provided, further, that if (i) all Necessary Gaming Approvals have not
been received by the Third Party Operator on or before five (5) business days before the Tenth
Extended Outside Date and (ii) Buyers deposit with the Escrow Agent an additional Five Million One
Hundred Thousand Dollars ($5,100,000) (which amount shall be included in the Deposit for all
purposes of this Agreement), the Tenth Extended Outside Date shall be extended to the earlier of
(A) five (5) business days after all Necessary Gaming Approvals have been received and (B) 30 days
after the Tenth Extended Outside Date (the “Eleventh Extended Outside Date”). If on the
Eleventh Extended Outside Date, the Third Party Operator has not received all Necessary Gaming
Approvals, Buyers shall not have an obligation to consummate the transactions contemplated hereby
and Buyers or Sellers shall have the right to terminate the Agreement pursuant to Section 9.1(b),
subject to the provisions thereof.

     (c) In no event shall (x) the sale of the Flamingo Purchased Assets be consummated without the
simultaneous consummation of the sale of the Boardwalk Purchased Assets, or (y) the sale of the
Boardwalk Purchased Assets be consummated without the simultaneous consummation of the sale of the
Flamingo Purchased Assets. Notwithstanding anything to the contrary in the foregoing, for the
purpose of the Working Capital Adjustment and prorations contemplated hereby, the Closing shall be
deemed to occur at the Transfer Time.

     Section 4.2 Deliveries at Closing. The following will be executed and delivered by the
Buyers and/or the Sellers, as applicable, at or prior to the Closing:

     (a) Grant, Bargain, Sale Deed. Flamingo shall execute, acknowledge and deliver to
Flamingo Buyer, a Grant, Bargain, Sale Deed in the form attached as Exhibit H.

     (b) State of Nevada Declaration of Value Form. Flamingo Buyer and Flamingo shall
complete, execute and deliver a State of Nevada Declaration of Value Form.

     (c) Bill of Sale and Assignment. Flamingo shall execute and deliver to Flamingo
Buyer, and Flamingo Buyer shall execute an acceptance of, a Bill of Sale and Assignment
substantially in the form attached as Exhibit B, which form may be modified to the extent
required by local Law, conveying to Flamingo Buyer free and clear of all Liens, except Permitted
Encumbrances, (A) the Acquired Personal Property, (B) the Transferred Intellectual Property, (C)
the Books and Records, (D) any Governmental Approvals, and pending applications thereof, to the
extent transferable by Law, (E) the Transferred Employee Records, (F) all items of the type
designated to be transferred to Flamingo Buyer on the Detailed Balance

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Sheet; (G) all assets to
which Flamingo Buyer is entitled under the proration and adjustment provisions of Article
III hereof; (H) the Flamingo Plans; and (I) all other Flamingo Purchased Assets but excluding
the Flamingo Excluded Assets.

     (d) Assumed Contracts; Assumed Liabilities. Flamingo Buyer and Flamingo shall execute
and deliver an Assignment and Assumption Agreement – Assumed Contracts and Assumed Liabilities in
the form attached as Exhibit C, which form may be modified to the extent required by local Law, to
transfer the Flamingo Assumed Liabilities and Assumed Contracts to Flamingo Buyer, and Flamingo
Buyer agrees to execute and deliver such other assumption agreements or other documents reasonably
required by any Person to effectuate the assumption of the Flamingo Assumed Liabilities and the
Flamingo Purchased Assets, and Flamingo agrees to execute and deliver such other assignment
agreements or other documents reasonably required by any Person to effectuate the assignment of the
Flamingo Assumed Contracts and the Flamingo Purchased Assets.

     (e) Purchase Price. Buyers shall deliver or cause to be delivered to Sellers cash in
the amount of the Purchase Price (less the Deposit) in accordance with Section 2.1.

     (f) Escrow Notices. Buyers and Sellers shall deliver all written notices to the
Escrow Agent as required under the Deposit Escrow Agreement to permit the Escrow Agent’s release of
the Deposit as of Closing.

     (g) Closing Escrow Agreement. If any of Buyers or Sellers so requests, Buyers,
Sellers, and the Escrow Agent shall execute and deliver, not later than two (2) business days prior
to the Closing, a closing escrow agreement (in form and substance reasonably acceptable to Buyers,
Sellers and the Escrow Agent), providing for the appointment and responsibilities of such escrow
agent with respect to implementation of the Closing.

     (h) Buyer Certificates. Buyers shall deliver to Sellers the certificates required by
Sections 8.3(b) and (c) hereof.

     (i) Seller Certificates. Sellers shall deliver to Buyers the certificates required by
Sections 8.2(a) and (b) hereof.

     (j) Flamingo Customer List; Affiliate Customer List. Flamingo shall deliver to
Flamingo Buyer the Flamingo Customer List and Affiliate Customer List. Flamingo and Flamingo Buyer
shall cooperate with each other’s reasonable requests for assistance in the solicitation of
required customers’ consents for the transfer of the Affiliate Customer List, including without
limitation cooperation in a mailing approximately forty-five (45) days prior to
the Closing to solicit any consents (or “opt-out” notices to the extent available
under applicable Law) reasonably required by either such Seller or Buyer of the customers on the
Affiliate Customer List.

     (k) Non-Foreign Affidavit. Sellers shall execute and deliver to Buyers Non-Foreign
Affidavits in the form attached as Exhibit D.

     (l) Transfer of Guest Safe Deposit Items. Flamingo Buyer and Flamingo shall confirm
the transfer of guest safe deposit box contents and the contents of the main safe

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controlled by
Flamingo belonging to guests of the Casino Property (excluding safes located in guest rooms) by
executing and delivering a Confirmation of Transfer of Guest Items in the form attached as
Exhibit E, which form may be modified to the extent required by local Law.

     (m) Transfer of Guest Baggage. Flamingo Buyer and Flamingo shall confirm the transfer
of guest baggage entrusted to Flamingo by executing and delivering a Confirmation of Transfer of
Guest Baggage in the form attached as Exhibit F, which form may be modified to the extent
required by local Law.

     (n) Vehicle Titles. Flamingo shall execute and deliver to Flamingo Buyer certificates
of titles, endorsed for transfer to Flamingo Buyer, for its Passenger/Delivery Vehicles along with
a Bill of Sale—Passenger/Delivery Vehicles therefore in the form attached as Exhibit G
which form may be modified to the extent required by local Law.

     (o) License Agreement. Flamingo Buyer and Flamingo or the appropriate Affiliates of
Flamingo shall execute and deliver a license agreement for the Flamingo System Marks, in the form
attached hereto as Exhibit J (the “Flamingo License Agreement”).

     (p) Deed. Boardwalk shall execute, acknowledge and deliver to Boardwalk Buyer a
Bargain and Sale Deed with Covenant As To Grantor’s Acts in the form attached hereto as Exhibit
I.

     (q) Bill of Sale and Assignment. Boardwalk shall execute and deliver to Boardwalk
Buyer, and Boardwalk Buyer shall execute an acceptance of, a Bill of Sale and Assignment
substantially in the form attached as Exhibit B, which form may be modified to the extent
required by local Law, conveying to Boardwalk Buyer free and clear of any Liens, other than the
Traymore Permitted Encumbrances (A) the Traymore Plans, (B) the Traymore Warranties, (C) the
Traymore Licenses and (D) all other Boardwalk Purchased Assets but excluding the Boardwalk Excluded
Assets.

     (r) Traymore Contracts; Assumed Liabilities. Boardwalk Buyer and Boardwalk shall
execute and deliver a Assignment and Assumption Agreement – Assumed Contracts and Assumed
Liabilities in the form attached as Exhibit C, which form may be modified to the extent
required by local Law, to transfer the Boardwalk Assumed Liabilities and Traymore Contracts to
Boardwalk Buyer, and Boardwalk Buyer agrees to execute and deliver such other assumption agreements
or other documents reasonably required by any Person to effectuate the assumption of the Boardwalk
Assumed Liabilities applicable to the Traymore Site and the Boardwalk Purchased Assets, and
Boardwalk agrees to execute and deliver such other assignment
agreements or other documents reasonably required by any Person to effectuate the assignment
of the Traymore Contracts.

     (s) Tax Bills. Boardwalk will deliver to Boardwalk Buyer the most recent tax bills
for the Traymore Site.

     (t) Releases. Boardwalk will deliver to Boardwalk Buyer payoff letters or releases
with respect to any mortgages or Liens encumbering the Traymore Site, except for Permitted Traymore
Encumbrances.

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     (u) Residency Certification. Boardwalk will deliver to Boardwalk Buyer an executed
State of New Jersey Residency Certification Form GIT/REP-3.

     (v) Assignment and Assumption of Traymore Leases. Boardwalk Buyer and Boardwalk shall
execute and deliver a Assignment and Assumption Agreement – Leases in the form attached as
Exhibit L, which form may be modified to the extent required by local Law, to transfer the
Traymore Leases to Boardwalk Buyer.

     (w) Other Documents. Buyers and Sellers shall each deliver any other documents,
instruments or agreements which are reasonably requested by the other party that are reasonably
necessary to consummate the transactions contemplated hereby and have not previously been delivered
and any documents reasonably required by Buyers’ title company in order to insure title, including
delivery to Buyer’s title company of such affidavits of title relating to the Casino Property and
the Traymore Site in form and substance reasonably satisfactory to Buyer’s title company or
otherwise reasonably necessary to consummate the transaction contemplated hereby.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Flamingo represents and warrants to Buyers with respect to itself only and to the Flamingo
Purchased Assets and the Flamingo Assumed Liabilities, except as set forth herein and in the
Disclosure Letter delivered by Flamingo to Buyers on the date of this Agreement (the “Flamingo
Disclosure Letter”) as set forth in Sections 5.1 through 5.16 and 5.27 through 5.30, provided,
however, that neither Flamingo nor any of its Affiliates (other than Boardwalk) is making any
representations or warranties with respect to Boardwalk or the Boardwalk Purchased Assets or
Boardwalk Assumed Liabilities. Boardwalk represents and warrants to Buyers with respect to itself
only and to the Boardwalk Purchased Assets and the Boardwalk Assumed Liabilities, except as set
forth herein and in the Disclosure Letter delivered by Boardwalk to Buyers on the date of this
Agreement (the “Boardwalk Disclosure Letter”), as set forth in Sections 5.1, 5.2, 5.12 and
5.17 through 5.30, provided, however, that neither Boardwalk nor any of its
Affiliates (other than Flamingo) is making any representations or warranties with respect to
Flamingo or the Flamingo Purchased Assets or Flamingo Assumed Liabilities:

     Section 5.1 Organization of Seller. Such Seller is duly organized and validly existing
under the laws of its state of incorporation and has all requisite power and authority to carry on
its business as now being conducted. Such
Seller is duly qualified or licensed to do business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be so qualified,
licensed or in good standing would not have a Seller Material Adverse Effect. Such Seller does not
have any subsidiaries and does not hold or own any interests or investments in any Person, other
than interests or investments which constitute cash or cash equivalents. Copies of the
organizational documents of such Seller have been made available to Buyers, and such copies are
accurate and complete copies of such organizational documents as in effect on the date hereof.

     Section 5.2 Authority; No Conflict; Required Filings and Consents.

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     (a) Such Seller has all requisite power and authority to enter into this Agreement and the
other agreements contemplated hereby and to consummate the transactions to which it is a party that
are contemplated by this Agreement and the other agreements contemplated hereby. The execution and
delivery of this Agreement and the other agreements contemplated hereby by such Seller and the
consummation by it of the transactions to which it is a party that are contemplated by this
Agreement and the other agreements contemplated hereby have been duly authorized by all necessary
action on the part of such Seller and no other proceedings or actions on the part of such Seller
are necessary to authorize such execution, delivery and performance. Each of this Agreement and
the other agreements contemplated hereby have been, or will be prior to Closing, as applicable,
duly executed and delivered by such Seller, and assuming this Agreement and the other agreements
contemplated hereby constitute, or will constitute prior to Closing, as applicable, the valid and
binding obligation of Buyers, constitute, or will constitute prior to Closing, as applicable, the
valid and binding obligation of such Seller, enforceable against such Seller in accordance with
their terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereinafter in effect affecting creditors’ rights generally and
(ii) general principles of equity.

     (b) The execution and delivery of this Agreement and the other agreements contemplated hereby
by such Seller, and the consummation by such Seller of the transactions contemplated by this
Agreement and the other agreements contemplated hereby will not, (i) conflict with, or result in
any violation or breach of, any provision of the organization documents of such Seller, (ii) result
in any violation or breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit) under, or require a consent or waiver under, any of the terms, conditions or
provisions of any bond, mortgage, indenture, Assumed Contract or Lease to which such Seller is a
party or by which such Seller may be bound, or (iii) subject to the governmental filings and other
matters referred to in Section 5.2(e) hereof, contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Entity or any other Person the
right to revoke, withdraw, suspend, cancel, terminate, or modify, in each case in any respect, any
permit, concession, franchise, license, judgment, or Law applicable to such Seller, except in the
case of clauses (ii) and (iii) for any such breaches, conflicts, violations, defaults,
terminations, cancellations, accelerations, losses or failures to obtain any such consent or waiver
which (x) are not, individually or in the aggregate, reasonably likely to have a Seller Material
Adverse Effect or (y) would not materially impair or delay the Closing.

     (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency, commission, Gaming Authority or other governmental
authority or instrumentality (“Governmental Entity”) is required by or with respect to such
Seller in connection with the execution and delivery of this Agreement and the other agreements
contemplated hereby by such Seller or the consummation by such Seller of the transactions to which
it is a party that are contemplated by this Agreements and the other agreements contemplated
hereby, except for (i) the filing of the pre-merger notification report under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (“HSR Act”), (ii) any approvals or filing of
notices required under the Gaming Laws, (iii) such consents, approvals, orders, authorizations,
permits, filings, declarations or registrations related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or serving of

23

 

alcoholic beverages
or the renaming or rebranding of the operations at the Property owned and operated by such Seller,
and (iv) such other material filings, consents, approvals, orders, authorizations, permits,
registrations and declarations as may be required under the Laws of any jurisdiction in which each
such Seller conducts any business or owns any assets.

     Section 5.3 Financial Statements. Section 5.3 of the Flamingo Disclosure Letter contains a
true and complete copy of (i) the unaudited balance sheets, statements of income, cash flow
statements and all other financial information relating to the business operated at the Casino
Property as of each of December 31, 2003 and December 31, 2004 and for the twelve (12) month
periods ending December 31, 2003 and December 31, 2004, and (ii) unaudited balance sheets and the
related statement of income (but not to include statement of cash flow) as of September 30, 2005
and for the nine months ended September 30, 2005 (collectively, the “Financial
Information”). Except as noted therein and except for normal period-end adjustments and the
lack of footnotes, the Financial Information was prepared in accordance with generally accepted
accounting principles in effect at the time of such preparation applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such financial
statements) and fairly present, in all material respects, the consolidated financial position and
results of operations of the Casino Property as of such date, subject to normally recurring
year-end audit adjustments (which will not be material individually or in the aggregate).

     Section 5.4 Flamingo Real Estate.

     (a) Section 5.4(a) of the Flamingo Disclosure Letter contains a complete and accurate list of
all real property owned by Flamingo (the “Casino Land”). Flamingo holds valid fee simple
title to the Casino Land, free and clear of all Liens except Permitted Encumbrances.

     (b) Flamingo leases no real property.

     (c) Flamingo has not received written notice of, nor does Flamingo have any knowledge of, any
Legal Proceeding pending (and, to the knowledge of Flamingo, threatened) relating to the Casino
Land, which would be reasonably likely to interfere in any material respects with the use,
ownership, improvement, development and/or operation of the Casino Land.

     Section 5.5 Intellectual Property. With the exception of the Excluded Intellectual
Property, Section 5.5 of the Flamingo Disclosure Letter lists all (i) trademark and service mark
registrations and applications and web domain URLs that are included in the Transferred
Intellectual Property and (ii) trademark, service mark and trade name license agreements which are
included in the Transferred Intellectual Property.

     Section 5.6 Agreements, Contracts and Commitments. Section 5.6 of the Flamingo Disclosure
Letter sets forth a complete and correct list and, if such Contract is not in writing, a
description of any material terms thereof, of each of the Material Assumed Contracts, in each case
as in effect on the date hereof. Flamingo has delivered to Flamingo Buyer true and complete copies
of all Material Assumed Contracts as in effect on the date hereof. Each Material Assumed Contract
is valid and binding upon Flamingo (and, to Flamingo’s knowledge, on all other parties thereto), in
accordance with its terms and is in full force and effect, (ii) there is no

24

 

breach or violation of
or default by Flamingo under any Material Assumed Contract, whether or not such breach, violation
or default has been waived, (iii) to Flamingo’s knowledge there is no breach or violation of or
default by any other Person under any Material Assumed Contract, (iv) Flamingo has performed all
obligations required to be performed by Flamingo under any Material Assumed Contract and (v) no
event has occurred with respect to Flamingo, which, with notice or lapse of time or both, would
constitute a breach, violation or default of, or give rise to a right of termination, modification,
cancellation, foreclosure, imposition of a Lien, prepayment or acceleration under, any of its
Material Assumed Contracts, except, with respect to this Section 5.6, as would not, individually or
in the aggregate, be reasonably likely to have a Seller Material Adverse Effect.

     Section 5.7 Litigation. There are no pending Legal Proceedings that have been commenced by
or against Flamingo or that otherwise relate to or may affect the Flamingo Purchased Assets or
Flamingo Assumed Liabilities, and to the knowledge of Flamingo, no such Legal Proceeding has been
threatened, and no event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Legal Proceeding, except for matters that fall into any of
the following categories regardless of any overlap among said categories: (i) any matters listed
in Section 5.7 of the Flamingo Disclosure Letter; and (ii) in any event matters that would not be,
individually or in the aggregate, reasonably likely to have a Seller Material Adverse Effect.

     Section 5.8 Environmental Matters. Except as set forth in Section 5.8 of the Flamingo
Disclosure Letter:

     (a) To Flamingo’s knowledge, (i) the Casino Property is and has been maintained and operated
in compliance with all Environmental Laws, and (ii) Flamingo is, and at all times has been, in
material compliance with, and has not been and is not in violation of or liable under, any
Environmental Law.

     (b) To Flamingo’s knowledge, no Releases of any Hazardous Substance or existence of any
conditions of mold in violation of Environmental Laws have occurred on the Casino Property, and, to
Flamingo’s knowledge, there does not exist on the Casino Property any material Environmental
Condition which requires remediation or other corrective action pursuant to any applicable
Environmental Law.

     (c) Accurate and complete copies of all environmental reports, tests, studies, investigations
and surveys performed on or with respect to the Casino Property or any other Flamingo Purchased
Assets by or on behalf of Flamingo have been provided to Flamingo Buyer.

     (d) Flamingo has not received any actual or threatened written order, citation, directive,
inquiry, notice, summons warning or other communication from (i) any Governmental Entity or private
citizen acting in the public interest with respect to the Casino Property, or (ii) the current or
prior owner or operator of any portion of the Casino Property, of any alleged, actual or potential
violation or failure to comply with any Environmental Law, of any alleged, actual or potential
material Environmental Condition, or of any actual or threatened material obligation to undertake
or bear the cost of any Environmental Liability with respect to any portion of the Casino Property.

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     (e) There are no pending or, to the knowledge of Flamingo, material claims threatened in
writing, Encumbrances, or other restrictions of any nature, resulting from any Environmental
Condition or arising under or pursuant to any Environmental Law, with respect to or affecting any
of the Casino Property.

     (f) To Flamingo’s knowledge, there are no underground or above-ground storage tanks at or
under the Casino Property.

     (g) To Flamingo’s knowledge and except as would not be reasonably likely to have a Seller
Material Adverse Effect, Flamingo has not used, treated, stored or disposed of any Hazardous
Substances at the Casino Property in violation of any applicable Environmental Law.

     Section 5.9 Permits; Compliance with Laws.

     (a) Flamingo and, to Flamingo’s knowledge, each of its directors, officers and Persons
performing management functions similar to officers, hold all material permits, registrations,
findings of suitability, licenses, variances, exemptions, certificates of occupancy, orders and
approvals of all Governmental Entities (including all authorizations under Gaming Laws), necessary
to conduct the business and operations conducted at the Casino Property, each of which is in full
force and effect in all material respects (the “Seller Permits”) and, to Flamingo’s
knowledge, no event has occurred which permits, or upon the giving of notice or passage of time or
both, would permit, revocation, non-renewal, modification, suspension, limitation or termination of
any Seller Permit that currently is in effect. Flamingo, and to Flamingo’s knowledge, each of its
directors, officers, key employees and Persons performing management functions similar to officers,
in each case whose position is related to the Casino Property, are in compliance in all material
respects with the terms of the Seller Permits. To Flamingo’s knowledge, the businesses conducted
by Flamingo at the Casino Property are not being conducted in violation of any applicable Law of
any Governmental Entity (including,
without limitation, any Gaming Laws). Flamingo has not received a notice of any investigation
or review by any Governmental Entity with respect to Flamingo or the Casino Property that is
pending, and, to the knowledge of Flamingo, no material investigation or review is threatened, nor
has any Governmental Entity indicated any intention to conduct the same. Notwithstanding anything
contained in this Section 5.9, the representations contained herein do not concern Environmental
Laws, which are the subject of the representations in Section 5.8.

     (b) Neither Flamingo nor, to Flamingo’s knowledge, any of its directors, officers, key
employees or Persons performing management functions similar to officers, in each case whose
position is related to the Casino Property, has received any written claim, demand, notice,
complaint, court order or administrative order from any Governmental Entity in the past three (3)
years under, or relating to any violation or possible violation of any Gaming Laws related to
actions or inactions at the Casino Property which did or would be reasonably likely to result in
fines or penalties of $50,000 or more, in the aggregate. To Flamingo’s knowledge, there are no
facts, which if known to the Gaming Authorities will or would be reasonably likely to result in the
revocation, limitation or suspension of any Gaming Approval.

     Section 5.10 Labor Matters. Except as set forth on Section 5.10 of the Flamingo Disclosure
Letter, Flamingo is not a party to any collective bargaining agreement applicable to

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Property
Employees and to the knowledge of Flamingo, there are no activities or proceedings of any labor
union to organize any non-unionized Property Employees. There are no unfair labor practice
charges, complaints or petitions for elections or other Legal Proceedings or Orders pending against
Flamingo before the National Labor Relations Board, or any similar labor relations governmental
bodies, or, of which Flamingo has received notice, and there is no strike, slowdown, work stoppage
or lockout, or, to the knowledge of the Flamingo, threat thereof, by or with respect to any
Property Employees.

     Section 5.11 Employee Benefits.

     (a) Section 5.11 of the Flamingo Disclosure Letter sets forth an accurate and complete list of
all (i) “employee welfare benefit plans,” within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations
thereunder (“ERISA”); (ii) “employee pension benefit plans,” within the meaning of
Section 3(2) of ERISA; and (iii) bonus, stock option, stock purchase, restricted stock, incentive,
fringe benefit, profit-sharing, pension or retirement, deferred compensation, medical, life
insurance, disability, accident, salary continuation, severance, accrued leave, vacation, sick pay,
sick leave, supplemental retirement and unemployment benefit plans, programs, arrangements,
commitments and/or practices (whether or not insured) for employees of Flamingo at the Casino
Property (the “Property Employees”) (all of the foregoing plans, programs, arrangements,
commitments, practices and Contracts referred to in (i), (ii) and (iii) above are referred to, the
“Flamingo Benefit Plans”).

     (b) True and complete copies of the
Flamingo Benefit Plans which shall include (i) all plan
descriptions and summary plan descriptions for which Flamingo is required to prepare, file and
distribute plan descriptions and summary plan descriptions, (ii) all summaries and descriptions
furnished to participants and beneficiaries for which a plan description or summary
plan description is not required, and (iii) all insurance policies purchased by or to provide
benefits under any Flamingo Benefit Plans have been made available by Flamingo to Flamingo Buyer.

     Section 5.12 Brokers. Except for CB Richard Ellis (the “Broker”) with respect to
the Casino Property, neither Flamingo, Boardwalk nor any of their respective Representatives have
employed any broker, financial advisor or finder or incurred any Liability for any brokerage fees,
commissions or finder’s fees in connection with the transactions contemplated by this Agreement.
Flamingo shall be solely obligated to pay Broker any and all fees, commissions and finder fees in
connection with this transaction.

     Section 5.13 Insurance. The insurance policies maintained by Flamingo or its Affiliates in
respect of the Casino Property are in full force and effect. To the knowledge of Flamingo and its
Affiliates, it has not received any written notice from any insurance carrier which has issued a
policy of insurance with respect to the Casino Property of any material defects of deficiencies or
requesting the performance of any material repairs, alterations or other work with respect to the
Casino Property.

     Section 5.14 Personal Property. Except for Permitted Encumbrances, Flamingo has good and
valid title to, or an adequate leasehold interest in, or other legal right to, all material

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tangible personal property necessary to conduct its business as presently conducted free and clear
of all Liens, excluding the Excluded Personal Property. Notwithstanding anything contained in this
Section 5.14, the representations contained herein do not concern the Casino Land or Intellectual
Property, which are the subject of the representations in Sections 5.4 and 5.5 hereof,
respectively.

     Section 5.15 Assets. Except as set forth in Section 5.15 of the Flamingo Disclosure
Letter, and except for the Flamingo Excluded Assets, the Flamingo Purchased Assets constitute all
of the assets, properties and rights which are used in the operation of the Casino Property.

     Section 5.16 Condemnation Proceedings. There are no pending or, to Flamingo’s knowledge,
threatened judicial proceedings seeking to condemn any portion of the Casino Property. Flamingo
has not entered into any agreement in lieu of condemnation therefor.

     Section 5.17 Fee Ownership. Boardwalk is the sole fee owner of the Traymore Site, and
holds fee simple title to the Traymore Site, free and clear of all Liens except the Traymore
Permitted Encumbrances.

     Section 5.18 Solvency. Boardwalk is not in the hands of a receiver, and Boardwalk has not
committed any act of bankruptcy or insolvency.

     Section 5.19 Special Assessments. No special assessments have been levied or are
threatened or pending against all or any part of the Traymore Site.

     Section 5.20 Traymore Condemnation. Boardwalk has no knowledge of any pending or
threatened condemnation or similar proceedings affecting all or any part of the Traymore Site.

     Section 5.21 Traymore Litigation. Except as set forth in Section 5.21 of the Boardwalk
Disclosure Letter, there are no material Legal Proceedings of any nature pending or, to Boardwalk’s
knowledge, threatened against Boardwalk, as it relates to the Boardwalk Purchased Assets.

     Section 5.22 Traymore Leases. Except as set forth in Section 5.22 of the Boardwalk
Disclosure Letter, there are no Leases giving any person or entity any rights to use, occupy or
operate on the Traymore Site or any portion thereof or otherwise affecting or relating to the
Traymore Site (the “Traymore Leases”).

     Section 5.23 Options. There are no options or other written agreements with respect to the
sale of all or any part of the Traymore Site, and no person or entity has any option, right of
first refusal or right of first offer to purchase all or any part of the Traymore Site.

     Section 5.24 Service Contracts. Except for the Traymore Contracts, there are no service
contracts, maintenance contracts, management agreements or other contracts or agreements affecting
or relating to the Traymore Site.

     Section 5.25 Compliance With Laws. To Boardwalk’s knowledge, the use and occupancy by
Boardwalk of the Traymore Site is in compliance with all applicable Laws of any Governmental
Entity. Boardwalk has not received any notice from any Governmental Authority

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having jurisdiction
over the Traymore Site advising that the Traymore Site or any use or occupancy thereof is in
violation of any applicable law, ordinance or regulation, including without limitation any zoning
or other municipal ordinance. Notwithstanding anything contained in this Section 5.25, the
representations
contained herein do not concern Environmental Laws, which are the subject of the representations in
Section 5.26.

     Section 5.26 Traymore Environmental Matters.

     (a) To Boardwalk’s knowledge, there does not exist on the Traymore Site any material
Environmental Condition which requires remediation or other corrective action pursuant to any
applicable Environmental Law.

     (b) Accurate and complete copies of all environmental reports, tests, studies, investigations
and surveys performed on or with respect to the Traymore Site or any other Boardwalk Purchased
Assets by or on behalf of Boardwalk have been provided to Boardwalk Buyer.

     (c) Boardwalk has not received any actual or threatened written order, citation, directive,
inquiry, notice, summons warning or other communication from (i) any Governmental Entity or private
citizen acting in the public interest with respect to the Traymore Site, or (ii) the current or
prior owner or operator of any portion of the Traymore Site, of any alleged, actual or potential
violation or failure to comply with any Environmental Law, of any alleged, actual or potential
material Environmental Condition, or of any actual or threatened material obligation to undertake
or bear the cost of any Environmental Liability with respect to any portion of the Traymore Site.

     (d) To Boardwalk’s knowledge, there are no underground or above-ground storage tanks at or
under the Traymore Site.

     (e) To Boardwalk’s knowledge and except as would not be reasonably likely to have a Seller
Material Adverse Effect, Boardwalk has not used, treated, stored or disposed of any Hazardous
Substances at the Traymore Site in violation of any applicable Environmental Law.

     Section 5.27 Absence of Certain Changes or Events. Since December 31, 2004 until the date
hereof, and except as set forth on Section 5.27 of the Flamingo Disclosure Letter or the Boardwalk
Disclosure Letter, as applicable,

     (a) there has not been any event or change which, individually or in the aggregate, has had or
is reasonably likely to have a Seller Material Adverse Effect; and

     (b) each Seller has operated the Purchased Assets, as applicable, in the Ordinary Course of
Business consistent with past practice and such Seller has not (i) incurred any material obligation
or material liability (whether absolute, accrued, contingent or otherwise) relating to its use,
possession, or operation of the Purchased Assets, except in the Ordinary Course of Business
consistent with past practice; (ii) mortgaged, pledged or subjected to any material Lien any of the
Purchased Assets, except for Permitted Encumbrances; (iii) sold or transferred any of the material
assets of the Business or canceled any material debts or material claims or waived any material
rights of the Business, except, in the case of the sale or transfer of assets, in the

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Ordinary
Course of Business consistent with past practice; or (iv) entered into any agreement or made any
commitment to do any of the foregoing.

     Section 5.28 Transactions with Directors, Officers and Other Affiliates. Except as set
forth in Section 5.28 of the Flamingo Disclosure Letter or the Boardwalk Disclosure Letter, as
applicable, no Seller is a party to any Contract as it relates to the Flamingo Purchased Assets or
the Boardwalk Purchased Assets with any of the directors, officers, Affiliates or present or former
stockholders of any Seller under which it: (i) leases any material real or personal property
(either to or from such Person), (ii) licenses material Intellectual Property (either to or from
such Person), (iii) is obligated to purchase any material asset from or sell such asset to such
Person, (iv) purchases any material products or services from such Person, (v) pays or receives
material commissions, rebates or other payments, (vi) lends or borrows more than $1,000 at any
given time or (vii) provides or receives any other material benefit or payment. No director,
officer, stockholder, member or other Affiliate of such Seller or any Affiliate of any of the
foregoing Persons owns or has any material rights in or to any of the Purchased Assets.

     Section 5.29 Absence of Undisclosed Liabilities. Except for indebtedness and liabilities
incurred since December 31, 2004 until the date hereof in the Ordinary Course of Business
consistent with past practice, to the knowledge of Seller, such Seller has no material indebtedness
or material Liabilities, absolute or contingent, known or unknown, individually or in the
aggregate, in each case relating to the Purchased Assets, which were required to be shown in the
Financial Information and is not shown or provided for on the face of the Financial Information or
has otherwise been disclosed to the applicable Buyer in writing.

     Section 5.30 Tax Matters. Except as disclosed in Section 5.30 of the either the Boardwalk
Disclosure Letter or the Flamingo Disclosure Letter; (i) the Sellers (and the Tax group of which
Sellers are members) have timely filed all Tax Returns required to be filed with respect to the
Purchased Assets for Tax periods ending on or prior to the Closing Date and (ii) all Taxes with
respect to the Purchased Assets (whether or not shown on any Tax Return with respect to the
Purchased Assets) owed by the Sellers (and the Tax group of which Sellers are members) required to
be paid with respect to Tax periods ending on or prior to the Closing Date have been timely paid or
are being presently contested in good faith.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYERS

     Each Buyer represents and warrants to Flamingo and Boardwalk, except as set forth herein and
in the Disclosure Letter delivered by Buyers to each of Flamingo and Boardwalk on the date of this
Agreement (the “Buyer Disclosure Letter”), as follows:

     Section 6.1 Organization. Each Buyer is duly organized and validly existing under the laws
of Delaware and has all requisite power and authority to carry on its business as now being
conducted. Each Buyer is, in all material respects, duly qualified or licensed to do business and
is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not have a Buyer

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Material Adverse Effect. Copies of
the organizational documents of such Buyer have been made available to Sellers, and such copies are
accurate and complete copies of such organizational documents as in effect on the date hereof.

     Section 6.2 Authority; No Conflict; Required Filings and Consents.

     (a) Each Buyer has all requisite power and authority to enter into this Agreement and the
other agreements contemplated herby and to consummate the transactions contemplated by this
Agreement and the other agreements contemplated hereby. The execution and delivery of this
Agreement and the other agreements contemplated hereby and the consummation by each Buyer of the
transactions to which it is a party that are contemplated by this Agreement and the other
agreements contemplated hereby by such Buyer have been duly authorized by all necessary action on
the part of such Buyer and no other proceedings or actions on the part of such Buyer are necessary
to authorize such execution, delivery and performance. Each of this Agreement and the other
agreements contemplated hereby have been, or will be at Closing, as applicable, duly executed and
delivered by each Buyer and, assuming this Agreement and the other agreements contemplated hereby
constitute, or will constitute at Closing, as applicable, the valid and binding obligation of
Sellers and Harrah’s, constitute, or will constitute prior to Closing, as applicable, the valid and
binding obligation of Such Buyer, enforceable against each Buyer in accordance with their terms,
subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereinafter in effect affecting creditors’ rights generally and (ii) general
principles of equity.

     (b) The execution and delivery of this Agreement by each Buyer and the other agreements
contemplated hereby by such Buyer does not, and the consummation by each Buyer of the transactions
to which it is a party that are contemplated by this Agreement and the other agreements
contemplated hereby will not, (i) conflict with, or result in any violation or breach of, any
provision of the organizational documents of such Buyer, (ii) result in any violation or breach of,
or constitute (with or without notice or lapse of time, or both) a default (or give rise to a right
of termination, cancellation or acceleration of any obligation or loss of any benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, or other Contract or obligation to which such Buyer is a party or by
which it or any of its properties or assets may be bound, or (iii) subject to the governmental
filings and other matters referred to in Section 6.2(c) hereof, contravene, conflict with or result
in a violation of any of the terms or requirements of, or give any Governmental Entity or any other
Person the right to revoke, withdraw, suspend, cancel, terminate, or modify any permit, concession,
franchise, license, judgment, or Law applicable to such Buyer or any of its properties or assets,
except in the case of clause (ii) and (iii) for any such breaches, conflicts, violations, defaults,
terminations, cancellations, accelerations, losses or failures to obtain any such consent or waiver
which are not, individually or in the aggregate, reasonably likely to have a Buyer Material Adverse
Effect.

     (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to any Buyer in connection
with the execution and delivery of this Agreement by each Buyer or the consummation by each
Buyer of the transactions contemplated hereby, except for (i) the filing of the pre-merger
notification report under the HSR Act, (ii) any approvals or filing of notices required under the

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Gaming Laws, (iii) such consents, approvals, orders, authorizations, permits, filings, declarations
or registrations related to, or arising out of, compliance with statutes, rules or regulations
regulating the consumption, sale or serving of alcoholic beverages or the renaming or rebranding of
the operations at the Property, and (iv) such other material filings, consents, approvals, orders,
authorizations, permits, registrations and declarations as may be required under the Laws of any
jurisdiction in which Seller conducts any business or owns any assets.

     Section 6.3 Brokers. No Buyer nor any of their respective Representatives have employed
any broker, financial advisor or finder or incurred any Liability for any brokerage fees,
commissions or finder’s fees in connection with the transactions contemplated by this Agreement.

     Section 6.4 Financing. Each Buyer will have available to it on the Closing Date sufficient
funds to enable such Buyer to pay the applicable Purchase Price, and all fees and expenses
necessary or related to the consummation of the transactions contemplated by this Agreement. Each
Buyer is, and at all times prior to Closing shall be, solvent.

     Section 6.5 Licensability of Principals. No Buyer nor any of their respective
Representatives or Affiliates has ever been denied, or had revoked, a gaming license by a
Governmental Entity or Gaming Authority. Each Buyer and each of its respective Representatives and
Affiliates is in good standing in each of the jurisdictions in which such Buyer or any of its
respective Affiliates owns or operates gaming facilities. To each Buyer’s knowledge, there are no
facts, which if known to the Gaming Authorities, would (a) be reasonably likely to result in the
denial, revocation, limitation or suspension of a Gaming Approval or (b) result in a negative
outcome to any finding of suitability proceedings currently pending, or under the suitability
proceedings necessary for acquisition of a Gaming Approval for the consummation of this Agreement.

     Section 6.6 Compliance with Gaming Laws.

     (a) Except as would not reasonably be expected to have a Buyer Material Adverse Effect, each
Buyer, and to each Buyer’s knowledge, each of its directors, officers and Persons performing
management functions similar to officers, (i) holds all material Gaming Approvals necessary to
conduct the business and operations of such Buyer, each of which is in full force and effect in all
respects (the “Buyer Permits”); (ii) knows of no event that has occurred which permits, or
upon the giving of notice or passage of time or both would permit revocation, non-renewal,
modification, suspension, limitation or termination of any Buyer Permit that currently is in
effect; (iii) is in compliance, in all material respects, with the terms of the Buyer Permits that
are currently in effect; (iv) has not received written notice of any investigation or review by any
Gaming Authority with respect to such Buyer or any of its Affiliates that is pending; and (v) knows
of no material investigation or review that has been threatened by any Gaming Authority.

     (b) Except as would not reasonably be expected to have a Buyer Material Adverse Effect, each
Buyer, and to each Buyer’s knowledge, each of its directors, officers and Persons performing
management functions similar to officers has not (i) received any written claim, demand, notice,
complaint, court order or administrative order from any Governmental Entity in the past three (3)
years under, or relating to any violation or possible violation of any Gaming Laws which did or
would be reasonably likely to result in fines or penalties of $50,000 or more;

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and (ii) suffered a
suspension or revocation of any Buyer Permit. Except as would not reasonably be expected to have a
Buyer Material Adverse Effect, to Buyer’s knowledge, there are no facts which, if known to any
Gaming Authority will or would reasonably be expected to result in the revocation, limitation or
suspension of a Gaming Approval, or any Gaming Approval held by its managers, members, officers,
key employees or Persons performing management functions similar to an officer or partner or
limited partner under any Gaming Laws.

     Section 6.7 Litigation. There are no actions, claims, suits or proceedings pending or, to
Buyer’s knowledge, threatened against Buyer before any Governmental Entity, which, if determined
adversely, would reasonably be expected to result in a Buyer Material Adverse Effect.

     Section 6.8 Inspection. Each Buyer acknowledges that it is familiar with the Purchased
Assets and Assumed Liabilities and has had the opportunity, directly or through its representatives
to inspect the Purchased Assets and Assumed Liabilities and conduct due diligence activities.
Without limitation of the foregoing, Buyers acknowledge that the Purchase Price has been negotiated
based on Buyers’ express agreement that there would be no contingencies (financial or otherwise) to
Closing other than the conditions set forth in Article VIII hereof and that, except as expressly
set forth to the contrary in this Agreement, including, without limitation Article V hereof, Buyers
are purchasing the Purchased Assets and Assumed Liabilities on an “As Is, Where Is” basis.
Buyers acknowledge and agree that, except as expressly set forth to the contrary in this Agreement,
including, without limitation Articles V and XI hereof, Buyers are not relying upon any
representations, statements, or warranties (oral or written, implied or express) of any officer,
employee, agent or Representative of any Seller, or any salesperson or broker (if any) involved in
this transaction as to the Purchased Assets and Assumed Liabilities. Except as expressly set forth
to the contrary in this Agreement, including, without limitation Articles V and XI hereof, (i)
Buyers are taking the Purchased Assets in an “As Is, Where Is” condition, and (ii) neither
Seller makes any warranties, representations or promises with respect to the physical condition of
the Purchased Assets, their value or their suitability for Buyer’s intended use or any other use.
Further, without limiting any representation, warranty or covenant of any Seller expressly set
forth herein and subject to the conditions to Closing set forth in Article VIII hereof, Buyer
acknowledges that it has waived and hereby waives as a condition to Closing any further due
diligence reviews, inspections or examinations with respect to the Purchased Assets and Assumed
Liabilities, including, without limitation, with respect to engineering, environmental, title,
survey, financial, operational, regulatory and legal compliance matters.

     Section 6.9 Employee Benefits.

     (a) Section 6.9 of the Flamingo Buyer Disclosure Letter sets forth an accurate and complete
list, as of the date hereof, of all (i) “employee welfare benefit plans,” within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations thereunder (“ERISA”); (ii) “employee pension benefit plans,”
within the meaning of Section 3(2) of ERISA; and (iii) bonus, stock option, stock purchase,
restricted stock, incentive, fringe benefit, profit-sharing, pension or retirement, deferred
compensation, medical, life insurance, disability, accident, salary continuation, severance,
accrued leave, vacation, sick pay, sick leave, supplemental retirement and unemployment benefit
plans, programs, arrangements, commitments and/or practices (whether or not insured) for

33

 

employees
of Flamingo Buyer (all of the foregoing plans, programs, arrangements, commitments, practices and
Contracts referred to in (i), (ii) and (iii) above are referred to, the “Buyer Benefit
Plans”).

     (b) True and complete copies of the Buyer Benefit Plans (which shall include (i) all plan
descriptions and summary plan descriptions for which Flamingo Buyer is required to prepare, file
and distribute plan descriptions and summary plan descriptions, (ii) all summaries and descriptions
furnished to participants and beneficiaries for which a plan description or summary plan
description is not required, and (iii) all insurance policies purchased by or to provide benefits
under any Buyer Benefit Plans have been made available by Flamingo Buyer to Flamingo.

ARTICLE VII

COVENANTS

     Section 7.1 Conduct of Business.

     (a) During the period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, subject to the limitations set forth below, Flamingo
shall (except to the extent that Flamingo Buyer shall otherwise consent in writing, which consent
may not be unreasonably withheld), with respect to the Casino Property only, carry on its business
in the Ordinary Course of Business and, to the extent consistent with the operation of the Casino
Property in the Ordinary Course of Business, use its commercially reasonable efforts consistent
with past practices and policies to preserve intact the Casino Property’s present relationships
with customers, suppliers, distributors, and others having business dealings with it. Without
limiting the generality of the foregoing, except as expressly contemplated by this Agreement or as
disclosed on Section 7.1 of the Flamingo Disclosure Letter, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement or the Closing,
without the written consent of Flamingo Buyer (which consent shall not be unreasonably withheld),
Flamingo agrees, only as it relates to the Flamingo Purchased Assets, that it shall not:

          (i) sell, pledge, lease, dispose of or grant (collectively, “Transfer”), or
otherwise authorize the Transfer of any of the Flamingo Purchased Assets except for
Transfers of current assets, equipment and other non-current assets in the Ordinary Course
of Business in connection with the operation of the Casino Property; provided
that in no event shall the aggregate amount of such Transfers exceed Two Hundred
Thousand Dollars ($200,000);

          (ii) incur any material Liabilities that are Assumed Liabilities, except in the
Ordinary Course of Business; provided that in no event shall the aggregate amount of such
Liabilities incurred exceed Two Hundred Thousand Dollars ($200,000);

          (iii) modify, amend or terminate any of the Material Assumed Contracts or waive,
release or assign any rights or claims, except in the Ordinary Course of Business or as
required by applicable Law;

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          (iv) except in the Ordinary Course of Business, subject the Flamingo Purchased Assets
to a Lien or Encumbrance, other than Permitted Encumbrances;

          (v) fail to maintain the existing insurance coverage relating to the Flamingo
Purchased Assets (however, in the event any such coverage shall be terminated or lapse,
Flamingo may procure substantially similar substitute insurance policies which in all
material respects are in at least such amounts and against such risks as are currently
covered by such policies);

          (vi) award or increase any bonuses, salaries, or other compensation, except in the
Ordinary Course of Business, to any Property Employee, or enter into any employment,
severance, or similar Assumed Contract with any Property Employee, except in the Ordinary
Course of Business, or transfer any Property Employee to an Affiliate of the Seller;

          (vii) enter into, amend or terminate or provide notice of termination of any Assumed
Contract or transaction involving a total commitment by or to Flamingo in excess of One
Hundred Thousand Dollars ($100,000) per month, unless such Assumed Contract is cancelable
without premium or penalty upon thirty (30) days notice; provided, however, that Flamingo
may enter into the following agreements without any consent from Flamingo Buyer: (A) any
advance booking contract that does not involve a room block commitment in excess of Two
Thousand (2000) room nights; and (B) purchase orders entered into in the Ordinary Course of
Business; or

          (viii) enter into a Contract to do any of the foregoing, or to authorize or announce
an intention to do any of the foregoing.

     (b) During the period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, Boardwalk agrees, only as it relates to the Boardwalk
Purchased Assets, that, except as otherwise consented to by Boardwalk Buyer which consent shall not
be unreasonably withheld, it shall:

          (i) maintain the Traymore Site in its present condition, ordinary wear and tear
excepted;

          (ii) maintain commercially reasonable limits of casualty, liability and hazard
insurance with respect to the Traymore Site; and

          (iii) operate and manage the Traymore Site in the same manner done by Boardwalk prior
to the date of this Agreement.

     (c) It is agreed and understood that if Buyer does not grant or deny consent to a proposed
action with respect to this Section 7.1(a) or (b) within five (5) business days of its receipt of a
second written request by Flamingo or Boardwalk to take such action, Buyer shall be deemed to have
consented to the taking of such action by Flamingo or Boardwalk notwithstanding any other provision
of Section 7.1(a) or (b) hereof.

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     (d) No action taken by Flamingo to reduce the amount of any prepaids designated as to be
retained by Seller on the Detailed Balance Sheet shall be deemed a violation of this Section 7.1.

     Section 7.2 Cooperation; Notice; Cure. Subject to compliance with applicable Law
(including, without limitation, antitrust Laws, Gaming Laws and privacy Laws), from the date hereof
until the earlier of the termination of this Agreement or the Closing, Flamingo, Boardwalk and
Buyers shall confer on a regular basis with one or more Representatives of each other party to
report on the general status of ongoing operations of the Properties. Flamingo, Boardwalk and
Buyers shall promptly notify each other in writing of, and will use commercially reasonable efforts
to cure before the Closing Date, any event, transaction or circumstance, as soon as practical after
it becomes known to such party, that (a) causes or will cause any covenant or agreement of
Flamingo, Boardwalk or Buyers under this Agreement to be breached in any material respect, (b)
renders or will render untrue in any material respect any representation or warranty of the
respective parties contained in this Agreement or (c) of any fact, circumstance, event or action
which will result in, or would reasonably be expected to result in, the failure of such party to
timely satisfy any of the closing conditions specified in Article VIII hereof of this Agreement, as
applicable. Nothing contained in Section 7.1 hereof shall prevent Sellers from giving such notice,
using such efforts or taking any action to cure or curing any such event, transaction or
circumstance. No notice given pursuant to this Section 7.2 shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein;
provided, however, that for purposes of
seeking indemnification pursuant to Article X hereunder, the representations and warranties made by
the Sellers shall be deemed for all such purposes to include and reflect such notices, supplements
and amendments as of the date hereof and at all times thereafter, including the Closing Date.

     Section 7.3 No Solicitation. Subject to obligations imposed by applicable Law, prior to
the earlier of the Closing and the termination of this Agreement in accordance with Section 9.1
hereof, Flamingo and Boardwalk shall not, directly or indirectly, through any of its Affiliates,
officers, directors, employees, financial advisors, agents or other representatives (collectively,
“Representatives”) (a) solicit or initiate any inquiries or proposals that constitute, or
could reasonably be expected to lead to, an Acquisition Proposal or (b) engage in negotiations with
any Person (or group of Persons) other than Buyers or their respective Affiliates concerning, or
provide any non-public information to any person or entity relating to, any Acquisition Proposal.

     Section 7.4 Employee Matters. 

     (a) On or prior to the Closing Date, Flamingo Buyer shall extend offers of employment,
effective as of the Closing Date, to all of the Property Employees with such offers being on terms
and conditions of employment comparable to the terms and conditions of employment as those provided
by Flamingo to each such Property Employee immediately prior to the Closing Date, other than the
Property Employees that are set forth on Section 7.4(a) of the Flamingo Disclosure Letter
(collectively, the “Retained Employees”). The Property Employees who accept Flamingo
Buyer’s offers of employment shall commence employment with Flamingo Buyer effective as of the
Closing Date and are hereinafter collectively referred to as the “Transferred Employees.”

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     (b) Subject to the terms and conditions of any applicable collective bargaining agreement
which is currently in effect or which may be in effect at any time in the future, for a period of
at least one (1) year immediately following the Closing Date, Flamingo Buyer shall provide benefits
to each Transferred Employee, which benefits are and shall be no less favorable in the aggregate
than the benefits provided by Flamingo to such Transferred Employees on the date hereof;
provided, that Flamingo Buyer may provide such benefits pursuant to the Buyer Benefit
Plans.

     (c) For a period of at least one (1) year immediately following the Closing Date, Flamingo
Buyer agrees to pay severance to all Transferred Employees who are terminated by Flamingo Buyer
after the Closing Date in accordance with Flamingo’s severance policy terms as of the date hereof,
identified on Section 5.11 of the Flamingo Disclosure Letter.

     (d) With respect to any employee or employee benefit plan, program or arrangement maintained
by Flamingo Buyer (including any severance plan), for all purposes, a Transferred Employee’s
service with Flamingo shall be treated as service with Flamingo Buyer; provided,
however, that such service need not be recognized to the extent that such recognition would
result in any duplication of benefits.

     (e) Flamingo Buyer shall waive, or cause to be waived, any pre-existing condition limitation
under any welfare benefit plan maintained by Flamingo Buyer or any of its Affiliates in which
Transferred Employees (and their eligible dependents) will be eligible to participate from and
after the Closing, except to the extent such pre-existing condition limitation would have been
applicable under the comparable Flamingo welfare benefit plan immediately prior to the Closing.
Flamingo Buyer shall recognize the dollar amount of all expenses incurred by each Transferred
Employee (and his or her eligible dependents) during the calendar year in which the Closing occurs
for purposes of satisfying such year’s deductible and co-payment limitations under the relevant
welfare benefit plans in which they will be eligible to participate from and after the Closing, to
the extent such deductibles and co-payments credits are permitted by Flamingo Buyer’s benefit
plans.

     (f) Flamingo Buyer shall not, at any time during the ninety (90) days following the Closing
Date, effectuate a “plant closing” or “mass layoff,” as those terms are defined in
the WARN Act, affecting in whole or in part any site of employment, facility, operating unit or
employee of Flamingo, without complying with the notice requirements and other provisions of
the WARN Act. Flamingo Buyer agrees that from and after the Closing Date, Flamingo Buyer
shall be responsible for any notification required under the WARN Act with respect to the
Transferred Employees.

     (g) Effective as of the Closing Date, Flamingo Buyer shall establish or designate a defined
contribution retirement plan which is qualified or eligible for qualification under Section 401(a)
of the Code (the “Buyer 401(k) Plan”). Subject to the terms and conditions of any
applicable collective bargaining agreement which is currently in effect or which may be in effect
at any time in the future, each Transferred Employee who participates in the Caesars Entertainment
401(k) Savings Plan (the “Seller 401(k) Plan”) who satisfies the eligibility requirements
of the Buyer 401(k) Plan shall become eligible to participate in the Buyer 401(k) Plan on the date
he or she becomes an employee of Flamingo Buyer and shall be credited with

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eligibility service and
vesting service for all periods of service with Flamingo or any other entity if so credited with
such service under the Seller 401(k) Plan. As soon as practicable after the Closing Date, Flamingo
shall cause the trustees of the Seller 401(k) Plan to transfer to the trustees or other funding
agent of the Buyer 401(k) Plan, the amounts representing the account balances of the Transferred
Employees (including the appropriate net investment return thereon and any participant loans made
to any Transferred Employees), said amounts to be established as account balances or accrued
benefits of the Transferred Employees under the Buyer 401(k) Plan. Each such transfer shall comply
with Section 414(l) of the Code and the requirements of ERISA and the regulations promulgated
thereunder. The assets to be transferred pursuant to this Section 7.4(g) shall be in cash, or to
the extent mutually agreed upon by Flamingo and Flamingo Buyer or as required by Law, in kind;
provided, however, that any participant loans of a Transferred Employee shall be
transferred in kind. At the time and to the extent that assets held in the trust with respect to
the Seller 401(k) Plan are paid to the trust under the Buyer 401(k) Plan pursuant to this Section
7.4(g), the Buyer 401(k) Plan shall assume all liabilities of the Seller 401(k) Plan, for the
payment of benefits transferred to the trust under the Buyer 401(k) Plan, and such transfer shall
be in full discharge of all obligations of the Seller 401(k) Plan in respect thereof;
provided, however, neither Flamingo Buyer nor the Buyer 401(k) Plan shall assume
any liability for failing to properly value the accounts of Transferred Employees under the Seller
401(k) Plan or for any other matter relating to the administration or the investment of the assets
of the Seller 401(k) Plan.

     (h) As of the Closing Date, Flamingo Buyer shall be substituted for Flamingo as the
contributing employer under each “multiemployer pension plan” (within the meaning of
Section 3(37) of ERISA) to which Flamingo contributes with respect to the business conducted by
Flamingo at the Casino Property (each, a “Substituted Multiemployer Pension Plan”). It is
the intent of the parties to satisfy the provisions of Section 4204 of ERISA with respect to any
obligation that Flamingo may have under each Substituted Multiemployer Pension Plan. Therefore,
Flamingo and Flamingo Buyer agree as follows: (i) from and after the Closing Date, Flamingo Buyer
shall continue making contributions to each Substituted Multiemployer Pension Plan with respect to
the Property Employees in accordance with the terms of any applicable collective bargaining
agreement obligating Flamingo to make contributions to such Substituted Multiemployer Pension Plan
for substantially the same number of contribution base units for which Flamingo has an obligation
to contribute to such Substituted Multiemployer Pension Plan; (ii) unless exempt under Pension
Benefit Guaranty Corporation Regulations Section 4204.11 or Section 4204.21, Flamingo Buyer shall
post a bond or hold in escrow in favor of the respective
Substituted Multiemployer Pension Plan for a period of five (5) plan years commencing with the
first plan year beginning after the Closing Date in an amount and form that satisfies the
requirements of Section 4204(a)(1)(B) of ERISA; (iii) in the event that Flamingo Buyer withdraws in
a complete or partial withdrawal under Section 4201 of ERISA from the respective Substituted
Multiemployer Pension Plan during the first five (5) plan years beginning after the Closing Date,
and Flamingo Buyer fails to make any withdrawal liability payments when due, Flamingo shall be
secondarily liable for any withdrawal liability that Flamingo would have had to the respective
Substituted Multiemployer Pension Plan but for the provisions of this Section 7.4(h) and Section
4204 of ERISA; and (iv) in the event that all or substantially all of Flamingo’s assets are
distributed, or if Flamingo is liquidated during the first five (5) plan years beginning after the
Closing Date, then Flamingo shall provide a bond or amount in escrow equal to the

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present value of
the withdrawal liability that Flamingo would have had but for the provisions of this Section 7.4(h)
and Section 4204 of ERISA.

          (i) Upon the Closing, Flamingo Buyer shall become a successor employer and shall
assume all Liabilities and obligations under, and be bound by, the collective bargaining
agreements listed on Section 7.4(i) of the Flamingo Disclosure Letter or any successor
agreements, amendments, or memoranda of understanding in respect thereof.

     Section 7.5 Access to Information and the Properties.

     (a) Upon reasonable notice, subject to applicable Law, including, without limitation,
antitrust Laws, Gaming Laws and privacy Laws, (i) Flamingo shall afford Flamingo Buyer’s
Representatives reasonable access, during normal business hours during the period from the date
hereof to the Closing, to the Casino Property and to all its personnel, properties, books, Seller
Benefit Plans, insurance records, Contracts and records, expressly excluding, however, those
related exclusively to the Flamingo Excluded Assets and the Flamingo Excluded Liabilities, and,
during such period, Flamingo shall furnish promptly to Flamingo Buyer all material information
concerning the business and operation of Flamingo, the Flamingo Purchased Assets and the Property
Employees (other than Flamingo Excluded Assets and the Flamingo Excluded Liabilities) as Flamingo
Buyer may reasonably request, and (ii) Boardwalk shall afford Boardwalk Buyer’s Representatives
reasonable access, during normal business hours during the period from the date hereof to the
Closing, to the Traymore Site and to all, insurance records, and other records, expressly
excluding, however, records relating solely to the Boardwalk Excluded Assets and the Boardwalk
Excluded Liabilities, and, during such period, Boardwalk shall furnish promptly to Boardwalk Buyer
all material information concerning the Boardwalk Purchased Assets (other than the Traymore
Excluded Assets and the Traymore Excluded Liabilities) as Buyer may reasonably request (with
respect to both Flamingo and Boardwalk, an “Inspection”); provided,
however, that (A) the applicable Buyer shall provide the applicable Seller with at least
twenty-four (24) hours’ prior written notice of any Inspection; (B) if the applicable Seller so
requests and if such Representative of the applicable Seller is readily available without undue
delay, the applicable Buyer’s Representatives shall be accompanied by a Representative of the
applicable Seller; (C) without the prior written consent of the applicable Seller’s
Representatives, which consent shall not be unreasonably withheld or delayed, Buyers shall not
initiate contact with employees or other representatives of a Seller or its Affiliates other than
such Seller’s Representatives or other individuals designated by any of Seller’s Representatives;
(D) Buyers’ Representatives shall not be entitled to perform any physical testing of any nature with
respect to any portion of the Casino Property or the Traymore Site without the applicable Seller’s
prior written consent, which consent may be withheld if in the sole judgment of Seller’s
Representatives such testing would unduly interfere with the operation of the business conducted at
the Properties; (E) Buyers shall not unduly interfere with the operation of the business conducted
at the Properties; (F) the applicable Buyer shall, at its sole cost and expense, promptly repair
any damage to the Properties or any other property owned by a Person other than such Buyer arising
from or caused by such Inspection, and shall reimburse the applicable Seller for any loss arising
from or caused by any Inspection, and restore the Properties or such other third-party property to
substantially the same condition as existed prior to such Inspection, and shall indemnify, defend
and hold harmless each Seller and its Affiliates from and against any personal

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injury or property
damage claims, liabilities, judgments or expenses (including reasonable attorneys’ fees) incurred
by any of them arising or resulting therefrom; and (G) subject to the conditions to Closing set
forth in Article VIII hereof, in no event shall the results of any such Inspection or Buyers’
satisfaction therewith be a condition to Buyers’ obligations hereunder, it being the intent of
Buyers to purchase the Purchased Assets and Assumed Liabilities on an “As Is, Where Is”
basis as set forth in Sections 6.7 and 11.1 hereof, except as expressly set forth to the contrary
in this Agreement, including, without limitation Article V hereof. Each Buyer will hold and cause
its Representatives to hold any such information furnished to it by Sellers, which is nonpublic in
confidence in accordance with the confidentiality agreements, with respect to Flamingo, dated
October 4, 2004, by and between Caesars Entertainment, Inc. and American Real Estate Partners L.P.
and, with respect to Boardwalk, dated May 20, 2005, by and between Caesars Entertainment, Inc. and
American Real Estate Partners L.P. (collectively, the “Confidentiality Agreements”). The
Confidentiality Agreements shall continue in full force and effect in accordance with its terms
until Closing, at which time the Confidentiality Agreement shall only terminate with respect to
information relating solely to the Purchased Assets and/or the Assumed Liabilities.
Notwithstanding anything to the contrary, Buyers and Sellers agree that in the event any
proprietary information or knowledge relating to any Excluded Asset is obtained, revealed or
otherwise made known to Buyers in effecting (1) the transition from Excluded Software to
replacement software pursuant to Section 1.5(b) hereof (including as a result of the parties having
entered into the Excluded Software License), specifically, or (2) the removal of the Excluded
Assets, generally, Buyers shall not reveal, disclose, employ or otherwise use any such proprietary
information and will hold such information in confidence in accordance with the Confidentiality
Agreements. No information or knowledge obtained in any investigation pursuant to this Section 7.5
shall affect or be deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations of the parties to consummate the transactions contemplated
herein.

     (b) Following the Closing, upon reasonable notice, each Buyer and each Seller shall (and shall
cause their respective Affiliates and Representatives, to) provide the other parties hereto and
their respective Affiliates and Representatives with reasonable access and duplicating rights,
during normal business hours, to each Buyer’s and each Seller’s personnel, properties, books,
insurance records, Seller Benefit Plans, contracts, commitments and records included in or related
to Seller, the Properties or the Property Employees and shall cooperate with the requesting party,
as reasonably necessary for such requesting party to pursue any suit, claim, action, proceeding or
investigation relating to the claims in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, any suit, claim, action,
proceeding or investigation related to the Excluded Assets, Excluded Liabilities, Retained
Employees and Transferred Employees. Notwithstanding the foregoing, no party shall be required to
provide any information which (i) they reasonably believe they may not provide to the requesting
party or its respective Affiliates and Representatives by reason of applicable Law or by a
confidentiality agreement with a third party, and if, in the case of a confidentiality agreement,
the non-requesting party has used reasonable efforts to obtain the consent of such party to such
disclosure, or (ii) constitutes information protected by the attorney/client and/or attorney work
product privilege. If any material is withheld by the non-requesting party pursuant to the
immediately preceding sentence, such non-requesting party shall inform the requesting party as to
the general nature of the material which is being withheld.

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     (c) Following the Closing, at either Seller’s request, the applicable Buyer will cause its
employees to prepare the Books and Records and financial statements, in each case which have been
provided to Buyers at the Closing, required by such Seller or its Affiliates (and which are not
otherwise the responsibility of such Buyer under this Agreement, including with respect to Buyer’s
obligations under Section 2.5 hereof) in connection with any filing with a Governmental Authority
(including Tax Returns relating to the Flamingo Purchased Assets prepared by or with the assistance
of Property Employees) in respect of the period prior to the Closing Date, as promptly as
practicable and in any event no later that three (3) days in advance of any applicable deadlines
and/or required filing dates. Each Seller will reimburse the applicable Buyer for the cost,
including the wage cost, of having such employees prepare any of the foregoing Books and Records
and financial statements requested by such Seller pursuant to this Section 7.5(c) hereof and each
Seller shall make available to such employees any Excluded Software or other Excluded Assets
reasonably required for such purpose.

     (d) From and after the Closing Date, Sellers shall, and shall cause their respective
Affiliates to, keep confidential any and all information concerning the Purchased Assets and the
Assumed Liabilities (the “Post-Closing Confidential Information”); provided,
however, that the Post-Closing Confidential Information shall not include information which
(i) is or becomes generally available to the public other than as a result of a disclosure by
Sellers or any of their respective Affiliates acting in such capacity in violation of this
Agreement, or (ii) becomes available after the Closing Date to Sellers or any of their respective
Affiliates on a non-confidential basis from a source that is reasonably believed by Sellers or any
of their respective Affiliates not to be bound by an obligation of confidentiality to the Buyers
(whether by agreement or otherwise). Notwithstanding the foregoing, if either Seller or any of
their respective Affiliates is requested or becomes legally compelled (by interrogatories, request
for information or documents, subpoena, civil investigative demand or similar process) to disclose
any Post-Closing Confidential Information, the Sellers or any of their respective Affiliates will
(i) provide Buyers with prompt written notice of the existence, terms and circumstances of such a
request, (ii) consult with Buyers on the advisability of taking legally available steps to resist
or narrow such requests (in respect of which Buyers may seek a protective order or other
appropriate remedy at Buyers’ sole expense), and (iii) if disclosure of such information is
required, furnish only that portion of the Post-Closing Confidential Information which, in the
opinion of Sellers’ counsel, the Seller or any of their respective Affiliates is legally compelled
to disclose and, further, exercise their reasonable best efforts to obtain reliable assurance that
confidential treatment will be accorded the Post-Closing Confidential Information.

     Section 7.6 Governmental Approvals.

     (a) Each Buyer and each Seller shall cooperate with each other and use their reasonable best
efforts to (i) as promptly as practicable, take, or cause to be taken, all appropriate action, and
do or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise
to consummate and make effective the transactions governed by this Agreement as promptly as
practicable, (ii) obtain from any Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders, including without limitation, Buyers’ Gaming Approvals,
required (A) to be obtained or made by each Seller or each Buyer or any of their respective
Affiliates or any of their respective Representatives and (B) to avoid any action or proceeding by
any Governmental Entity (including, without limitation, those in

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connection with the HSR Act and
antitrust and competition Laws of any other applicable jurisdiction), in connection with the
authorization, execution and delivery of this Agreement and the consummation of the transactions
governed herein and therein, and (iii) make all necessary filings, and thereafter make any other
required submissions with respect to this Agreement, as required under (A) any applicable federal
or state securities Laws, (B) the HSR Act and antitrust and competition Laws of any other
applicable jurisdiction, (C) the Gaming Laws and (D) any other applicable Law (collectively, the
“Governmental Approvals”), and to comply with the terms and conditions of all such
Governmental Approvals. The parties hereto and their respective Representatives and Affiliates
shall file within fifteen (15) days after the date hereof, all required initial applications and
documents in connection with obtaining the Governmental Approvals (including without limitation
under applicable Gaming Laws and the HSR Act) and shall act diligently and promptly to pursue the
Governmental Approvals, including, without limitation, filing such additional applications and
documents as may be required, and shall cooperate with each other in connection with the making of
all filings referenced in the preceding sentence, including providing copies of all such documents
to the non-filing party and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection therewith. Each Buyer and each
Seller shall use reasonable best efforts to schedule and attend any hearings or meetings with
Governmental Entities to obtain the Governmental Approvals as promptly as possible. Each Buyer and
each Seller shall have the right to review in advance and, to the extent practicable, each will
consult the other parties hereto on, in each case, subject to applicable Laws relating to the
exchange of information (including, without limitation, antitrust laws and any Gaming Laws), all
the information relating to the applicable Buyer or the applicable Seller, as the case may be, and
any of their respective Affiliates or Representatives which appear in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in connection with the
transactions governed by this Agreement. Without limiting the foregoing, each Buyer and each
Seller will notify the other party hereto promptly of the receipt of comments or requests from
Governmental Entities relating to Governmental Approvals, and will supply the other party with
copies of all correspondence between the notifying party or any of its Representatives and
Governmental Entities with respect to Governmental Approvals. If, at any time prior to eight (8)
months from the date hereof (the “Third Party Retention Date”), Buyers, acting upon the
advice of its counsel and in good faith, reasonably believe that it is unlikely that they will
receive all Necessary Gaming Approvals by the Eighth Extended Outside Date, Buyers may, upon
written notice to Sellers prior to the Third Party Retention Date, elect to retain a third party
gaming operator reasonably acceptable to Seller (a “Third Party Operator”);
provided, further, that the Sellers shall be deemed to have accepted such Third
Party Operator if Seller has not otherwise objected
to such Third Party Operator within ten (10) days of receipt of such written notice. Such
written notice to Seller shall contain reasonable detail regarding the identity and gaming history
of the Third Party Operator. Upon acceptance by the Seller, the Third Party Operator will be
obligated to purchase all Purchased Assets and assume all Assumed Liabilities that are required to
obtain all Necessary Gaming Approvals under applicable Laws, on the terms and conditions set forth
in this Agreement, provided, that the retention of a Third Party Operator shall in no way relieve
the Buyers of any of their agreements or obligations hereunder. Within thirty (30) days after the
date of the acceptance by Seller of a Third Party Operator, such Third Party Operator will be
required to (a) execute any documents reasonably required by either Buyers or Sellers to obligate
such party to the terms and conditions hereof and (b) file all required initial applications and

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documents in connection with obtaining the Necessary Gaming Approvals; provided, that in
all cases, Buyers must have retained such Third Party Operator no later than the Eighth Extended
Outside Date. For the sake of clarity, in all cases the Buyer shall continue to be (i) obligated
in all circumstances to make all required Deposits under Section 4.1(a) and (b) hereof and (ii)
subject to the provisions of Section 9.3.

     (b) Each Buyer and each Seller shall each use its reasonable best efforts:

          (i) to avoid the entry of, or to have vacated or terminated, any decree, order, or
judgment that would restrain, prevent or delay the Closing, on or before the Outside Date,
including defending through litigation on the merits any claim asserted in any court by any
Person; and

          (ii) to avoid or eliminate each and every impediment under any antitrust, competition
or trade regulation Law that may be asserted by any Governmental Entity with respect to the
Closing so as to enable the Closing to occur as soon as reasonably possible (and in any
event no later than the Outside Date), including implementing, contesting or resisting any
litigation before any court or quasi-judicial administrative tribunal seeking to restrain
or enjoin the Closing; provided, however, that Buyers and their respective
Affiliates shall be required to effect (and nothing in this Agreement shall require
Sellers, or any of their respective Affiliates to commit to) any divestitures, licenses or
hold separate or similar arrangements with respect to its, or their respective assets or
conduct of business arrangements, to the extent necessary to obtain any approval from a
Governmental Entity required to consummate the transactions contemplated hereby, except
where all required actions pursuant to this proviso, if taken together, would be materially
adverse to the business, financial condition or results of operations of the Buyers and
their respective Affiliates.

     (c) Each Buyer and each Seller shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required for consummation
of the transactions governed by this Agreement which causes such party to reasonably believe that
there is a reasonable likelihood that such consent or approval from such Governmental Entity will
not be obtained or that the receipt of any such approval will be materially delayed. Each Buyer
and each Seller shall use their reasonable best efforts to take, or cause to be taken, all actions
reasonably necessary to defend any lawsuits or other legal proceedings challenging this Agreement
or the consummation of the transactions governed by this Agreement, seeking to prevent the entry by
any Governmental Entity of any decree,
injunction or other order challenging this Agreement or the consummation of the transactions
governed by this Agreement, appealing as promptly as possible any such decree, injunction or other
order and having any such decree, injunction or other order vacated or reversed.

     (d) From the date of this Agreement until the Closing, the parties hereto shall promptly
notify the other parties hereto in writing of any pending or, to the knowledge of any Buyer or any
Seller, as appropriate, threatened Legal Proceeding or investigation by any Governmental Entity or
any other Person (i) challenging or seeking damages in connection with the Closing or any other
transaction governed by this Agreement or (ii) seeking to restrain or prohibit the consummation of
the Closing.

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     Section 7.7 Publicity. Sellers and Buyers shall agree on the form and content of the
initial press release regarding the transactions contemplated hereby and thereafter shall consult
with each other before issuing, provide each other the opportunity to review and comment upon and
use all reasonable efforts to agree upon, any press release or other public statement with respect
to any of the transactions contemplated hereby and thereby and shall not issue any such press
release or make any such public statement prior to such consultation and prior to considering in
good faith any such comments, except as may be required by applicable Law (including, without
limitation, the Securities Act, the Exchange Act and any Gaming Laws) or any listing agreement with
the New York Stock Exchange. Notwithstanding anything to the contrary herein, Buyers and Sellers
or their respective Affiliates may make any public statement in response to specific questions by
the press, analysts, investors or those attending industry conferences or financial analyst
conference calls, so long as any such statements are not inconsistent with previous press releases,
public disclosures or public statements made jointly by Buyers and Sellers and do not reveal
non-public information regarding Buyers or Sellers.

     Section 7.8 Further Assurances and Actions.

     (a) Subject to the terms and conditions herein, each party hereto agrees to use its reasonable
best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done,
all things reasonably necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the transactions contemplated by this Agreement, including, without
limitation, using their respective reasonable best efforts to obtain (i) all Seller Permits and
Buyer Permits, as applicable, and (ii) consents of parties to the Assumed Contracts and Traymore
Contracts and (iii) consents from customers on the Affiliate Customer List as such consents may be
required by the Gramm-Leach-Bliley Act of 1999, any other applicable Law in effect as of the
Closing, or any Seller privacy policy which may be in effect as of the date hereof, in each case,
as are necessary for consummation of the transactions contemplated by this Agreement.

     (b) In case at any time after the Closing any further action is necessary to carry out the
purposes of this Agreement or to vest Buyers with full title to the Purchased Assets the proper
officers and/or directors of Buyers and Sellers shall take all action reasonably necessary
(including such officers’ executing and delivering further notices, assumptions, releases and
acquisitions); provided that, if such action is necessary due to events or circumstances
particular to Buyer, Buyer shall bear the cost of such action.

     (c) The parties hereto acknowledge that Consolidated Supplies, Services and Systems, a Nevada
corporation and an Affiliate of Flamingo (“CS3”), owns certain assets listed on Section
7.8(c) of the Flamingo Disclosure Letter and used exclusively in the operation of the Casino
Property (collectively, the “CS3 Assets”). Flamingo shall cause CS3 to take such actions as
are necessary to cause CS3 at the Closing to transfer to Flamingo Buyer the CS3 Assets, and certain
of the Liabilities associated therewith that would be Flamingo Assumed Liabilities if such
Liabilities were Liabilities of Flamingo (“CS3 Liabilities”). In addition, such CS3 Assets
shall be deemed to be Flamingo Purchased Assets for purposes of this Agreement and such CS3
Liabilities shall be deemed to be Flamingo Assumed Liabilities for purposes of this Agreement,
including without limitation, the representations and warranties with respect to the Flamingo
Purchased Assets and the Flamingo Assumed Liabilities set forth in Article V hereof.

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     Section 7.9 Transfer Taxes; HSR Filing Fee.

     (a) All transfer, documentary, sales, use, stamp, registration and other such Taxes (including
all applicable real estate transfer or similar Taxes) and related fees (including any penalties,
interest and additions to Tax) incurred with respect to the Purchased Assets pursuant to this
Agreement shall be borne one-half by Buyers and one-half by Sellers. Except as required by
applicable Law, Buyers shall prepare, execute and file all Tax Returns and other documentation on a
timely basis as may be required to comply with the provisions of any such Tax Laws;
provided, however, that any such Tax Returns and other documentation shall be
subject to the approval of the applicable Seller, which approval shall not be unreasonably withheld
and, only to the extent required by applicable Law, the applicable Seller shall execute such Tax
returns.

     (b) All recording or filing fees with respect to the removal of any Liens or Encumbrances on
the Traymore Site shall be paid one-half by Boardwalk Buyer and one-half by Boardwalk. All
recording fees for the deed and all title insurance search fees and premiums shall be paid one-half
by Buyers and one-half by Sellers.

     (c) The filing fees pursuant to the pre-merger notifications under the HSR Act shall be paid
one-half by Buyers and one-half by Sellers.

     Section 7.10 Accounts Receivable; Accounts Payable.

     (a) Flamingo agrees that after the Closing Date, Buyer shall have the right and authority to
collect for its own account or the account of its Affiliates all accounts receivable which are
transferred and assigned to any Buyer as set forth on the Detailed Balance Sheet. Flamingo agrees
that it will promptly transfer and deliver to Buyer any cash or other property which Flamingo may
receive in respect of such accounts receivable. Buyer agrees that after the Closing Date, Flamingo
shall have the right and authority to collect for its own account or the account of its Affiliates
all accounts receivables which are retained by Flamingo as set forth on the Detailed Balance Sheet.
Buyer agrees that it will promptly transfer and deliver to Flamingo any cash or other property
which Buyer may receive in respect of such accounts receivables.

     (b) Following the Closing Date, Flamingo Buyer shall make payments in the Ordinary Course of
Business consistent with Flamingo’s practice prior to Closing in respect of all Liabilities of the
type designated on the Detailed Balance Sheet as being assumed by Flamingo Buyer and reflected on
the Pre-Closing Working Capital Statement and the Working Capital Statement, other than those which
are being contested in good faith by appropriate proceedings. Following the Closing Date, Flamingo
Buyer shall cooperate with Flamingo to inform Flamingo in a timely manner of the receipt of goods
and/or services ordered by Flamingo prior to the Closing Date. In respect of expenses that are
accrued in whole or in part prior to the Closing Date, which become payable after the Closing Date
and which do not appear on the Pre-Closing Working Capital Statement or Working Capital Statement,
such expenses shall be prorated between Flamingo Buyer and Flamingo as of the Closing Date on the
Flamingo Determination Date. Within ten (10) days of the Flamingo Determination Date, the amount,
if any, pursuant to this Section 7.10(b) due from Flamingo Buyer to Flamingo or due from Flamingo
to Flamingo Buyer shall be paid in cash by wire transfer of immediately available funds from
Flamingo Buyer to Flamingo or from Flamingo to Flamingo Buyer, as applicable.

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     Section 7.11 Reservations; Chips; Front Money; Guests; Keys.

     (a) Reservations. Flamingo Buyer will honor the terms and rates of all pre-Closing
reservations (in accordance with their terms) at the Casino Property by guests or customers,
including advance reservation cash deposits, for rooms or services confirmed by Flamingo for dates
after the Closing Date. Prior to the Closing Date, Flamingo may continue to accept reservations
for periods after the Closing in the Ordinary Course of Business consistent with past practice in
operating the Casino Property. Flamingo Buyer recognizes that such reservations may include, to
the extent consistent with the Ordinary Course of Business consistent with past practice, discounts
or other benefits, including, without limitation, benefits extended under Total Rewards or any
other frequent player or casino awards programs, group discounts, other discounts or requirements
that food, beverage or other benefits be delivered by Flamingo Buyer to the guest(s) holding such
reservations. Flamingo Buyer will honor all room allocation agreements and banquet facility and
service agreements which have been granted to groups, persons or other customers for periods after
the Closing Date at the rates and terms provided in such agreements. Flamingo Buyer agrees that
Flamingo cannot make any representation or warranty that any party holding a reservation or
agreement for rooms, facilities or services will utilize such reservation or honor such agreement.
Flamingo Buyer, by the execution hereof, solely assumes the risk of non-utilization of reservations
and non-performance of such agreements from and after the Closing.

     (b) Destruction of Chips. Except as otherwise provided for in the Flamingo License
Agreement and applicable Gaming Laws, as of Closing, Flamingo Buyer will (i) cease to issue or use
and will not reissue or reuse any of Flamingo’s gaming chips, tokens or plaquemines and (ii) be
solely responsible and liable for compliance with applicable Gaming Laws, including any obligation
to destroy such gaming chips, tokens or plaquemines.

     (c) Front Money. Effective as of the Transfer Time, Representatives of each of
Flamingo Buyer and Flamingo shall take inventory of all Front Money and identify what Persons are
entitled to what portions of such Front Money. All such Front Money shall be retained in the
Casino Property cage and listed in an inventory prepared and signed jointly by Representatives
of Flamingo Buyer and Flamingo no later than the Transfer Time. Flamingo Buyer shall be
responsible from and after the Transfer Time for all Front Money and shall distribute Front Money
only to the Persons and only in the amounts as determined pursuant to this Section 7.11(c).
Pursuant to Article X hereof, Flamingo shall be responsible for and indemnify Flamingo
Buyer against claims of alleged missing Front Money not contained on the inventory, and Flamingo
Buyer shall be responsible for and indemnify Flamingo against claims of alleged missing Front Money
listed on the inventory.

     (d) Guests’ Baggage. Effective as of the Transfer Time, Flamingo and Flamingo Buyer
shall take inventory of: (i) all baggage, suitcases, luggage, valises and trunks of hotel guests
checked or left in the care of Flamingo at the Casino Property; (ii) all luggage or other property
of guests retained by Flamingo as security for unpaid accounts receivable; and (iii) the contents
of the baggage storage room; provided, however, that no such baggage, suitcases,
luggage, valises or trunks shall be opened. All such baggage and other items shall be sealed in a
manner to be agreed upon by the parties and listed in an inventory prepared and signed jointly by
said representatives of Flamingo and Flamingo Buyer as of the Closing Date. Said baggage and

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other
items shall be stored as Flamingo Buyer shall choose, and Flamingo Buyer shall be solely
responsible for claims with respect thereto.

     (e) Guests’ Safe Deposit Boxes. Not later than thirty (30) days prior to the
anticipated Closing Date, Flamingo shall use reasonable efforts to send a notice by certified mail
to the last known address of each Person who has stored personal property in safe deposit boxes
located at the Casino Property, advising them that they must make arrangements with Flamingo Buyer
to continue use of their safe deposit box and that if they should fail to do so within fifteen (15)
days after the date of such notice is sent, the box will be opened in the presence of a
Representative of Flamingo and a Representative of Flamingo Buyer, and the contents of such box
will be sealed in a package by the Representatives of each of Flamingo and Flamingo Buyer, who
shall write on the outside the name of the Person who rented the safe deposit box and the date of
the opening of the box. The Representatives of each of Flamingo and Flamingo Buyer shall then
execute a certificate reciting the name of the Person who rented the safe deposit box, the date of
the opening of the box and a list of its contents. The certificate shall be placed in the package
and a copy of it sent by certified mail to the last known address of the person who rented the safe
deposit box. The package will then be placed in a vault arranged by Flamingo Buyer. Pursuant to
Article X hereof, Flamingo shall be responsible for and indemnify Buyer against claims of alleged
missing items not contained on the certificate, and Flamingo Buyer shall be responsible for and
indemnify Flamingo against claims of alleged missing items listed on the certificate.

     (f) Keys. As of the Closing Date, (i) Flamingo shall use commercially reasonable
effort to deliver to Flamingo Buyer or otherwise leave at the Casino Property all keys in its
possession relating to the Casino Property and (ii) Boardwalk shall use commercially reasonable
efforts to deliver to Boardwalk Buyer or otherwise leave at the Traymore Site all keys in its
possession relating to the Traymore Site.

     Section 7.12 Insurance Policies. Each Seller’s fire and casualty insurance and other insurance policies shall be cancelled by
such Seller or any of its Affiliates as of the date immediately following the Closing Date, and any
refunded premiums shall be retained by such Seller. Buyers will be solely responsible for
acquiring and placing its casualty insurance, business interruption insurance, liability insurance
and other insurance policies for periods after the Closing.

     Section 7.13 Certain Transactions. Prior to the Closing, neither party shall take, or
agree to commit to take, any action that would or is reasonably likely to materially delay the
receipt of, or materially impact the ability of a party to obtain, any Governmental Approval
necessary for the consummation of the transactions contemplated by this Agreement.

     Section 7.14 Insurance; Casualty and Condemnation.

     (a) If, before the Closing, one or both of the Casino Property or Traymore Site suffer damage
that does not result in a Casualty Termination Event, then the Closing shall proceed as scheduled
and Flamingo or Boardwalk, applicable, shall, as of the Closing Date, (i) promptly pay to the
applicable Buyer all insurance proceeds received by such Seller or its Affiliates with respect to
such damage, destruction or other loss, less any proceeds applied to any physical

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restoration of
the applicable Property and (ii) assign to the applicable Buyer all rights of such Seller and its
Affiliates against third parties with respect to any causes of action, whether or not litigation
has commenced as of the Closing Date, in connection with such damage, destruction or other loss,
provided that the proceeds of such insurance shall be subject to (and recovery thereon
shall be reduced by the amount of) any payment or reimbursement (but not subject to any applicable
deductibles and co-payment provisions, which shall be the responsibility of the applicable Seller
and shall be paid to the applicable Buyer or applied to such repair or replacement as applicable)
and shall constitute full compensation for the damage to the Property, and such Seller shall have
no responsibility for restoration or repair of the applicable Property or any resultant loss,
directly, by subrogation, or otherwise. For the avoidance of doubt, nothing contained in this
Section 7.14(a) shall restrict the ability of Buyers to seek indemnification from the applicable
Seller as provided in Article X hereof. In the event of damage that does not result in a Casualty
Termination Event, between the date of the casualty and the Closing, the applicable Buyer will have
the right to consult with Seller regarding negotiations with Seller’s insurance carriers and to
review and consult with Seller with respect to any repairs (including the cost thereof) to be made
prior to or after Closing. After Closing, the applicable Buyer shall have the right to negotiate
and settle with any insurance carrier, provided that the applicable Seller shall have the
right to consult with Buyer with respect to such negotiations or settlements.

     (b) In the event a Casualty Termination Event occurs prior to the Closing Date, Buyers shall
have the option, by written notice to both Sellers and the Escrow Agent within ten (10) days of the
occurrence of such Casualty Termination Event, to exercise their termination right under Section
9.1(g) hereof; provided, however, that, if requested by Sellers, Sellers and Buyers
shall discuss and consult in good faith for a period of up to thirty (30) days after any such
casualty to discuss whether such casualty (individually or together with any prior casualties)
constitutes a Total Material Adverse Effect, and after any such period expires, Buyers shall have
fifteen (15) days to exercise its termination right pursuant to Section 9.1(g) hereof with
respect to such casualty.

     (c) In the event a condemnation proceeding or payment in lieu of condemnation occurs relative
to any part of the Casino Property or Traymore Site prior to the Closing Date, and such proceeding
does not result in a Condemnation Termination Event, all payments relative to such condemnation
shall be paid by the applicable Seller, or the rights to such payments shall be assigned, to the
applicable Buyer at the Closing (the “Condemnation Amount”), or, at the applicable Seller’s
election, the Purchase Price shall be reduced by the Condemnation Amount.

     Section 7.15 License of Excluded Software. As of the date hereof,. Flamingo and Flamingo
Buyer shall enter into the non-exclusive, “as-is,” fully-paid, worldwide, non-transferable
license (the “Excluded Software License”), attached hereto as Exhibit K, pursuant to which
Flamingo Buyer shall be permitted to use certain of the Excluded Software designated in the
Excluded Software License for the term specified in such Excluded Software License following the
Closing Date exclusively in connection with the operation of the Casino Property and only to the
extent permitted under any third-party agreements governing Flamingo’s use of any such Excluded
Software. It is agreed and understood by Flamingo Buyer that the Excluded Software License will
not cover source code and Flamingo shall not be obligated to provide any support services to
Flamingo Buyer in respect of any Excluded Software covered by the Excluded Software License, except
as otherwise provided for in the Excluded Software License.

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Neither Flamingo Buyer nor any of its
Affiliates or Representatives shall sell, license, lease, or otherwise transfer the Excluded
Software License without the prior written consent of Flamingo, which consent may be withheld in
Flamingo’s sole discretion. In the event of any such sale, license, lease or other transfer
without the prior written consent of Flamingo, Flamingo shall have the right to terminate the
Excluded Software License granted hereunder, and thereafter Flamingo Buyer shall have no right to
use the Excluded Software.

     Section 7.16 Non-Solicitation. Without prior written consent of the other Party, for a
period of one year from the Closing Date, (a) Flamingo Buyer or its Affiliates shall not employ or
solicit to employ any of the information technology employees of Flamingo or its Affiliates (other
than the Property Employees immediately prior to Closing, and then pursuant to the terms of this
Agreement) and (b) Flamingo or its Affiliates shall not employ or solicit to employ any of the
information technology employees of Flamingo Buyer or its Affiliates or any of the Property
Employees, (i) in either case, other than any such employee who has been terminated prior to the
commencement of employment discussions between the other party and such employee and (ii) other
than any such employee who responds to a solicitation (x) by the soliciting party or any of its
Affiliates or representatives, which constitutes a good faith general solicitation, mass
advertisement or similar type of broad based publicly disseminated solicitation through
advertisement or (y) by a search firm, provided that neither the soliciting party nor its
Affiliates or representatives encourages or advises any such firm to approach any such employee.

     Section 7.17 Termination of Billboard Lease. Boardwalk shall cause the Billboard Lease to be terminated and of no further force or effect at
or prior to Closing.

     Section 7.18 No Control. Except as permitted by the terms of this Agreement, prior to the
Closing, Buyers shall not directly or indirectly control, supervise, direct or interfere with, or
attempt to control, supervise, direct or interfere with, the Purchased Assets. Until the Closing,
the operations and affairs of the Purchased Assets is the sole responsibility of and under the
applicable Seller’s complete control, except as provided for in this Agreement.

     Section 7.19 Estoppel Certificate. Boardwalk shall use commercially reasonable efforts to
cooperate with Buyer in obtaining an estoppel certificate relating to the Traymore Site in form and
substance satisfactory to the Buyer, acting reasonably.

     Section 7.20 2005 Audited Financial Statements. Flamingo shall use its commercially
reasonable efforts to deliver to Buyers at Closing stand-alone audited balance sheets, statements
of income, and cash flow statements relating to the Business operated at the Casino Property as of
December 31, 2005 (the “Audited Financial Information”). The Audited Financial Information
shall be prepared in accordance with generally accepted accounting principles in effect at the time
of such preparation applied on a consistent basis throughout the period involved (except as may be
indicated in the notes to such financial statements) and will fairly present, in all material
respects, the consolidated financial position and results of operations of the Casino Property as
of such date, subject to normal recurring year-end audit adjustments. Buyer shall cooperate with
Flamingo and Deloitte & Touche as may be reasonably requested by Flamingo or Deloitte & Touche in
connection with the preparation of the Audited Financial Statements. All costs that would not have
been incurred by Flamingo but for its obligation to prepare the Audited Financial Statements
hereunder shall be borne solely by the Buyers.

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ARTICLE VIII

CONDITIONS TO CLOSING

     Section 8.1 Conditions to Each Party’s Obligation to Effect the Closing. The respective
obligations of each party to this Agreement to effect the Closing is subject to the satisfaction of
each of the following conditions on or prior to the Closing Date, any of which may be waived in
whole or in part to the extent permitted by applicable Law in a writing executed by all of the
parties hereto:

     (a) No Injunctions. No Governmental Entity shall have (i) initiated any order to
enact, issue, promulgate, enforce or enter, or (ii) enacted, issued, promulgated, enforced or
entered any order, executive order, stay, decree, judgment or injunction or statute, rule,
regulation which is in effect (whether temporary, preliminary or permanent) to prevent or
prohibit the consummation of any of the transactions contemplated by the Agreement or make it
illegal for any party hereto to perform its obligations hereunder.

     (b) HSR Act. Any applicable waiting periods, together with any extensions thereof,
under the HSR Act and the antitrust or competition Laws of any other applicable jurisdiction shall
have expired or been terminated.

     (c) Consents and Approvals. All consents, waivers, authorizations and approvals of
any Person required in connection with the consummation of the transactions contemplated hereby
that are set forth on Section 8.2(c) of the Buyer Disclosure Letter shall have been duly obtained
and shall be in full force and effect on the Closing Date and written evidence (in form and
substance reasonably acceptable to Buyers) of any such consents, waivers, authorizations and
approvals shall have been provided to Buyers on or prior to the Closing Date.

     (d) Governmental Consents. Each Buyer shall have obtained all Gaming Approvals
necessary in connection with the transactions contemplated by this Agreement and necessary for
ownership and operation of the Purchased Assets (including, without limitation, approval, licensing
or registration of such Buyer and its (i) officers, executive directors, key employees, managers or
Persons performing management functions similar to officers, and (ii) partners (general and limited
partners), stockholders and members, each, as required by any Governmental Entity) (each a
“Necessary Gaming Approval” and collectively the “Necessary Gaming Approvals”) and
such Necessary Gaming Approvals shall be in full force and effect.

     Section 8.2 Additional Conditions to Obligations of Buyers. The obligation of Buyers to
effect the Closing is subject to the satisfaction of each of the following conditions on or prior
to the Closing Date, any of which may be waived in whole or in part in writing exclusively by
Buyers:

     (a) Representations and Warranties. The representations and warranties of each of
Flamingo and Boardwalk contained in this Agreement shall be true and correct (without giving effect
to any limitation as to “materiality” or “Seller Material Adverse Effect” set forth
therein) at and as of the Closing as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such earlier date), except where the failure of
such

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representations and warranties to be true and correct would not, individually or in the
aggregate, result in a Total Material Adverse Effect. Each Buyer shall have received certificates
signed on behalf of the applicable Seller by an executive officer of such party to such effect.

     (b) Performance of Obligations. Each of Flamingo and Boardwalk shall have performed
in all material respects all covenants, agreements and obligations required to be performed by it
under this Agreement at or prior to the Closing, including without limitation delivery of items
listed in Section 4.2 hereof. Each Buyer shall have received certificates signed on behalf of the
applicable Seller by an executive officer of such party to such effect.

     Section 8.3 Additional Conditions to Obligations of Sellers. The obligations of Sellers to effect the Closing are subject to the satisfaction of each of the
following conditions on or prior to the Closing Date, any of which may be waived in whole or in
part in writing exclusively by all of the Sellers:

     (a) Representations and Warranties. The representations and warranties of each Buyer
contained in this Agreement shall be true and correct (without giving effect to any limitation as
to “materiality” or “Buyer Material Adverse Effect” set forth therein) at and as of
the Closing as if made at and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), except where the failure of such representations and
warranties to be true and correct would not, individually or in the aggregate, result in a Buyer
Material Adverse Effect. Each Seller shall have received a certificate signed on behalf of the
applicable Buyer by an executive officer of such party to such effect.

     (b) Performance of Obligations of Buyers. Buyers shall have performed in all material
respects all covenants, agreements and obligations required to be performed by them under this
Agreement at or prior to the Closing, including, without limitation, delivery of items listed in
Section 4.2 hereof. Each Seller shall have received a certificate signed on behalf of the
applicable Buyer by an executive officer of such party to such effect.

ARTICLE IX

TERMINATION AND AMENDMENT

     Section 9.1 Termination. This Agreement may be terminated at any time prior to the Closing
by written notice by the terminating party to the other party (except in the case of termination
pursuant to 9.1(a) hereof, which requires mutual agreement of all parties):

     (a) by mutual agreement of Sellers and Buyers;

     (b) by either Buyers or Sellers, if the transactions contemplated hereby shall not have been
consummated on or prior to the Outside Date; provided, however, that the right to
terminate this Agreement under this Section 9.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the primary cause of or resulted in
the failure of the Closing to occur on or before the Outside Date;

     (c) by Sellers, if any Gaming Authority has made a nonappealable final determination that such
Gaming Authority (i) will not issue to any Buyer any Necessary Gaming Approvals,

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provided,
that if such nonappealable final determination is made with respect to any such Buyer prior to the
Third Party Retention Date, Sellers shall not be able to terminate unless such Buyer determines
that it will not retain a Third Party Operator; provided, further, that such Buyer
shall be required to make such determination reasonably promptly and in no event later than the
Third Party Retention Date, or (ii) will not issue to any Third Party Operator any Necessary Gaming
Approvals, if applicable;

     (d) by either Buyers or Sellers, if (i) a court of competent jurisdiction or other
Governmental Entity shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action, in each case, having the effect of permanently restraining,
enjoining or otherwise prohibiting the Closing and the transactions contemplated hereby, or (ii) a
Governmental Entity shall have initiated any order to enact, issue, promulgate, enforce or enter or
shall have enacted, issued, promulgated, enforced or entered any order, executive order, stay,
decree, judgment or injunction or statute, rule, regulation which is in effect (whether temporary,
preliminary or permanent) prevents or prohibits the consummation of the transactions contemplated
by this Agreement or makes it illegal for either party hereto to perform its obligations hereunder;
provided, however, that the right to terminate this Agreement under this Section
9.1(d) shall not be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or materially contributed to, such action;

     (e) by Buyers, if any Seller has breached any representation, warranty, covenant or agreement
on the part of such Seller set forth in this Agreement which (i) would result in a failure of a
condition set forth in Sections 8.2(a) or (b) hereof and (ii) is not cured in all material respects
within thirty (30) calendar days after written notice thereof; provided, however,
that if such breach cannot reasonably be cured within such thirty (30) day period but can be
reasonably cured prior to the Outside Date, and such Seller is diligently proceeding to cure such
breach, this Agreement may not be terminated pursuant to this Section 9.1(e); provided,
further, that Buyers’ right to terminate this Agreement under this Section 9.1(e) shall not
be available if, at the time of such intended termination, any Seller has the right to terminate
this Agreement under Sections 9.1(c), (d) or (f) hereof;

     (f) by Sellers, if any Buyer has breached any representation, warranty, covenant or agreement
on the part of such Buyer set forth in this Agreement which (i) would result in a failure of a
condition set forth in Sections 8.3(b) or (c) hereof and (ii) is not cured in all material respects
within thirty (30) calendar days after written notice thereof; provided, however,
that if such breach cannot reasonably be cured within such thirty (30) day period but can be
reasonably cured prior to the Outside Date, and the applicable Buyer is diligently proceeding to
cure such breach, this Agreement may not be terminated pursuant to this Section 9.1(f);
provided, further, that Sellers’ right to terminate this Agreement under this
Section 9.1(f) shall not be available if, at the time of such intended termination, any Buyer has
the right to terminate this Agreement under Sections 9.1(d) or (e) hereof;

     (g) by Buyers, upon a Casualty Termination Event or a Condemnation Termination Event;
provided, however, that the termination right set forth in this Section 9.1(g) is
subject to the terms and conditions set forth in Section 7.14 hereof; and

     (h) by Buyers pursuant to Section 11.2(c).

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     Section 9.2 Effect of Termination.

     (a) Liability. In the event of termination of this Agreement as provided in Section
9.1 hereof, this Agreement shall immediately become void and there shall be no further Liability on
the part of Buyers or Sellers, or their respective Affiliates or Representatives; provided,
however, that notwithstanding the foregoing (i) to the extent that such termination results
from the breach by a party hereto of any of its representations, warranties, covenants or
agreements set forth in this Agreement, no termination of this Agreement pursuant to Section 9.1
hereof shall relieve
any party of liability for a breach of any provision of this Agreement occurring before such
termination, (ii) no termination of this Agreement pursuant to Section 9.1 hereof shall relieve or
limit the Liability of any party to this Agreement for any fraudulent or willful breach of this
Agreement. In the event that this Agreement is terminated, Buyers will redeliver all documents,
work papers and other materials of Sellers relating to the transactions contemplated herein,
whether obtained before or after the execution hereof, in accordance with the terms of the
Confidentiality Agreements, and (iii) Sections 7.5 (relating to confidentiality), 9.2, 9.3 and
Article XII hereof shall remain in full force and effect notwithstanding such termination.

     (b) Fees and Expenses. Except as otherwise expressly provided in this Agreement, all
fees and expenses incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the Closing is
consummated.

     Section 9.3 Application of the Deposit; Liquidated Damages.

     (a) In the event that (i) any Seller terminates this Agreement pursuant to Section 9.1(c) or
(f) hereof, or (ii) any Seller or any Buyer terminates this Agreement pursuant to Section 9.1(b)
and at or prior to such time Buyer or, in the event a Buyer retains a Third Party Operator, such
Third Party Operator, shall not have received all Necessary Gaming Approvals, then, in each case,
the Deposit (and any interest thereon) will be delivered to Sellers by the Escrow Agent unless any
Seller’s failure to fulfill any of its obligations under this Agreement has been a material cause
of the Buyer’s or a Third Party Operator’s, as applicable, failure to obtain any Necessary Gaming
Approval. In all other circumstances of termination of this Agreement, the Deposit (and any
interest thereon) shall be returned to Buyers.

     (b) The parties hereto agree that the provisions contained in Section 9.2 and Section 9.3 are
an integral part of the transactions contemplated by this Agreement, that the damages resulting
from the termination of this Agreement as set forth in Section 9.2 and Section 9.3(a) of this
Agreement are uncertain and incapable of accurate calculation and that the amounts payable pursuant
to Section 9.2 and Section 9.3 hereof are reasonable forecasts of the actual damages which may be
incurred by the parties under such circumstances. The amounts payable pursuant to Section 9.2 and
Section 9.3 hereof constitute liquidated damages and not a penalty and shall be the sole and
exclusive remedy in the event of termination of this Agreement by Sellers. If Buyers fail to pay
to Sellers (including by preventing the timely delivery by the Escrow Agent) any amounts due under
Section 9.3, in accordance with the terms hereof, Buyers shall pay the reasonable costs and
expenses (including legal fees and expenses) of each Seller in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect payment.

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     (c) In the event the foregoing liquidated damages provision is declared void or unenforceable
by a court of competent jurisdiction (and as a result, Sellers do not receive liquidated damages),
then Sellers may elect to pursue any and all remedies available to it at Law or in equity,
including actual damages; provided, however, that neither Sellers nor Buyers may
challenge the validity of this Section 9.3.

ARTICLE X

SURVIVAL; INDEMNIFICATION

     Section 10.1 Survival of Representations, Warranties, Covenants and Agreements.

     (a) Except as set forth in Article IX and Section 10.1(b) hereof, the representations,
warranties, covenants and agreements of each party hereto shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any other party hereto, any
Person controlling any such party or any of their Representatives whether prior to or after the
execution of this Agreement.

     (b) Notwithstanding the foregoing provisions of this Section 10.1, (i) the
representations and warranties made by each Seller and each Buyer in this Agreement shall survive
the Closing until (and claims based upon or arising out of such representations and warranties may
be asserted at any time before) twelve (12) months after the Closing Date, (ii) the representations
and warranties made by each Seller in Sections 5.1, 5.2, 5.8, 5.12, 5.17, the first sentence of
5.14 and 5.26 shall survive the Closing until (and claims based upon or arising out of such
representations and warranties may be asserted at any time before) the date that is six (6) months
after the date on which the applicable statute of limitations for such matters expires, and (iii)
there shall be no limitation on the time within which notice of a claim based on fraud or
intentional misrepresentation on the part of any party hereto may be made.

     (c) The period of time a representation or warranty survives the Closing pursuant to Section
10.1(b) shall be the “Survival Period” with respect to such representation or warranty.
The parties intend for Section 10.1(b)(i) to shorten the otherwise applicable statute of
limitations and agree that, subject to the last sentence of this Section 10.1(c) and Section
10(b)(iii), no claim may be brought based solely upon, directly or indirectly, any of the
representations and warranties contained in this Agreement after the Survival Period with respect
to such representation or warranty. The covenants and agreements of the parties hereto in this
Agreement shall survive the Closing without any contractual limitation on the period of survival
(other than those covenants and agreements that are expressly required to remain in full force and
effect for a specified period of time). The termination of the representations and warranties to
the extent provided herein shall not affect a party in respect of any claim made by such party in
reasonable detail in a writing received by the indemnifying party prior to the expiration of the
Survival Period provided herein.

     Section 10.2 Indemnification.

     (a) From and after the Closing, each Seller shall, in the case of each Seller, severally but
not jointly with such other Seller, indemnify, save and hold harmless Buyers and their

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respective Affiliates and their respective Representatives (each, a “Buyer Indemnified Party” and
collectively, the “Buyer Indemnified Parties”) from and against any and all costs, losses,
Liabilities, obligations, damages, claims, demands and expenses (whether or not arising out of
third party claims), including interest, penalties, reasonable attorneys’ fees and all amounts paid
in investigation, defense or settlement of any of the foregoing (herein, “Damages”),
incurred in connection with, arising out of or resulting from:

          (i) any breach of any representation or warranty made by such Seller in this
Agreement;

          (ii) any breach of any covenant or agreement made, or to be performed, by such Seller
in this Agreement;

          (iii) the Flamingo Excluded Liabilities and the Flamingo Excluded Assets; and

          (iv) the Boardwalk Excluded Liabilities and the Boardwalk Excluded Assets.

     (b) From and after the Closing, each Buyer shall, severally but not jointly with such other
Buyer, indemnify, save and hold harmless each Seller and its Affiliates and their respective
Representatives (each, a “Seller Indemnified Party” and collectively, the “Seller
Indemnified Parties”) from and against any and all Damages incurred in connection with, arising
out of or resulting from:

          (i) any breach of any representation or warranty made by such Buyer in this Agreement;

          (ii) any breach of any covenant or agreement made, or to be performed, by such Buyer
in this Agreement;

          (iii) (A) the Flamingo Assumed Liabilities and (B) the Boardwalk Assumed Liabilities;
and

          (iv) (A) except for the Flamingo Excluded Liabilities and the Boardwalk Excluded
Liabilities, the ownership, use, operation or maintenance of the Flamingo Purchased Assets
solely with respect to periods from and after the Closing or the conduct of the business of
the Casino Property solely with respect to periods from and after the Closing and (B) the
ownership, use, operation or maintenance of the Boardwalk Purchased Assets solely with
respect to periods from and after the Closing or the conduct of the business of the
Traymore Site solely with respect to periods from and after the Closing.

          (v) The parties hereto hereby acknowledge and agree that for purposes of this
Article X in determining whether any representation or warranty of the Sellers in
Article V hereof or Buyers in Article VI hereof have been breached and for
purposes of determining the amount of Damages resulting therefrom, any and all
“Material Adverse 

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Effect,”
“material adverse effect,” “materiality”
and similar exceptions and qualifiers set forth in any such representations and warranties
shall be disregarded.

     Section 10.3 Interpretation. 

     (a) Notwithstanding anything in this Agreement to the contrary, the term Damages shall not
include any consequential, special or incidental damages, claims for lost profits, or punitive or
similar damages.

     (b) Notwithstanding anything to the contrary in this Agreement, neither the Buyer Indemnified
Parties nor the Seller Indemnified Parties shall be entitled to any recovery of Damages pursuant to
Section 10.2(a)(i) or Section 10.2(b)(i), respectively, to the extent that any of the Buyer
Indemnified Parties or the Seller Indemnified Parties, as applicable, received written notice on or
prior to the Closing Date of any Liability that gives rise to the Damages.

     Section 10.4 Procedure for Claims between Parties. If a claim for Damages is to be made by
a Buyer Indemnified Party or Seller Indemnified Party (each, an “Indemnified Party” and
collectively, the “Indemnified Parties”) entitled to indemnification hereunder, such party
shall give written notice briefly describing the claim and the total monetary damages sought (each,
a “Notice”) to the indemnifying party hereunder (the “Indemnifying Party” and
collectively, the “Indemnifying Parties”) as soon as practicable after such Indemnified
Party becomes aware of any fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Article X. Any failure to submit any such notice of claim
to the Indemnifying Party shall not relieve any Indemnifying Party of any Liability hereunder,
except to the extent that the Indemnifying Party was actually prejudiced by such failure.

     Section 10.5 Defense of Third Party Claims. If any lawsuit or enforcement action is filed
against an Indemnified Party by any third party (each, a “Third Party Claim”) for which
indemnification under this Article X may be sought, Notice thereof shall be given to the
Indemnifying Party as promptly as practicable. The failure of any Indemnified Party to give timely
Notice hereunder shall not affect rights to indemnification hereunder, except to the extent that
the Indemnifying Party was actually prejudiced by such failure. The Indemnifying Party shall be
entitled, if it so elects at its own cost, risk and expense, (a) to take control of the defense and
investigation of such Third Party Claim, (b) to employ and engage attorneys of its own choice
(provided that such attorneys are reasonably acceptable to the Indemnified Party) to handle and
defend the same, unless the named parties to such action or proceeding include both one or more
Indemnifying Parties and an Indemnified Party, and the Indemnified Party has been advised in
writing by counsel that there may be one or more legal defenses available to such Indemnified Party
that are different from or additional to those available to an applicable Indemnifying Party, in
which event such Indemnified Party shall be entitled, at the Indemnifying Parties’ reasonable cost,
risk and expense, to separate counsel (provided that such counsel is reasonably acceptable to the
Indemnifying Party), and (c) to compromise or settle such claim, which compromise or settlement
shall be made only (A) with the written consent of the Indemnified Party, such consent not to be
unreasonably withheld and (B) if such compromise or settlement contains an unconditional release of
the Indemnified Party in respect of such claim. If the Indemnifying Party elects to assume the
defense of a Third Party Claim, the Indemnified

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Party shall cooperate in all reasonable respects
with the Indemnifying Party and its attorneys in the investigation, trial and defense of such Third
Party Claim and any appeal arising therefrom; provided, however, that the Indemnified Party may, at
its own cost, participate in the investigation, trial and defense of such lawsuit or action and any
appeal arising therefrom. The parties shall cooperate with each other in any notifications to
insurers. If the Indemnifying Party fails to assume the defense of such claim within fifteen (15)
calendar days after receipt of the Notice, the Indemnified Party against
which such claim has been asserted will have the right to undertake, at the Indemnifying Parties’
reasonable cost, risk and expense, the defense, compromise or settlement of such Third Party Claim
on behalf of and for the account and risk of the Indemnifying Parties; provided, however, that such
claim shall not be compromised or settled without the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. If the Indemnified Party assumes the defense of
the claim, the Indemnified Party will keep the Indemnifying Party reasonably informed of the
progress of any such defense, compromise or settlement.

     Section 10.6 Limitations on Indemnity.

     (a) Other than in respect of a claim for indemnification pursuant to Sections 10.2(a)(iii) or
(iv), in respect of any breach of Sections 5.1, 5.2(a), 5.17 or 7.9 or based on fraud or
intentional misrepresentation on the part of any party hereto, for which, in each of said
instances, except as otherwise expressly set forth in this Article X, there shall be no limitations
on the amount of Damages recoverable through the indemnification provisions hereunder, no Buyer
Indemnified Party shall seek, or be entitled to seek, indemnification from any of the Indemnifying
Parties pursuant to Sections 10.2(a)(i) or (ii) hereof to the extent the aggregate claims for
Damages of the Buyer Indemnified Parties is less than One Million Five Hundred Thousand Dollars
($1,500,000) (the “Threshold”) or exceeds Ten Million Dollars ($10,000,000) (the
“Cap”); provided, that, if the aggregate of all claims for Damages for which
indemnification is sought pursuant to Section 10.2(a)(i) or (ii) hereof equals or exceeds the
Threshold, then Buyer shall be entitled to recover for such Damages subject to the limitations in
this Section 10.6(a) only to the extent such Damages exceed the Threshold, but in any event not to
exceed the Cap.

     (b) Other than in respect of a claim for indemnification pursuant to Sections 10.2(b)(iii) or
(iv); in respect of any breach of Sections 6.1, 6.2(a) or 7.9, or based on fraud or intentional
misrepresentation on the part of any party hereto, for which, in each of said instances, except as
otherwise expressly set forth in this Article X, there shall be no limitations on the amount of
Damages recoverable through the indemnification provisions hereunder, no Seller Indemnified Party
shall seek, or be entitled to, indemnification from any of the Indemnifying Parties pursuant to
Section 10.2(b)(i) or (ii) hereof to the extent the aggregate claims for Damages of the Seller
Indemnified Parties are less than the Threshold, or exceeds the Cap; provided, that, if the
aggregate of all claims for Damages for which indemnification is sought pursuant to Section
10.2(b)(i) or (ii) hereof equals or exceeds the Threshold, then Buyer shall be entitled to recover
for such Damages subject to the limitations in this Section 10.6(b) only to the extent such Damages
exceed the Threshold, but in any event not to exceed the Cap.

     (c) In calculating the amount of any Damages payable to a Buyer Indemnified Party or a Seller
Indemnified Party hereunder, the amount of the Damages (i) shall not be duplicative of any other
Damage for which an indemnification claim has been made, (ii) shall be computed

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net of any amounts
actually recovered by such Indemnified Party under any insurance policy with respect to such
Damages (net of any costs and expenses incurred in obtaining such insurance proceeds) and (iii)
shall be computed net of any Tax benefit obtained or obtainable by the Indemnified Party with
respect to such Damages. If an Indemnifying Party pays an Indemnified Party for a claim and
subsequently insurance proceeds in respect of such claim is collected by the Indemnified Parties,
then the Indemnified Party promptly shall remit the insurance proceeds (net of any costs and
expenses incurred in obtaining such insurance proceeds)
to Indemnifying Party. The Indemnified Parties shall use reasonable best efforts to obtain
from any applicable insurance company any insurance proceeds in respect of any claim for which the
Indemnified Parties seek indemnification under this Article X.

     Section 10.7 Payment of Damages. An Indemnified Party shall be paid in cash by an
Indemnifying Party the amount to which such Indemnified Party may become entitled by reason of the
provisions of this Article X, within fifteen (15) days after such amount is determined either by
mutual agreement of the parties or on the date on which both such amount and an Indemnified Party’s
obligation to pay such amount have been determined by a final, nonappealable judgment of a court or
administrative body having jurisdiction over such proceeding.

     Section 10.8 Exclusive Remedy. Except in the case of fraud or intentional
misrepresentation, in which case the Buyer Indemnified Parties and the Seller Indemnified Parties
reserve any and all rights and remedies available to them, after the Closing, the indemnities
provided in this Article X shall constitute the sole and exclusive remedy of any Indemnified Party
for Damages arising out of, resulting from or incurred in connection with any claims regarding
matters arising under or otherwise relating to this Agreement; provided, however; that this
exclusive remedy for Damages does not preclude a party from bringing an action for specific
performance or other equitable remedy to require a party to perform its obligations under this
Agreement. Without limiting the foregoing and except in the case of fraud or intentional
misrepresentation, in which case the Buyer Indemnified Parties and the Seller Indemnified Parties
reserve any and all rights and remedies available to them, Buyers and each Seller each hereby waive
(and, by their acceptance of the benefits under this Agreement, each Buyer Indemnified Party and
Seller Indemnified Party hereby waives), from and after the Closing, any and all rights, claims and
causes of action such party may have against the other party arising under or based upon this
Agreement or any schedule, exhibit, Disclosure Letter, document or certificate delivered in
connection herewith, and no legal action sounding in tort, statute or strict liability may be
maintained by any party (other than a legal action brought solely to enforce the provisions of this
Article X).

     Section 10.9 Treatment of Indemnification Payments. All indemnification payments made
pursuant to this Article X shall be treated by the parties for income Tax purposes as adjustments
to the Purchase Price, unless otherwise required by applicable Law.

ARTICLE XI

PROPERTY

     Section 11.1 As Is.

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     (a) Buyers or its Representatives shall have fully examined and inspected the Properties prior
to the execution of this Agreement, and subject to the representations and warranties in
Article V and the provisions of this Article XI, Buyers agree to accept the
Properties in an “AS IS” condition as of the Closing. Buyers agree that, except as
provided in Article V hereof, no Buyer is relying upon any representations, statements, or
warranties (oral or written, implied or express) of any officer, employee, agent or Representative
of any Seller, or any salesperson or broker (if any) involved in this transaction as to the
Properties, including, but not limited to: (i) any representation, statements or warranties as to
the physical condition of the Properties, (ii) the fitness and/or suitability of the Properties for
use as a resort, hotel and/or casino; (iii) the financial performance of the Properties; (iv) the
compliance of the Properties with applicable building, zoning, subdivision, environmental, or land
use Laws, codes, ordinances, rules or regulations; (v) the state of repair of the Properties; (vi)
the value of the Properties; (vii) the manner or quality of construction of the Properties; (viii)
the income derived or to be derived from the Properties; or (i) the fact that the Properties may be
located on earthquake faults or in seismic hazardous zones. To the extent not covered by the
representations and warranties made in Article V, each Buyer, for itself and its successors
and assigns, waives any right to assert any claim against Sellers, at Law or in equity, relating to
any such matter, whether latent or patent, disclosed or undisclosed, known or unknown, in contract
or tort, now existing or hereafter arising.

     (b) Except as expressly set forth to the contrary in this Agreement, including, without
limitation Article V hereof, Buyers acknowledge and agree that they are taking the Properties in
“As-Is” condition with respect to any environmental conditions and Buyers shall be
responsible, at the Buyers’ sole cost and expense, to take all necessary and required action in
connection with the Purchased Assets and Assumed Liabilities as they related to such environmental
conditions.

     Section 11.2 Title to Casino Land.

     (a) Title Commitment. At Closing, Flamingo shall provide to Flamingo Buyer a policy
of title insurance with respect to the Casino Property in the form of the Title Commitment annexed
to Section 11.2(a) of the Flamingo Disclosure Letter. Flamingo shall execute any and all owner’s
affidavits as reasonably required by Lawyers Title of Nevada, Inc. (with respect to the Casino
Land) (the “Title Insurer”).

     (b) Defects. Flamingo Buyer agrees to accept title to the Casino Land subject to all
matters shown by the Title Commitment annexed to Section 11.2(a) of the Flamingo Disclosure Letter.
The Title Commitment shall be updated at or shortly before Closing. If the updated Title
Commitment shows defects in title not shown by the Title Commitment annexed to Section 11.2(a) of
the Flamingo Disclosure Letter or, if the Casino Land or Flamingo’s interest therein should become
subject to a Lien or other financial Encumbrance, and Flamingo has received from Flamingo Buyer an
itemized written notice of such defects within ten (10) days after the date of delivery of the
updated Title Commitment to Flamingo Buyer or, if earlier, the Closing Date, Flamingo shall have
thirty (30) days after receipt of such notice (or, if longer, until the Closing Date) to cure any
such defects in title, and the Closing Date shall, if necessary, be extended accordingly. Title
defects will not be deemed to include any matters shown by the Title Commitment annexed to Section
11.2(a) of the Flamingo Disclosure Letter. Failure to notify Flamingo within the specified period
of title defects revealed by the updated Title

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Commitment shall be deemed a waiver of Flamingo
Buyer’s right to disapprove of the status of Flamingo’s title but only with respect to new matters
shown on such updated Title Commitment, and Flamingo Buyer shall then accept such title as is
described in the Title Commitment, as
updated, without reserving any claim against Flamingo for title defects. Flamingo shall be
under no obligation to remove title defects, and any failure or refusal of any Flamingo to do so
shall not be a default of Flamingo hereunder, except that Flamingo shall be obligated to cure
monetary encumbrances in an amount in excess of Fifty Thousand Dollars ($50,000) that are not
disclosed by the Title Commitment annexed to Section 11.2(a) of the Flamingo Disclosure Letter
(other than Taxes and assessments and the encumbrances created or suffered by Buyer) which are
unpaid and liquidated at Closing, not to exceed Two Million Dollars ($2,000,000) in the aggregate
(“Monetary Encumbrances”), if any, which encumber the Properties or Flamingo’s interest
therein as of the Closing in the manner provided below. An encumbrance is liquidated only if it is
fixed either by agreement of the Seller and the party asserting the encumbrance or by operation of
law. In order to cure a Monetary Encumbrance, and if Flamingo desires to attempt to cure any other
title defects, Flamingo shall have the option to extend the Closing Date for a period of thirty
(30) days, by giving written notice of such extension election to Flamingo Buyer at or before the
Closing Date. Cure of Monetary Encumbrances may be effected by either (i) payment and release of
such Monetary Encumbrance of record, or (ii) posting a bond which causes such Monetary Encumbrance
to cease to be a Lien on the applicable Property.

     (c) Failure to Cure Title Defects. If Flamingo fails to cure Monetary Encumbrances
that it is obligated to cure in accordance with Section 11.2(b), such failure shall be a default by
Flamingo subject to the remedies of Article IX. If Flamingo elects not to attempt to cure
or remove any other title defects or if it elects to do so but is not successful in its efforts to
do so on or before the Closing Date, or the end of the extension period, if elected, then this
Agreement shall, at the option of Flamingo Buyer (to be exercised by written notice to Flamingo
given no later than the earlier of: (i) the original or extended Closing Date, as applicable; or
(ii) five (5) days after Flamingo’s notice to Flamingo Buyer of Flamingo’s election not to cure or
attempt to cure such title defects), be terminated, Escrow Agent shall return the Deposit to Buyers
and Buyers and Flamingo shall be released and discharged from any further obligation to each other
hereunder; provided that if Flamingo Buyer so elects, Flamingo Buyer may accept such title as is
tendered by Flamingo without reduction in the Purchase Price, or reservation of claim against
Flamingo; provided, that, in such case, Flamingo shall be obligated to cure Monetary Encumbrances
thereon in accordance with the terms of Section 11.2(b) hereof.

     (d) Survey. Flamingo agrees to deliver to Flamingo Buyer, within ninety (90) days of
the date hereof, a survey of the Casino Land (the “Survey”). If Flamingo Buyer provides
notice to Flamingo that the Survey reveals (i) any material encroachments of the Casino Land onto
property of others; (ii) any material encroachments of property of others on the Casino Land; or
(iii) the location of any title matter on the Casino Land in a manner that would materially and
adversely affect the ability to use the Casino Land as presently used; or any other matter which
would render Flamingo’s title to the Casino Land uninsurable or unmarketable, then such disclosure
shall be a title defect as to which the provisions of Section 11.2(b) and 11.2(c) shall govern
Flamingo Buyer’s and Flamingo’s rights and obligations. Flamingo Buyer may, at Flamingo Buyer’s
sole cost and expense, cause the Survey to be recertified to Flamingo Buyer at or shortly before
Closing.

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     Section 11.3 Title to the Traymore Site Land. Title to the Traymore Site Land shall be conveyed by Boardwalk to Boardwalk Buyer by Bargain and
Sale Deed with Covenant As To Grantor’s Acts, free and clear of all Liens and Encumbrances except
for (a) municipal zoning ordinances and applicable governmental regulations and (b) current taxes
not then due and payable, provided none of the foregoing will materially interfere with the
Boardwalk Buyer’s intended use of the Traymore Site and (c) those tenancies and leases set forth on
Section 5.22 of the Boardwalk Disclosure Letter (which clauses (a), (b) and (c) are collectively
referred to as “Traymore Permitted Encumbrances”).

ARTICLE XII

MISCELLANEOUS

     Section 12.1 Definitions.

     (a) For purposes of this Agreement, the term:

     “Acquired Personal Property” means the Personal Property, excluding the Excluded
Personal Property.

     “Acquisition Proposal” means (i) any proposal or offer from any Person relating to any
direct or indirect acquisition or purchase of the Purchased Assets or any material portion thereof,
(ii) any tender offer or exchange offer, or (iii) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving any Seller and a third
party, in each case, other than the transactions contemplated by this Agreement. The parties agree
and acknowledge that notwithstanding anything in the previous sentence, no transaction or action
relating solely to Excluded Assets, including Other Assets or Other Property, shall be deemed to be
an Acquisition Proposal.

     “Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, such first-mentioned Person. As used herein, “control” means the right to
exercise, directly or indirectly, more than fifty percent (50%) of the voting power of the
stockholders, members or owners and, with respect to any individual, partnership, trust or other
entity or association, the possession, directly to cause the direction of the management or actions
of the controlled entities.

     “Affiliate Customer List” means the output (in either electronic or printed form as
reasonably requested by Flamingo Buyer) of that portion of the Customer Database that includes (a)
the information set forth in Section 4.2(g) of the Flamingo Disclosure Letter, to the extent
available in the Customer Database as of a time no earlier than 48 hours prior to the Closing but
in no event after the Closing, for customers of the Casino Property, who (i) have visited the
Casino Property during the 24 month period prior to the Closing (but not including such data for
the ten day period prior to the Closing) and (ii) have visited any other property owned or operated
by Harrah’s or its Affiliates and (b) the names, addresses and dates of stay for customers at the
hotel located at the Casino Property for the twelve (12) months prior to the Closing Date;
provided, however, that the Affiliate Customer List shall not include any “do
not mail” customers.

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     “Assumed Contracts” means the Contracts related to the Casino Property which exist as
of the Closing Date, which are either (i) set forth on Section 1.1(a)(iii) of the Flamingo
Disclosure Letter, or (ii) not listed on Section 1.1(a)(iii) of the Flamingo Disclosure Letter but
(a) reflected in the income statements of Flamingo prepared through the Closing Date and which are
not otherwise, individually or in the aggregate, material to the Casino Property or (b) entered
into prior to Closing with the approval of Flamingo Buyer or which did not require the approval of
Flamingo Buyer pursuant to Section 7.1(a).

     “Billboard” means the billboard located on the Traymore Site at the corner of Indiana
Avenue and the Atlantic City Boardwalk.

     “Books and Records” means all books and records of Flamingo relating to the Casino
Property including, without limitation, the rent roll, all architectural, structural, service
manuals, engineering and mechanical plans and surveys, electrical, soil, wetlands, environmental
and similar reports, studies, certificates and audits and all plans and specifications for the
Casino Property except to the extent related primarily to the Excluded Liabilities, the Excluded
Assets or otherwise proprietary to Harrah’s or its Affiliates (other than Flamingo) and shall not
be deemed to include the Customer Database.

     “Business day” means any Monday through Friday, inclusive, other than any such days
that financial institutions within the State of New York are authorized or required to close;
provided, however, any reference in this Agreement to any day other than a business
day shall be deed a reference to a calendar day.

     “Buyer Material Adverse Effect” means changes, events or effects that would reasonably
be expected, individually or in the aggregate, to materially impair or delay the ability of Buyers
to consummate the transactions contemplated by this Agreement.

     “Casino Property” means, collectively, the Casino Land, the building structures and
improvements comprising hotel and casino located on the Casino Land, and the Fixtures on the Casino
Land.

     “Casualty Termination Event” means damage to the Casino Property and/or Traymore Site
by fire or other casualty which damages results in a Total Material Adverse Effect.

     “Code” means the Internal Revenue Code of 1986, as amended, or any successor
provisions.

     “Condemnation Termination Event” means, with respect to Flamingo, a taking of a
material part of the Casino Property such that the remaining balance of the Casino Property may not
be feasibly operated (after using commercially reasonable efforts to restore the Casino Property)
as a casino hotel reasonably similar to other casino hotels in the area, and with respect to
Boardwalk, any taking of any material portion of the Traymore Site adjacent to the Atlantic City
boardwalk.

     “Contract” means any agreement, contract, lease, service contract, equipment lease,
sign lease, software license agreement, power of attorney, note, loan, evidence of indebtedness,
purchase order, letter of credit, settlement agreement, franchise agreement, undertaking,

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covenant not to compete, employment agreement, license, instrument, obligation, commitment,
understanding, policy, purchase and sales order, quotation and other executory commitment to which
any Person is a party or to which any of the assets of such Person are subject, whether oral or
written, express or implied.

     “Customer Database” means all customer databases, customer lists, historical records
of customers and any other customer information collected and used by Flamingo or its Affiliates in
connection with marketing and promoting the Casino Property.

     “Detailed Balance Sheet” means the September 30, 2005 balance sheet and related data
of Flamingo as set forth on Section 2.4 of the Flamingo Disclosure Letter.

     “Encumbrances” means Liens, covenants, conditions, restrictions, agreements,
easements, title defects, options, rights of first offer, rights of first refusal, restrictions on
transfer, rights of other parties, limitations on use, limitations on voting rights, or other
encumbrances of any kind or nature.

     “Environmental Condition” means, the Release into the environment of any Hazardous
Substance as a result of which the applicable Seller (i) has or may become liable to any Person for
an Environmental Liability, (ii) is or was in violation of any Environmental Law, (iii) has or may
be required to incur response costs for investigation or remediation, or (iv) by reason of which
any Land or other assets of such Seller, may be subject to any Lien under Environmental Laws;
provided, however, that none of the foregoing shall be an Environmental Condition
if such matter was fully remediated or otherwise corrected prior to the date hereof in accordance
with Environmental Law.

     “Environmental Laws” means all applicable and legally enforceable foreign, federal,
state and local statutes or laws, judgments, orders, regulations, licenses, permits, rules and
ordinances relating to pollution or protection of health or the environment, including, but not
limited to the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), Resource
Conservation and Recovery Act (42 U.S.C. §6901 et seq.), Safe Drinking Water Act (42 U.S.C.
§3000(f) et seq.), Toxic Substances Control Act (15 U.S.C. §2601 et seq.), Clean
Air Act (42 U.S.C. §7401 et seq.), Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. §9601 et seq.) and other similar state and local statutes, in
effect as of the date hereof.

     “Environmental Liabilities” means all Liabilities (including, without limitation, all
reasonable fees, disbursements and expenses of counsel, expert and consulting fees and costs of
investigations and feasibility studies and responding to government requests for information or
documents, clean-up fees), fines, penalties, restitution and monetary sanctions, interest, direct
or indirect, known or unknown, absolute or contingent, past, present or future, resulting from any
claim or demand, by any Person or entity, under any Environmental Law, or arising from
Environmental Conditions relating to the Property.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Excluded Contracts” means all Contracts which are not primarily used in or relate to
the Casino Property or are listed on Section 1.2(a)(ii) of the Flamingo Disclosure Letter, which
list

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shall include, without limitation, those Contracts used primarily in the Business and entered
into by any Affiliate of Flamingo.

     “Excluded Intellectual Property” means all Intellectual Property which is not set
forth on Section 5.5 of the Flamingo Disclosure Letter.

     “Excluded Personal Property” means the following:

             (i) any and all signs, menus, stationery, gift shop inventory or other items containing any
Excluded Intellectual Property or indicating that the Casino Property is owned and/or operated by
or on behalf of “Flamingo” or identifying the Casino Property as the “Flamingo” or
bearing the System Mark “Caesars,” “Harrah’s” or any other System Mark of
Flamingo’s Affiliates, except for those items that Flamingo Buyer and Flamingo agree may be
modified by Buyer to remove such System Marks or identification;

             (ii) all records, files and memorabilia pertaining to Flamingo or Harrah’s and any past or
present corporate Affiliates or predecessors of Flamingo or Harrah’s (including Caesars
Entertainment, Inc.); and

             (iii) any personal property of any third party (including, without limitation, any Affiliate
of Flamingo) located at the Casino Property that is not the subject of an Assumed Contract.

     “Excluded Software” means all computer software owned by or licensed for use by
Flamingo or its Affiliates and all source code, user codes and data, whether on tape, disc or other
computerized format, and all related user manuals, computer records, service codes, programs,
stored materials and databases (including, without limitation, all access codes and instructions
needed to obtain access to and to utilize the information contained on such computer records),
together with any and all updates and modifications of all of the foregoing and all copyrights
related to the computer software, including, without limitation, the Customer Database and any
customer tracking system.

     “Fixtures” means, as it relates to each Seller, all fixtures owned by Seller and
placed on, attached to, or located at and used in connection with the operation of the Property.

     “Flamingo Customer List” means the output (in either electronic or printed form as
reasonably requested by Flamingo Buyer) of that portion of the Customer Database that includes the
information set forth in Section 4.2(g) of the Flamingo Disclosure Letter, to the extent available
in the Customer Database as of a time no earlier than 48 hours prior to the Closing but in no event
after the Closing, for customers of the Casino Property, who (i) have visited the Casino Property
during the 24 month period prior to the Closing (but not including such data for the ten day period
prior to the Closing) and (ii) have not visited any other property owned or operated by Harrah’s or
its Affiliates; provided, however, that the Flamingo Customer List shall not
include any “do not mail” customers.

     “Flamingo Databases” means a list, in electronic form (where available), of the
following databases maintained by Flamingo: Keno Players, Race and Sports Players, W2-G Winners,
Entertainment Tickets, Catering Contacts, Wedding Guests, Alta Villa Promotion, Tour and

64

 

Travel, Ride to Riches Groups, Turnaround Bus Operators, Convention/Company Meetings,
Wholesalers, Prospects-Meetings/Conventions, Prospects-Wholesalers, Prospects-Tour & Travel,
Prospects-Rides to Riches and Website Guestbook.

     “Front Money” means all money stored on deposit at the Casino Property cage belonging
to, and stored in an account for, any Person.

     “Gaming Approvals” means all licenses, permits, approvals, authorizations,
registrations, findings of suitability, franchises, entitlements, waivers and exemptions issued by
any Gaming Authority necessary for or relating to the conduct of activities by any party hereto or
any of its Affiliates, including, without limitation, the ownership, operation, management and
development of the Purchased Assets.

     “Gaming Authorities” means those federal, state, local and other governmental,
regulatory and administrative authority, agency, board and officials responsible for, or involved
in, the regulation of gaming or gaming activities or the sale of liquor in any jurisdiction,
including, without limitation, within the State of Nevada and State of New Jersey, specifically,
the Nevada Gaming Commission, the Nevada State Gaming Control Board, the New Jersey Casino Control
Commission, the New Jersey Division of Gaming Enforcement, and all other state and local regulatory
and licensing bodies with authority over gaming in the State of Nevada and State of New Jersey and
their political subdivisions.

     “Gaming Laws” mean all laws pursuant to which any Gaming Authority possesses
regulatory, licensing or permit authority over gaming within (i) the State of Nevada, including,
without limitation, the Nevada Gaming Control Act, as codified in Chapter 463 of the NRS, as
amended from time to time, and the regulations of the Nevada Gaming Commission promulgated
thereunder, as amended from time to time, and (ii) the State of New Jersey, including, without
limitation, the New Jersey Casino Control Act, as amended from time to time.

     “Harrah’s” means Harrah’s Operating Company, Inc., a Delaware corporation.

     “Hazardous Substance” means any pollutant, chemical, substance and any toxic,
infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, chemical compound,
or hazardous substance, material or waste, whether solid, liquid or gas, that is subject to
regulation, control or remediation under applicable Environmental Laws, including without
limitation, any quantity of friable asbestos, urea formaldehyde foam insulation, PCBs, crude oil or
any fraction thereof, all forms of natural gas, petroleum products or by-products or derivatives.

     “Intellectual Property” means all intellectual property or other proprietary rights of
every kind, foreign or domestic, including all patents, patent applications, inventions (whether or
not patentable), processes, products, technologies, discoveries, copyrightable and copyrighted
works, apparatus, trade secrets, trademarks, trademark registrations and applications, domain
names, service marks, service mark registrations and applications, trade names, trade secrets,
know-how, trade dress, copyright registrations, customer lists, confidential marketing and customer
information, licenses, confidential technical information, and all documentation thereof, and the
goodwill symbolized thereby.

65

 

     “IRS” means the Internal Revenue Service, a division of the United States Treasury
Department, or any successor thereto.

     “Knowledge” means (a) when used in the phrase “knowledge of the Seller” or
“the Seller’s knowledge” and words of similar import, the actual knowledge of (i) Darryl
Dauenhauer and Ken Kitko, with respect to Flamingo, and (ii) Anthony F. Santo and N. Lynne Hughes,
with respect to Boardwalk, and (b) when used in the phrase “knowledge of Buyer” or
“Buyer’s knowledge” and words of similar import, the actual knowledge of: Richard Brown and
Denise Barton.

     “Law” means any foreign or domestic law, statute, code, ordinance, rule, regulation,
order, judgment, writ, stipulation, award, injunction, decree or arbitration award, policies,
guidance, court decision, rule of common law or finding, including, without limitation, the Gaming
Laws.

     “Leases” means, as it relates to each Seller, leases, subleases, occupancy and
concession agreements affecting such Seller’s Property.

     “Legal Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or informal)
commenced, brought, conducted, or heard by or before or otherwise involving any Governmental Entity
or arbitrator.

     “Liabilities” mean any direct or indirect liability, indebtedness, obligation,
commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type,
whether accrued, absolute, contingent, matured, unmatured, liquidated, unliquidated, known or
unknown.

     “Liens” means any mortgage, pledge, lien, security interest, conditional or
installment sale agreement, option, right of first refusal, restriction, exaction, imposition,
charge or other claims of third parties of any kind or nature.

     “Material Assumed Contracts” means, as it relates to each Seller, all Assumed
Contracts that either (i) have a remaining obligation for payment or services in excess of One
Hundred Thousand Dollars ($100,000) or (ii) are not cancelable by such Seller upon thirty (30) days
notice.

     “NRS” means Nevada Revised Statutes, as amended through the date hereof.

     “Ordinary Course of Business” shall describe any action taken by a Person if such
action is consistent with such Person’s past practices and is taken in the ordinary course of such
Person’s normal day to day operations.

     “Outside Date” means the Initial Outside Date; provided, however, that such date shall
be extended by the number of days that the Initial Outside Date has been extended pursuant to
Section 4.1(a) or 11.2(b) hereof, or if the Buyers retain a Third Party Operator in accordance with
the terms of Section 7.6(a) hereof, Section 4.1(b) hereof.

     “Passenger/Delivery Vehicles” means those certain passenger or delivery vehicles and
recreational vehicles identified in Section 12.1(c) of the Flamingo Disclosure Letter.

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     “Permitted Encumbrances” means, as it relates to each Seller:

          (i) Liens or Encumbrances for mechanics’ and materialmen’s Liens or Encumbrances not filed of
record and charges assessments and other governmental charges not delinquent or which are currently
being contested in good faith by appropriate proceedings and for which Seller shall have provided
bond or other security reasonably satisfactory to the Buyer;

          (ii) Liens or Encumbrances for Taxes not yet due and payable;

          (iii) special Taxes and assessments payable or becoming a Lien after the Closing Date;

          (iv) Liens and Encumbrances created or approved by Buyer;

          (v) easements, leases, reservations or other rights of others in, or minor defects and
irregularities in title to, property or assets of Seller; provided that such easements, leases,
reservations, other rights of others in or defects or irregularities do not materially impair the
use of such property or assets for the purposes for which they are held; further provided that such
easements, leases, reservations, other rights of other in or defects or irregularities are not of
such a nature that the Property is not financeable under customary terms and conditions; further
provided that all such easements, leases, reservations or other rights of others in or minor
defects and irregularities in title as to the Casino Land and Fixtures are shown as exceptions on
the Title Commitment annexed to Section 11.2(a) of the Flamingo Disclosure Letter and/or the Survey
(subject to Section 11.2(d) hereof); and further provided that, in the case of the Traymore Site,
such easements, leases, reservations, other rights of others in or defects or irregularities would
not reasonably be expected to prevent the development of the Traymore Site as a casino hotel within
twelve (12) months following the Closing Date;

     (vi) zoning and subdivision ordinances;

     (vii) terms and conditions of licenses, permits and approvals for the Casino Land and Laws of
any Governmental Entity having jurisdiction over the Property;

     (viii) Assumed Contracts for any areas of the Casino Land or the Traymore Site Property;

     (ix) any Liens or Encumbrances or privilege vested in any other lessor, or any licensor or
permitter for rent or other obligations of Seller relative to any Assumed Contracts so long as the
payment of such rent or the performance of such obligations is not delinquent;

     (x) rights of tenants under operating leases whose occupancy may be terminated on thirty (30)
days or less notice and rights of guests in possession or holding reservations for future use or
occupancy of the applicable Property, in each case to the extent disclosed in writing to Buyers
prior to the date hereof;

     (xi) any Liens or Encumbrances identified in the Title Commitment annexed to Section 11.2(a)
of the Flamingo Disclosure Letter or (subject to Section 11.2(d) hereof) the Survey;

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     (xii) any Assumed Liability; or

     (xiii) such other matters as would not reasonably be expected to materially impair,
individually or in the aggregate, the Purchased Assets.

     “Person” means an individual, corporation, limited liability company, partnership,
association, trust, unincorporated organization, other entity or “group” (as defined in
Rule 13d-5(b)(1) under the Exchange Act).

     “Personal Property” means all office, hotel, casino, showroom, restaurant, bar,
convention, meeting and other furniture, furnishings, appliances, equipment, equipment manuals,
slot machines, gaming tables and gaming paraphernalia (including parts or inventories thereof),
subject to Section 7.11(b) hereof, gaming chips and tokens, including, without limitation, (i) slot
machine tokens not currently in circulation, and (ii) reserve chips, if any, not currently in
circulation, Passenger/Delivery Vehicles, computer hardware, point of sale equipment, telephone
numbers, two-way security radios and base station, maintenance equipment, tools, signs and signage,
office supplies, cleaning supplies in unopened cases or bulk containers or packages, linens
(sheets, towels, blankets, napkins), uniforms, silverware, glassware, chinaware, pots, pans and
utensils, and food, beverage and alcoholic beverage inventories owned by Flamingo and located at
the Casino Property or used in Ordinary Course of Business thereon on the Closing Date.

     “Pre-Closing Employee Liabilities” means (i) with respect to the Retained Employees,
all Liabilities arising out of or relating primarily to any and all severance obligations or other
Liabilities relating to the termination of Retained Employees, (ii) with respect to Property
Employees, any and all accrued and unpaid salary, bonuses and commissions (but excluding
vacation/sick pay) payable to any such Property Employee for any period prior to the Closing Date
and (iii) with respect to the matters set forth on Section 7.1(1) and 7.1(2) of the Flamingo
Disclosure Letter, all wages required to be paid as of the Closing and which are accrued and unpaid
as of the Closing.

     “Pre-Closing Tax Liabilities” means, as it relates to both Flamingo and Boardwalk, any
Liability related primarily to (i) income Taxes of Flamingo or Boardwalk, respectively, and (ii)
except as provided for in Sections 3.1 and 7.9, all Liabilities for Taxes including, without
limitation, any Taxes due pursuant to subsequent deficiency determinations made under NRS Chapter
463, arising from and attributable to the ownership of the Purchased Assets prior to the Closing
Date; provided, however, that all Taxes that are included in the calculation of the
Final Working Capital Adjustment shall not constitute Pre-Closing Tax Liabilities.

     “Property” means one of the following, as applicable: the Casino Property and the
Traymore Site.

     “Release” means any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing of a Hazardous Substance into the environment, whether
intentional or unintentional.

     “Securities Act” means the Securities Act of 1933, as amended.

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     “Seller Material Adverse Effect” means, as it relates to each Seller, changes, events
or effects that are materially adverse to the business, financial condition or results of
operations of the Purchased Assets; provided that the following, individually and in the
aggregate, shall be excluded from the definition of Seller Material Adverse Effect and from any
determination as to whether a Seller Material Adverse Effect has occurred: (i) any change, event
or effects arising out of or resulting from changes in or affecting the (w) travel, hospitality or
gaming industries generally, to the extent the applicable Purchased Assets are not
disproportionately affected thereby (x) travel, hospitality or gaming industries in the markets or
jurisdictions where the applicable Property is located to the extent the applicable Purchased
Assets are not disproportionately affected thereby or (y) the financial, banking, currency or
capital markets in general to the extent the applicable Purchased Assets are not disproportionately
affected thereby, (ii) any change, event or effect resulting from the entering into or public
announcement of the transactions contemplated by this Agreement, and (iii) any change, event or
effect resulting from any act of terrorism, commencement or escalation of armed hostilities in the
U.S. or internationally, or declaration of war by the U.S. Congress to the extent the applicable
Purchased Assets are not disproportionately affected thereby, and (iv) the applicable Property’s
prospects or the failure of such Property to meet any financial or other projections.

     “Subsidiary” means, with respect to any party, any corporation or other organization,
whether incorporated or unincorporated, of which (i) such party or any other Subsidiary of such
party is a general partner or managing member or (ii) at least 50% of the securities or other
equity interests having by their terms voting power to elect a majority of the board of directors
or others performing similar functions with respect to such corporation or other organization that
is, directly or indirectly, owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.

     “System Mark” means service marks, trademarks, trade names, fictitious firm names,
color arrangements, designs, logos and other similar designations of source or origin and general
intangibles of like nature, together with the goodwill symbolized thereby, now or hereafter held or
applied for in connection therewith.

     “Taxes” means any and all taxes, charges, fees, levies, tariffs, duties, liabilities,
impositions or other assessments of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by any Tax authority
or other Governmental Entity, including, without limitation, income, gross receipts, profits,
gaming, excise, real or personal property, environmental, sales, use, value-added, ad valorem,
withholding, social security, retirement, employment, unemployment, workers’ compensation,
occupation, service, license, net worth, capital stock, payroll, franchise, gains, stamp, transfer
and recording taxes, and shall include any Liability for the Taxes of any other Person under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Law), or
as a transferee or successor, by contract, or otherwise.

     “Tax Return” means any report, return (including any information return), claim for
refund, election, estimated Tax filing or payment, request for extension, document, declaration or
other information or filing required to be supplied to any Governmental Entity with respect to
Taxes, including attachments thereto and amendments thereof.

69

 

     “Title Commitment” means that certain Title Insurance Commitment which is annexed to
Section 11.2(a) of the Flamingo Disclosure Letter.

     “Total Material Adverse Effect” means, as applied to the Sellers in the aggregate,
changes, events or effects that are materially adverse to the business, financial condition or
results of operations of the Purchased Assets; provided that the following, individually
and in the aggregate, shall be excluded from the definition of Total Material Adverse Effect and
from any determination as to whether a Total Material Adverse Effect has occurred: (i) any change,
event or effects arising out of or resulting from changes in or affecting the (w) travel,
hospitality or gaming industries generally, to the extent the applicable Purchased Assets are not
disproportionately affected thereby (x) travel, hospitality or gaming industries in the markets or
jurisdictions where the applicable Property is located to the extent the applicable Purchased
Assets are not disproportionately affected thereby or (y) the financial, banking, currency or
capital markets in general to the extent the applicable Purchased Assets are not disproportionately
affected thereby, (ii) any change, event or effect resulting from the entering into or public
announcement of the transactions contemplated by this Agreement, and (iii) any change, event or
effect resulting from any act of terrorism, commencement or escalation of armed hostilities in the
U.S. or internationally, or declaration of war by the U.S. Congress to the extent the applicable
Purchased Assets are not disproportionately affected thereby, and (iv) the applicable Property’s
prospects or the failure of such Property to meet any financial or other projections.

     “Total Rewards” means the player loyalty program of Harrah’s, including the Connection
Card program.

     “Transfer Time” means 11:59:59 p.m., New York City time, on the day prior to the
Closing Date.

     “Transferred Data” means all data, files and other materials that the parties
reasonably agree are required for Flamingo Buyer to operate the Casino Property; provided, however,
that such data, files and materials shall not include that which, in Flamingo’s sole discretion, is
deemed to be proprietary information, sensitive or confidential customer information, or
competitively sensitive information.

     “Transferred Employee Records” means records of Flamingo that relate to Transferred
Employees, but only to the extent that such records may be transferred under applicable Law.

     “Transferred Intellectual Property” means all Intellectual Property used exclusively
in the operation of the Casino Property and set forth on Section 5.5 of the Flamingo Disclosure
Letter, other than the Excluded Intellectual Property.

     “Traymore Contracts” means the Contracts (including all amendments, modifications and
supplements thereto) related to the ownership, maintenance and operation of the Traymore Site,
which are either (i) set forth on Section 1.1(b)(iii) of the Boardwalk Disclosure Letter, or (ii)
not listed on Section 1.1(b)(iii) of the Boardwalk Disclosure Letter but entered into prior to
Closing with the approval of Boardwalk Buyer or which did not require the approval of Boardwalk
Buyer pursuant to Section 7.1(b) or (c).

70

 

     “Traymore Site” means, collectively, the Traymore Site Land, the Traymore Site
Improvements, and the Fixtures at the Traymore Site Land.

     “WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988 and
analogous state and local Law.

     “Working Capital” means the calculation, in accordance with the methodology set forth
on the Detailed Balance Sheet, of the current assets of Flamingo (other than Excluded Assets) minus
the current liabilities of Flamingo (other than Excluded Liabilities), excluding all real and
personal property Taxes subject to proration pursuant to Article III hereof.

     “Working Capital Adjustment” means the amount (which may be a positive or negative
number) that equals Closing Date Working Capital.

     (b) The following are defined elsewhere in this Agreement, as indicated below:

	 	 	 
	 	 	Cross Reference in
	Terms	 	Agreement
	Actual Traymore Adjustment

	 	Section 2.6(a)
	Agreement

	 	Preamble
	Assumed Liabilities

	 	Section 1.3(b)
	Auditor

	 	Section 2.3
	Boardwalk

	 	Preamble
	Boardwalk Assumed Liabilities

	 	Section 1.3(b)
	Boardwalk Determination Date

	 	Section 2.6(b)
	Boardwalk Excluded Assets

	 	Section 1.2(b)
	Boardwalk Excluded Environmental Liabilities

	 	Section 1.4(b)
	Boardwalk Excluded Liabilities

	 	Section 1.4(b)
	Boardwalk Purchase Price Allocation

	 	Section 2.3(b)
	Boardwalk Purchased Assets

	 	Section 1.1(b)
	Broker

	 	Section 5.12
	Buyer

	 	Preamble
	Buyer 401(k) Plan

	 	Section 7.4(g)
	Buyer Benefit Plans

	 	Section 6.9(a)
	Buyer Disclosure Letter

	 	ARTICLE VI
	Buyer Indemnified Parties

	 	Section 10.2(a)
	Buyer Permits

	 	Section 6.6(a)
	Cap

	 	Section 10.6(a)
	Casino Land

	 	Section 5.4(a)
	Closing

	 	Section 4.1
	Closing Date

	 	Section 4.1
	Closing Date Working Capital

	 	Section 2.5(a)
	Condemnation Amount

	 	Section 7.14(c)
	Confidentiality Agreements

	 	Section 7.5(a)
	CS3

	 	Section 7.8(c)
	CS3 Assets

	 	Section 7.8(c)
	CS3 Liabilities

	 	Section 7.8(c)

71

 

	 	 	 
	 	 	Cross Reference in
	Terms	 	Agreement
	Damages

	 	Section 10.2(a)
	Deposit

	 	Section 2.2(a)
	Deposit Escrow Agreement

	 	Section 2.2(a)
	ERISA

	 	Section 5.11(a)
	Escrow Agent

	 	Section 2.2(a)
	Estimated Closing Statement

	 	Section 2.4(b)
	Excluded Assets

	 	Section 1.2(b)
	Excluded Liabilities

	 	Section 1.4(b)
	Excluded Software License

	 	Section 7.15
	Fifth Extended Outside Date

	 	Section 4.1
	Final Traymore Adjustment

	 	Section 2.6(c)
	Final Working Capital Adjustment

	 	Section 2.5(c)
	Financial Information

	 	Section 5.3
	First Extended Outside Date

	 	Section 4.1
	Flamingo

	 	Preamble
	Flamingo Assumed Liabilities

	 	Section 1.3(a)
	Flamingo Benefit Plans

	 	Section 5.11(a)
	Flamingo Determination Date

	 	Section 2.5(b)
	Flamingo Disclosure Letter

	 	Article V
	Flamingo Excluded Assets

	 	Section 1.2(a)
	Flamingo Excluded Liabilities

	 	Section 1.4(a)
	Flamingo Purchase Price Allocation

	 	Section 2.3(a)
	Flamingo Purchased Assets

	 	Section 1.1(a)
	Fourth Extended Outside Date

	 	Section 4.1
	Governmental Approvals

	 	Section 7.6(a)
	Governmental Entity

	 	Section 5.2(c)
	HSR Act

	 	Section 5.2(c)
	Indemnified Party

	 	Section 10.4
	Indemnifying Party

	 	Section 10.4
	Initial Outside Date

	 	Section 4.1
	Initial Traymore Adjustment

	 	Section 2.4(b)
	Initial Working Capital Adjustment

	 	Section 2.4
	Inspection

	 	Section 7.5(a)
	Monetary Encumbrances

	 	Section 11.2(b)
	Necessary Gaming Approval

	 	Section 9.1(c)
	Non-Assignable Asset

	 	Section 1.6(a)
	Notice

	 	Section 10.4
	Other Assets

	 	Section 1.7
	Other Property

	 	Section 1.7
	Post-Closing Confidential Information

	 	Section 7.5(d)
	Pre-Closing Working Capital

	 	Section 2.4
	Pre-Closing Working Capital Statement

	 	Section 2.4
	Property Employees

	 	Section 5.11(a)
	Purchase Price

	 	Section 2.1

72

 

	 	 	 
	 	 	Cross Reference in
	Terms	 	Agreement
	Purchased Assets

	 	Section 1.1(b)
	Representatives

	 	Section 7.3
	Retained Employees

	 	Section 7.4(a)
	Second Extended Outside Date

	 	Section 4.1
	Seller

	 	Preamble
	Seller 401(k) Plan

	 	Section 7.4(g)
	Seller Indemnified Parties

	 	Section 10.2(b)
	Seller Permits

	 	Section 5.9
	Substituted Multiemployer Pension Plan

	 	Section 7.4(h)
	Survey

	 	Section 11.2(d)
	Survival Period

	 	Section 10.1(c)
	Third Extended Outside Date

	 	Section 4.1
	Third Party Claim

	 	Section 10.5
	Third Party Operator

	 	Section 7.6(a)
	Threshold

	 	Section 10.6(a)
	Transferred Employees

	 	Section 7.4(a)
	Transfers

	 	Section 7.1(a)(i)
	Traymore Leases

	 	Section 5.22
	Traymore Licenses

	 	Section 1.1(b)(iv)
	Traymore Permitted Encumbrances

	 	Section 11.3
	Traymore Plans

	 	Section 1.1(b)(iv)
	Traymore Contracts

	 	Section 1.1(b)(iii)
	Traymore Site Improvements

	 	Section 1.1(b)(ii)
	Traymore Site Land

	 	Section 1.1(b)(i)
	Traymore Warranties

	 	Section 1.1(b)(iv)
	Working Capital Statement

	 	Section 2.5(a)

     Section 12.2 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury.

     (a) This Agreement and the transactions contemplated hereby, and all disputes between the
parties under or related to the Agreement or the facts and circumstances leading to its execution,
whether in contract, tort or otherwise, shall be governed by and construed in accordance with the
Laws of the State of Delaware, applicable to contracts executed in and to be performed entirely
within the State of Delaware, without regard to the conflicts of laws principles thereof.

     (b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the
United States of America, sitting in Delaware, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the agreements delivered in
connection herewith or the transactions contemplated hereby or thereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby irrevocably and
unconditionally (i) agrees not to commence any such action or proceeding except in such courts,
(ii) agrees that any claim in respect of any such action or proceeding may be heard and

73

 

determined in such Delaware State court or, to the extent permitted by Law, in such Federal
court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any such action or proceeding in any
such Delaware State or Federal court, (iv) waives, to the fullest extent permitted by Law, the
defense of an inconvenient forum to the maintenance of such action or proceeding in any such
Delaware State or Federal court, and (v) to the extent such party is not otherwise subject to
service of process in the State of Delaware, as to Harrah’s and Sellers, appoints Corporation
Service Company as such party’s agent in the State of Delaware and as to Buyers, appoints CT
Corporation System as such party’s agent in the State of Delaware, for acceptance of legal process
and agrees that service made on any such agent shall have the same legal force and effect as if
served upon such party personally within such state. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law. Each party to this
Agreement irrevocably consents to service of process in the manner provided for notices in Section
12.3 hereof. Nothing in this Agreement will affect the right of any party to this Agreement to
serve process in any other manner permitted by Law.

     (c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 12.2(c).

     Section 12.3 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally, telecopied (which is confirmed) or mailed by
registered or certified mail (return receipt requested) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):

	 	 	 	 	 
	 

	(a)	 	 	if to Buyers, to
	 
	 	 	 	 
	 

	 	 	 	Sands Casino Hotel
	 

	 	 	 	Indiana Avenue & Brighton Park
	 

	 	 	 	Atlantic City, NJ 08401
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	Fax: (609) 441-4937

74

 

	 	 	 	 	 
	 

	 	 	 	with copies to:
	 
	 	 	 	 
	 

	 	 	 	Stratosphere
	 

	 	 	 	2000 Las Vegas Boulevard South
	 

	 	 	 	Las Vegas, NV 89104
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	Fax: (702) 383-4733
	 
	 	 	 	 
	 

	 	 	 	Martin Hirsch
	 

	 	 	 	767 Fifth Avenue, 47th Fl.
	 

	 	 	 	New York, NY 10153
	 

	 	 	 	Fax: (212) 750-5841
	 
	 	 	 	 
	 

	 	 	 	Marc Weitzen, Esq.
	 

	 	 	 	767 Fifth Avenue, 47th Fl.
	 

	 	 	 	New York, NY 10153
	 

	 	 	 	Fax: (212) 750-5841
	 
	 	 	 	 
	 

	 	 	 	Sills Cummis Epstein & Gross, P.C.
	 

	 	 	 	One Riverfront Plaza
	 

	 	 	 	Newark, New Jersey 07102-5400
	 

	 	 	 	Attention: Noah Bronkesh, Esq.
	 

	 	 	 	Fax: (973) 643-6500
	 
	 	 	 	 
	 

	 	 	 	Kummer Kaempfer Bonner & Renshaw
	 

	 	 	 	3800 Howard Hughes Parkway, Seventh Floor
	 

	 	 	 	Las Vegas, NV 89109
	 

	 	 	 	Attention: Gregg Vermeys
	 

	 	 	 	Fax: (702) 796-7181
	 
	 	 	 	 
	 

	 	(b)
	 	if to Flamingo, to
	 
	 	 	 	 
	 

	 	 	 	Flamingo-Laughlin, Inc.
	 

	 	 	 	c/o Harrah’s Operating Company, Inc.
	 

	 	 	 	One Harrah’s Court
	 

	 	 	 	Las Vegas, Nevada 89119
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	Fax: (702) 407-6418
	 

	 	 	 	Attn: Anthony F. Santo
	 

	 	 	 	Fax: (702) 494-4869
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Skadden, Arps, Slate, Meagher & Flom LLP
	 

	 	 	 	Four Times Square
	 

	 	 	 	New York, NY 10036
	 

	 	 	 	Attn: Martha E. McGarry

75

 

	 	 	 	 	 
	 

	 	(c)
	 	if to Boardwalk, to:
	 
	 	 	 	 
	 

	 	 	 	Boardwalk Regency Corporation
	 

	 	 	 	Martial Development Corporation
	 

	 	 	 	c/o Caesars Atlantic City
	 

	 	 	 	2100 Pacific Avenue
	 

	 	 	 	Atlantic City, New Jersey 08401
	 

	 	 	 	Attn: N. Lynne Hughes
	 

	 	 	 	Fax: (609) 340-2410
	 
	 	 	 	 
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	Fax: (702) 407-6418
	 
	 	 	 	 
	 

	 	 	 	with copies to:
	 
	 	 	 	 
	 

	 	 	 	Sandson & DeLucry, LLC
	 

	 	 	 	17 Gordon’s Alley
	 

	 	 	 	Atlantic City, New Jersey 08401
	 

	 	 	 	Attn: Richard F. DeLucry, Esq.
	 

	 	 	 	Fax: (609) 344-0204
	 
	 	 	 	 
	 

	 	 	 	Skadden, Arps, Slate, Meagher & Flom LLP
	 

	 	 	 	Four Times Square
	 

	 	 	 	New York, NY 10036
	 

	 	 	 	Attn: Martha E. McGarry
	 

	 	 	 	Fax: (212) 735-2000

     Section 12.4 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section or Exhibit or Schedule of this
Agreement unless otherwise indicated. All Exhibits and Schedules of this Agreement, including
without limitation, the Flamingo Disclosure Letter, the Boardwalk Disclosure Letter and the Buyer
Disclosure Letter are incorporated herein by reference. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement they shall be deemed to be
followed by the words “without limitation.” The phrase “made available” in this
Agreement shall mean that the information referred to has been made available if requested by the
party to whom such information is to be made available. Each of Harrah’s, Buyers and Sellers will
be referred to herein individually as a “party” and collectively as “parties”
(except where the context otherwise requires).

     Section 12.5 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.

     Section 12.6 Entire Agreement; No Third Party Beneficiaries. This Agreement and all
documents and instruments referred to herein constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties with respect to the
subject matter hereof; provided, that the Confidentiality Agreements shall remain in full
force

76

 

and effect after the Closing or upon termination of this Agreement. Each party hereto agrees
that, except for the representations and warranties contained in this Agreement and the respective
Disclosure Letters, none of Harrah’s, Sellers or Buyers makes any other representations or
warranties, and each hereby disclaims any other representations and warranties made by itself or
any of its respective Representatives or other representatives, with respect to the execution and
delivery of this Agreement or the transactions contemplated hereby, notwithstanding the delivery or
disclosure to any of them or their respective representatives of any documentation or other
information with respect to any one or more of the foregoing.

     Section 12.7 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as closely as possible
in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.

     Section 12.8 Assignment. With the exception of an assignment by each Buyer to one of its
respective Affiliates, written notice of which shall be given to Sellers, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by operation of Law
(including, without limitation, by merger or consolidation) or otherwise without the prior written
consent of the other party, provided, however, that any assignment by any Buyer to one of its
respective Affiliates shall not be valid under this Agreement unless such Affiliate assumes all of
such Buyer’s agreements and obligations hereunder and provided, that (a) no such assignment
shall relieve such Buyer from any of its agreements and obligations hereunder, and (b) no such
assignment in any way (i) shall adversely effect the ability to receive, or delay the receipt of,
the Gaming Approvals or antitrust approvals contemplated by this Agreement or (ii) shall adversely
affect or delay the Closing of the transactions contemplated by this Agreement. Any assignment in
violation of this Section 12.8 shall be void.

     Section 12.9 Parties of Interest. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their respective successors and assigns, and nothing in this
Agreement, express or implied is
intended to or shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

     Section 12.10 Counterparts. This Agreement may be executed by facsimile and/or in one or
more counterparts, and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall constitute one and
the same agreement.

     Section 12.11 Mutual Drafting. Each party hereto has participated in the drafting of this
Agreement, which each party acknowledges is the result of extensive negotiations between the
parties. In the event of any ambiguity or question of intent arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of proof shall arise

77

 

favoring or disfavoring any party by virtue of the authorship of any of the provisions of this
Agreement.

     Section 12.12 Amendment. This Agreement may be amended by Buyer and Sellers. This
Agreement may not be amended except by an instrument in writing signed on behalf of each Buyer and
each Seller.

     Section 12.13 Extension; Waiver. At any time prior to the Closing, Buyers and Sellers by
action taken or authorized by their respective boards of directors or other duly authorized action
may, to the extent legally allowed (i) extend the time for or waive the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained here. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.

     Section 12.14 Time of Essence. Time is of the essence with respect to this Agreement and
all terms, provisions, covenants and conditions herein.

     Section 12.15 Disclosure Letters. Each of the Flamingo Disclosure Letter and the Boardwalk
Disclosure Letter shall be arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Agreement and the disclosure in any paragraph shall, to the extent
applicable, only qualify other paragraphs in this Agreement to the extent such disclosure clearly
and unequivocally apprises Buyers of the matters to be excepted from such other paragraphs in this
Agreement. The Buyer Disclosure Letter shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Agreement and the disclosure in any paragraph
shall, to the extent applicable, only qualify other paragraphs in this Agreement to the extent such
disclosure clearly
and unequivocally apprises Sellers of the matters to be excepted from such other paragraphs in this
Agreement.

     Section 12.16 Guarantee. Harrah’s hereby unconditionally guarantees the obligations of
Flamingo and Boardwalk to pay any indemnification obligations pursuant to Article X hereof.

[SIGNATURE PAGE FOLLOWS]

78

 

     IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by their
respective duly authorized officers as of the date first written above.

	 	 	 	 	 	 	 
	 	 	FLAMINGO-LAUGHLIN, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BOARDWALK REGENCY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	MARTIAL DEVELOPMENT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	AREP LAUGHLIN CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	AREP BOARDWALK LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ 	 	 
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	HARRAH’S OPERATING COMPANY, INC.	 	 
	 

	 	Acknowledged and Agreed Solely for the
Purposes of Article X and Section 12.16	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ 	 	 
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENTEX-10.2

 

Exhibit 10.2

SUPPLEMENTAL INDENTURE

     Supplemental Indenture (this “Supplemental Indenture”), dated as of May 19, 2006,
made by AREP Laughlin Corporation, a Delaware corporation (the “Guaranteeing Subsidiary”), a
subsidiary of American Casino & Entertainment Properties LLC, a Delaware limited liability company,
as issuer (“ACEP”) (or its permitted successor), American Casino & Entertainment Properties Finance
Corp., a Delaware corporation, as co-issuer (“ACEP Finance”, together with ACEP, the “Company”),
the other Guarantors (as defined in the Indenture referred to herein) and Wilmington Trust Company,
as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the
“Indenture”), dated as of January 29, 2004 providing for the issuance of 7.85% Senior Secured Notes
due 2012 (the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and
deliver this Supplemental Indenture.

     NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the
Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes
as follows:

     1. Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.

     2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an
unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee
and in the Indenture including but not limited to Article 11 thereof.

     4. No Recourse Against Others. No past, present or future director, officer,
employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have
any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes,
any Note Guarantees, the Collateral Documents, the Indenture or this Supplemental Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the SEC that such a
waiver is against public policy.

     5. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

 

 

     6. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement.

     7. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

     8. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary
and the Company.

[Remainder of page intentionally left blank. Signature Page to Follow.]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written.

	 	 	 	 	 
	 	AREP Laughlin Corporation

 	 
	 	By:  	/s/	 
	 	 	  	 	 
	 	 	  	 	 
	 
	 	American Casino & Entertainment Properties

LLC

 	 
	 	By:  	/s/	 
	 	 	  	 	 
	 	 	  	 	 
	 
	 	American Casino & Entertainment Properties

Finance Corp.

 	 
	 	By:  	/s/	 
	 	 	  	 	 
	 	 	  	 	 
	 
	 	Wilmington Trust Company,

as Trustee

 	 
	 	By:  	/s/

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