Boyd Gaming Corp – ‘SC 13D’ on 2/12/04 re: Coast Casinos Inc – EX-1

On:  Thursday, 2/12/04, at 5:02pm ET   ·   Accession #:  950157-4-76   ·   File #:  5-48724

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General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D      General Statement of Beneficial Ownership              9     38K 
 2: EX-1        Stockholders Agreement                                80    282K 
 3: EX-2        Agreement and Plan of Merger                          79    289K 

EX-1   —   Stockholders Agreement
Exhibit Table of Contents

EX-1
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                                                                   EXHIBIT 1

                                                              EXECUTION COPY

                  STOCKHOLDERS AGREEMENT dated as of February 6,
 2004 (this "Agreement") among BOYD GAMING
         CORPORATION, a Nevada corporation ("Parent"), and
            the individuals listed on Schedule A attached hereto
     (each, a "Stockholder" and, collectively, the
"Stockholders").                        

      WHEREAS Parent, BGC, Inc., a Nevada corporation and a wholly owned
subsidiary of Parent ("Sub"), and Coast Casinos, Inc., a Nevada corporation     
(the "Company"), propose to enter into an Agreement and Plan of Merger (in the  
form attached as Exhibit A hereto) to be dated as of the date hereof (as the    
same may be amended or supplemented, the "Merger Agreement") providing for the  
merger of the Company with and into Sub (the "Merger"), upon the terms and      
subject to the conditions set forth in the Merger Agreement; and                

       WHEREAS each Stockholder owns the number of shares of common stock,
par value $0.01 per share, of the Company (the "Company Common Stock") set      
forth opposite such Stockholder's name on Schedule A attached hereto (such      
shares of Company Common Stock, together with any other shares of capital       
stock of the Company acquired by such Stockholder after the date hereof and     
during the term of this Agreement (including through the exercise of warrants,  
stock options or similar instruments), being collectively referred to herein    
as the "Subject Shares" of such Stockholder); and                               

       WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that each Stockholder enter into this           
Agreement.                                                                      

        NOW, THEREFORE, to induce Parent to enter into, and in consideration
of its entering into, the Merger Agreement, and in consideration of the         
promises and the representations, warranties, covenants and agreements set      
forth herein, the parties hereto agree as follows:                              

       SECTION 1. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER. Each
Stockholder hereby, severally and not jointly, represents and warrants to       
Parent in respect of himself as follows:                                        

(a) AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. The  
Stockholder has all requisite power and authority to execute and deliver this   
Agreement and to consummate the transactions contemplated hereby. The           
Stockholder has duly executed and delivered this Agreement, and this Agreement  
constitutes the legal, valid and binding obligation of the Stockholder,         
enforceable against the Stockholder in accordance with its terms. The           
execution and delivery by the Stockholder of this Agreement do not, and the     
consummation of the transactions contemplated hereby and compliance with the    
terms hereof will not, conflict with, or result in any violation of, or         
default (with or without notice or lapse of time, or both) under, or give rise  
to a right of termination, cancelation or acceleration of any obligation or to  
loss of a benefit under, or to increased, additional,                           

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accelerated or guaranteed rights or entitlements of any person under, or        
result in the creation of any pledges, liens, charges, mortgages, encumbrances  
and security interests of any kind or nature whatever (collectively, "Liens")   
upon any of the Subject Shares of the Stockholder under, any provision of any   
contract, lease, license, indenture, note, bond, agreement, permit,             
concession, franchise or other instrument (each, a "Contract") to which the     
Stockholder is a party or by which any Subject Shares of the Stockholder are    
bound or, subject to the filings and other matters referred to in the next      
sentence, any provision of any judgment, order or decree ("Judgment") or        
applicable statute, law (including common law), ordinance, rule or regulation   
("Law") applicable to the Stockholder or the Subject Shares of the              
Stockholder. No consent, approval, license, permit, order or authorization of,  
or registration, declaration or filing with, any Federal, state, local or       
foreign government or any court of competent jurisdiction, administrative       
agency or commission or other governmental authority or instrumentality,        
domestic or foreign is required to be obtained or made by the Stockholder in    
connection with the execution, delivery and performance of this Agreement or    
the consummation of the transactions contemplated hereby, other than (i)        
compliance with and filings under the Hart- Scott-Rodino Antitrust              
Improvements Act of 1976, as amended, if applicable to the Stockholder's        
receipt in the Merger of shares of common stock, par value $0.01 per share, of  
Parent ("Parent Common Stock"), (ii) such filings under the Securities Act of   
1933, as amended, and such reports under the Securities Exchange Act of 1934,   
as amended, as may be required in connection with this Agreement and the        
transactions contemplated hereby and (iii) compliance with and such filings as  
may be required under applicable Laws governing or relating to the current or   
contemplated casino and gaming activities and operations of the Company and     
its subsidiaries, including the rules and regulations established by the        
Nevada State Gaming Control Board, the Nevada Gaming Commission and the Clark   
County Liquor and Gaming Licensing Board. If the Stockholder is married and     
the Subject Shares of the Stockholder constitute community property or          
otherwise need spousal or other approval in order for this Agreement to be      
legal, valid and binding, this Agreement has been duly authorized, executed     
and delivered by, and constitutes a legal, valid and binding obligation of,     
the Stockholder's spouse, enforceable against such spouse in accordance with    
its terms. The Stockholder shall execute a power of attorney in favor of the    
two other Stockholders with respect to the matters covered by Sections 3(a)     
and 3(b) in the event of incapacity of the Stockholder.                         

        (b) THE SUBJECT SHARES. The Stockholder is the record and beneficial
owner of, and has good and marketable title to, the Subject Shares set forth    
opposite the Stockholder's name on Schedule A attached hereto, free and clear   
of any Liens. The Stockholder does not own, of record or beneficially, any      
shares of capital stock of the Company other than the Subject Shares set forth  
opposite the Stockholder's name on Schedule A attached hereto. The Stockholder  
has the sole right to vote such Subject Shares, and none of such Subject        
Shares is subject to any voting trust or other agreement, arrangement or        
restriction with respect to the voting of such Subject Shares, except as        
contemplated by this Agreement. The Stockholder further represents that any     
proxies                                                                         

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heretofore given in respect of the Stockholder's Subject Shares are             
revocable, and represents and declares that all such proxies are hereby         
revoked.                                                                        

      SECTION 2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to each Stockholder as follows: Parent has all          
requisite corporate power and authority to execute this Agreement and to        
consummate the transactions contemplated hereby. The execution and delivery by  
Parent of this Agreement and consummation by Parent of the transactions         
contemplated hereby and compliance by Parent with the provisions of this        
Agreement have been duly authorized by all necessary corporate action on the    
part of Parent. Parent has duly executed and delivered this Agreement, and      
this Agreement constitutes the legal, valid and binding obligation of Parent,   
enforceable against Parent in accordance with its terms. The execution and      
delivery by Parent of this Agreement do not, and the consummation of the        
transactions contemplated hereby and compliance with the terms hereof will      
not, conflict with, or result in any violation of, or default (with or without  
notice or lapse of time, or both) under, or give rise to a right of             
termination, cancelation or acceleration of any obligation or to loss of a      
material benefit under, or to increased, additional, accelerated or guaranteed  
rights or entitlements of any person under, or result in the creation of any    
Liens upon any of the properties or assets of Parent under, any provision of    
any Contract to which Parent is a party or by which any properties or assets    
of Parent are bound or any provision of any Judgment or applicable Law          
applicable to Parent or the properties or assets of Parent.                     

SECTION 3. COVENANTS OF EACH STOCKHOLDER. Each Stockholder, 
severally and not jointly, covenants and agrees as follows:                     

       (a) (1) At any meeting of the stockholders of the Company called to
vote upon the Merger and the Merger Agreement or in any other circumstances     
upon which a vote, consent or other approval (including by written consent)     
with respect to the Merger Agreement, the Merger or any other transaction       
contemplated by the Merger Agreement is sought, the Stockholder shall,          
including by executing a written consent if requested by Parent, vote (or       
cause to be voted) the Subject Shares of the Stockholder in favor of the        
Merger and the Merger Agreement.                                                

       (2) IRREVOCABLE PROXY The Stockholder hereby irrevocably grants to,
and appoints, Parent, William S. Boyd and William R. Boyd, or any of them, and  
any individual designated in writing by any of them, and each of them           
individually, as the Stockholder's proxy and attorney-in-fact (with full power  
of substitution), for and in the name, place and stead of the Stockholder, to   
vote the Subject Shares of the Stockholder, or grant a consent or approval in   
respect of the Subject Shares of the Stockholder in a manner consistent with    
this Section 3. The Stockholder understands and acknowledges that Parent is     
entering into the Merger Agreement in reliance upon the Stockholders'           
execution and delivery of this Agreement. The Stockholder hereby affirms that   
the irrevocable proxy set forth in this Section 3(a) is given in connection     
with the                                                                        

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execution of the Merger Agreement, and that such irrevocable proxy is given to  
secure the performance of the duties of the Stockholder under this Agreement.   
The Stockholder hereby further affirms that the irrevocable proxy is coupled    
with an interest and may under no circumstances be revoked. The Stockholder     
hereby ratifies and confirms all that such irrevocable proxy may lawfully do    
or cause to be done in accordance herewith. Such irrevocable proxy is executed  
and intended to be irrevocable in accordance with the provisions of Section     
78.355(5) of the Nevada Revised Statutes. The irrevocable proxy granted         
hereunder shall automatically terminate upon the termination of Sections 3(a)   
and 3(b).                                                                       

(b) At any meeting of stockholders of the Company or at any 
adjournment thereof or in any other circumstances upon which the Stockholder's  
vote, consent or other approval (including by written consent) is sought, the   
Stockholder shall vote (or cause to be voted) the Subject Shares of the         
Stockholder against, and shall not consent to (and shall cause the Subject      
Shares of the Stockholder not to be consented to), any of the following (or     
any agreement to enter into, effect, facilitate or support any of the           
following): (i) any merger agreement or merger (other than the Merger           
Agreement and the Merger), consolidation, combination, sale of substantial      
assets, joint venture, binding share exchange, reorganization,                  
recapitalization, dissolution, liquidation or winding up of or by the Company,  
(ii) any Company Takeover Proposal (as defined in Section 5.02(e) of the        
Merger Agreement) or (iii) any amendment of the articles of incorporation or    
by-laws of the Company or other proposal, action or transaction involving the   
Company or any of its stockholders, which amendment or other proposal, action   
or transaction would reasonably be expected to in any manner impede,            
frustrate, interfere with, delay, prevent or nullify any provision of the       
Merger Agreement, the Merger or any other transaction contemplated by the       
Merger Agreement or the consummation of the transactions contemplated by this   
Agreement, or change in any manner the voting rights of any class of capital    
stock of the Company (collectively, "Frustrating Transactions"). The            
Stockholder shall not commit or agree to take any action inconsistent with the  
foregoing.                                                                      

       (c) The Stockholder shall not (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or         
consent to or permit any Transfer of, any Subject Shares or any interest        
therein, or enter into any Contract, option or other arrangement (including     
any profit sharing arrangement) with respect to the Transfer of any Subject     
Shares or any interest therein, to any person (other than, if the transactions  
contemplated by the Merger Agreement are consummated, by operation of law in    
the Merger), (ii) other than pursuant to the express terms of this Agreement,   
enter into any voting arrangement, whether by proxy, voting agreement or        
otherwise, with respect to any Subject Shares or (iii) take any action which    
would, or could reasonably be expected to result in a diminution of the voting  
power represented by any Subject Shares, and shall not commit or agree to take  
any of the foregoing actions.                                                   

       (d) The Stockholder shall not, nor shall he authorize or permit any
employee of, or any investment banker, attorney or other adviser or             
representative of, the                                                          

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Stockholder to, directly or indirectly, (i) solicit, initiate or encourage, or  
take any other action to facilitate, any inquiries with respect to a potential  
Company Takeover Proposal or Frustrating Transaction or the submission of any   
Company Takeover Proposal or Frustrating Transaction, (ii) enter into any       
agreement with respect to any Company Takeover Proposal or Frustrating          
Transaction or (iii) enter into, continue or otherwise participate in any       
discussions or negotiations regarding, or furnish to any person any             
information with respect to, or otherwise cooperate in any way with, or assist  
or participate in any effort or attempt by any person with respect to, any      
Company Takeover Proposal or Frustrating Transaction. The Stockholder promptly  
shall advise Parent orally and in writing of any Company Takeover Proposal or   
Frustrating Transaction or inquiry made to the Stockholder with respect to or   
that would reasonably be expected to lead to a Company Takeover Proposal or     
Frustrating Transaction, the identity of the person making or initiating any    
such Company Takeover Proposal, Frustrating Transaction or inquiry and the      
material terms of any such Company Takeover Proposal, Frustrating Transaction   
or inquiry. The Stockholder shall keep Parent informed of the status and        
details (including amendments or proposed amendments) of any such Company       
Takeover Proposal, Frustrating Transaction or inquiry.                          

      (e) The Stockholder shall not, nor shall the Stockholder authorize
or permit any investment banker, attorney or other adviser or representative    
of, the Stockholder to, issue any press release or make any other public        
statement with respect to this Agreement, the Merger Agreement, the Merger or   
any other transactions contemplated by this Agreement or the Merger Agreement   
without the prior written consent of Parent, except as may be required by       
applicable law.                                                                 

    (f) The Stockholder shall use his reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist   
and cooperate with the other parties in doing, all things necessary, proper or  
advisable to consummate and make effective, in the most reasonably expeditious  
manner practicable, the transactions contemplated by this Agreement.            

    (g) The Stockholder hereby waives any rights to dissent from the
Merger that the Stockholder may have, and agrees not to commence or             
participate in, and to take all actions necessary to opt out of any class in    
any class action with respect to, any claim, derivative or otherwise, against   
the Company (or any of its respective successors) relating to the negotiation,  
execution and delivery of this Agreement or the Merger Agreement or the         
consummation of the Merger or any of the other transactions contemplated in     
this Agreement or the Merger Agreement.                                         

      (h) As soon as practicable after the date of this Agreement and in
any event prior to the Effective Time (as defined in Section 1.03 of the        
Merger Agreement), each of Michael J. Gaughan and Franklin Toti shall enter     
into a stockholders agreement, in form and substance mutually satisfactory to   
Parent and each such Stockholder, regarding certain restrictions on the         
transfer by each such Stockholder of the shares of Parent Common Stock          
received by such Stockholder in the Merger.                                     

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   SECTION 4. TERMINATION. This Agreement shall terminate upon the
earliest of (a) the Effective Time, (b) the termination of the Merger           
Agreement pursuant to Section 8.01(a), 8.01(b)(ii), 8.01(b)(iv), 8.01(d) or     
8.01(e) thereof, provided that (i) the Company is not in breach of any of its   
obligations under the Merger Agreement and (ii) none of the Stockholders are    
in breach of any of their obligations under this Agreement, and (c) two years   
after the date of this Agreement.                                               

       SECTION 5. ADDITIONAL MATTERS. Each Stockholder shall, from time to
time, execute and deliver, or cause to be executed and delivered, such          
additional or further consents, documents and other instruments as Parent may   
reasonably request for the purpose of effectively carrying out the              
transactions contemplated by this Agreement.                                    

        No Stockholder makes (or shall be deemed to have made) any agreement
or understanding herein in his capacity as a director or officer. Without       
limiting the generality of the foregoing, each Stockholder signs solely in his  
capacity as the record holder and beneficial owner of the Stockholder's         
Subject Shares and nothing herein, including the provisions of Section 3(d),    
shall limit or affect any actions taken by a Stockholder in his capacity as an  
officer or director of the Company or require any Stockholder to take any       
action in his capacity as an officer or director of the Company.                

SECTION 6. GENERAL PROVISIONS.                              

  (a) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of Parent and each Stockholder affected    
by such amendment.                                                              

       (b) NOTICE. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or sent by         
overnight courier (providing proof of delivery) to Parent in accordance with    
Section 9.02 of the Merger Agreement and to the Stockholders at their           
respective addresses set forth on Schedule A hereto (or at such other address   
for a party as shall be specified by like notice).                              

       (c) INTERPRETATION. When a reference is made in this Agreement to a
Section or Subsection, such reference shall be to a Section of this Agreement   
unless otherwise reasonably indicated. 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. Wherever the words "include",      
"includes" or "including" are used in this Agreement, they shall be deemed to   
be followed by the words "without limitation".                                  

      (d) SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or Law, or       
public policy, all other conditions and provisions of this Agreement shall      
nevertheless remain in full force                                               

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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.          

   (e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and  
shall become effective when one or more counterparts have been signed by each   
of the parties and delivered to the other parties.. Each party need not sign    
the same counterpart.                                                           

      (f) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(i) constitutes the entire agreement and supersedes all prior agreements and    
understandings, both written and oral, among the parties with respect to the    
subject matter hereof and (ii) is not intended to confer upon any person other  
than the parties hereto any rights or remedies hereunder.                       

(g) GOVERNING LAW. This Agreement shall be governed by, and 
construed in accordance with, the laws of the State of Nevada regardless of     
the laws that might otherwise govern under applicable principles of conflicts   
of law thereof.                                                                 

 (h) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or    
in part, by operation of law or otherwise, by Parent without the prior written  
consent of each Stockholder or by any Stockholder without the prior written     
consent of Parent, and any purported assignment without such consent shall be   
void. Subject to the preceding sentence of this Section 6(h), this Agreement    
shall be binding upon, inure to the benefit of and be enforceable by, the       
parties hereto and their respective permitted successors and assigns.           

    (i) ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not        
performed in accordance with their specific terms or were otherwise breached.   
It is accordingly agreed that the parties shall be entitled to an injunction    
or injunctions to prevent breaches of this Agreement and to enforce             
specifically the terms and provisions of this Agreement in any Nevada state     
court or any Federal court located in the County of Clark in the State of       
Nevada, this being in addition to any other remedy to which they are entitled   
at law or in equity. In addition, each of the parties hereto (i) consents to    
submit itself to the personal jurisdiction of any Nevada state court or any     
Federal court located in the County of Clark in the State of Nevada in the      
event any dispute arises out of this Agreement or any Transaction, (ii) agrees  
that it will not attempt to deny or defeat such personal jurisdiction by        
motion or other request for leave from any such court, (iii) agrees that it     
will not bring any action relating to this Agreement or any Transaction in any  
court other than a Nevada state court or any Federal court sitting in the       
County of Clark in the State of Nevada and                                      

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(iv) waives any right to trial by jury with respect to any claim or proceeding  
related to or arising out of this Agreement or any transaction contemplated     
hereby.                                                                         

[The remainder of this page has been left blank intentionally.  
Signature page follows.]  

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        IN WITNESS WHEREOF, each party has duly executed this Agreement, all
as of the date first written above.                                             

                        BOYD GAMING CORPORATION,

    by
                             /s/ William S. Boyd
                             -------------------
                                Name:  William S. Boyd
                                   Title: Chairman and Chief
                                         Executive Officer

             STOCKHOLDERS:

                      /s/ Michael J. Gaughan
                      ----------------------
                        Name: Michael J. Gaughan

                                  /s/ Martha Paula Gaughan
                                  ------------------------
                                      Spouse: Martha Paula Gaughan

                 /s/ Franklin Toti
                 -----------------
                   Name: Franklin Toti

                            /s/ Mary Jean Toti
                            ------------------
                                Spouse: Mary Jean Toti

                /s/ Jerry Herbst
                ----------------
                  Name: Jerry Herbst

                             /s/ Maryanna Herbst
                             -------------------
                                 Spouse: Maryanna Herbst

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SCHEDULE A  

Name and Address           Number of Shares of Company
of Stockholder                Common Stock Owned    
--------------                ------------------    

Michael J. Gaughan                 453,928.97         
Jerry Herbst                       265,488.08         
Franklin Toti                       99,776.47         

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EXHIBIT A - FORM OF AGREEMENT AND PLAN OF MERGER  
---------                                         

(See attached)  

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                                                      [CS&M Draft--02/06/04]

========================================================================= 

AGREEMENT AND PLAN OF MERGER  

Dated as of February 6, 2004, 

Among 

BOYD GAMING CORPORATION,  

BGC, INC. 

and 

COAST CASINOS, INC. 

========================================================================= 

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TABLE OF CONTENTS 

                                                                        Page

ARTICLE I   

SECTION 1.02. Closing.........................................................1 
SECTION 1.03. Effective Time..................................................2 
SECTION 1.04. Effects.........................................................2 
SECTION 1.05. Articles of Incorporation and By-laws...........................2 
SECTION 1.06. Directors.......................................................3 
SECTION 1.07. Officers........................................................3 

ARTICLE II  

EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;  
EXCHANGE OF CERTIFICATES  

SECTION 2.01. Effect on Capital Stock.........................................3 
SECTION 2.02. Exchange of Certificates........................................6 
SECTION 2.03. Elections......................................................10 

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

SECTION 3.01. Organization, Standing and Power...............................12 
SECTION 3.02. Company Subsidiaries; Equity Interests.........................12 
SECTION 3.03. Capital Structure..............................................12 
SECTION 3.04. Authority; Execution and Delivery; Enforceability..............14 
SECTION 3.05. No Conflicts; Consents.........................................15 
SECTION 3.06. Company SEC Documents; Undisclosed Liabilities.................16 
SECTION 3.07. Information Supplied...........................................17 
SECTION 3.08. Absence of Certain Changes or Events...........................17 
SECTION 3.09. Taxes..........................................................18 
SECTION 3.10. Absence of Changes in Benefit Plans............................21 
SECTION 3.11. ERISA Compliance; Excess Parachute Payments....................22 
SECTION 3.12. Litigation.....................................................24 

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SECTION 3.13. Compliance with Applicable Laws................................25 
SECTION 3.14. Assets Other than Real Property Interests......................25 
SECTION 3.15. Real Property..................................................26 
SECTION 3.16. Labor Matters..................................................26 
SECTION 3.17. Contracts......................................................27 
SECTION 3.18. Environmental Matters..........................................29 
SECTION 3.19. Intellectual Property..........................................30 
SECTION 3.20. Brokers; Schedule of Fees and Expenses.........................31 
SECTION 3.21. Opinion of Financial Advisor...................................31 

ARTICLE IV  

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB  

SECTION 4.01. Organization, Standing and Power...............................31 
SECTION 4.02. Sub; Parent Subsidiaries.......................................32 
SECTION 4.03. Capital Structure..............................................32 
SECTION 4.04. Authority; Execution and Delivery; Enforceability..............33 
SECTION 4.05. No Conflicts; Consents.........................................34 
SECTION 4.06. Parent SEC Documents; Undisclosed Liabilities..................34 
SECTION 4.07. Information Supplied...........................................35 
SECTION 4.08. Absence of Certain Changes or Events...........................36 
SECTION 4.09. Litigation.....................................................36 
SECTION 4.10. Compliance with Applicable Laws................................36 
SECTION 4.11. Brokers; Schedule of Fees and Expenses.........................36 

ARTICLE V 

COVENANTS RELATING TO CONDUCT OF BUSINESS 

SECTION 5.01. Conduct of Business............................................37 
SECTION 5.02. No Solicitation................................................40 

ARTICLE VI  

ADDITIONAL AGREEMENTS 

SECTION 6.01. Preparation of the Form S-4 and the Joint Proxy                   
                 Statement; Stockholders Meetings...........................42
SECTION 6.02. Access to Information; Confidentiality.........................44 

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SECTION 6.03. Reasonable Efforts; Notification...............................44 
SECTION 6.04. Company Stock Options..........................................46 
SECTION 6.05. Benefit Plans..................................................47 
SECTION 6.06. Indemnification................................................48 
SECTION 6.07. Fees and Expenses..............................................49 
SECTION 6.08. Public Announcements...........................................49 
SECTION 6.09. Transfer Taxes.................................................49 
SECTION 6.10. Affiliates.....................................................50 
SECTION 6.11. Stock Exchange Listing.........................................50 
SECTION 6.12. Tax Treatment..................................................50 
SECTION 6.13. Stockholder Litigation.........................................50 
SECTION 6.14. Parent Board...................................................50 

ARTICLE VII 

CONDITIONS PRECEDENT  

SECTION 7.01. Conditions to Each Party's Obligation To Effect The               
                 Merger.....................................................51
SECTION 7.02. Conditions to Obligations of Parent and Sub....................52 
SECTION 7.03. Conditions to Obligation of the Company........................53 
SECTION 7.04. Frustration of Closing Conditions..............................54 

ARTICLE VIII  

TERMINATION, AMENDMENT AND WAIVER 

SECTION 8.01. Termination....................................................54 
SECTION 8.02. Effect of Termination..........................................55 
SECTION 8.03. Amendment......................................................55 
SECTION 8.04. Extension; Waiver..............................................56 
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver......56 

ARTICLE IX  

GENERAL PROVISIONS  

SECTION 9.01. Nonsurvival of Representations and Warranties..................56 
SECTION 9.02. Notices........................................................56 
SECTION 9.03. Definitions....................................................57 
SECTION 9.04. Interpretation; Disclosure Letters.............................58 

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SECTION 9.05. Severability...................................................58 
SECTION 9.06. Counterparts; Facsimile........................................59 
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries.................59 
SECTION 9.08. Governing Law..................................................59 
SECTION 9.09. Assignment.....................................................59 
SECTION 9.10. Enforcement....................................................59 

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                        AGREEMENT AND PLAN OF MERGER dated as of February 6,
                 2004, among BOYD GAMING CORPORATION, a Nevada corporation
                ("Parent"), BGC, INC., a Nevada corporation and a wholly
              owned subsidiary of Parent ("Sub"), and COAST CASINOS,
   INC., a Nevada corporation (the "Company").

     WHEREAS the respective Boards of Directors of Sub and the Company
have (i) approved the merger (the "Merger") of the Company into Sub on the      
terms and subject to the conditions set forth in this Agreement, whereby each   
issued share of common stock, par value $0.01 per share, of the Company (the    
"Company Common Stock") not owned by Parent, Sub or the Company shall be        
converted into the right to receive the Merger Consideration (as defined in     
Section 2.01(c)(4)) and (ii) adopted this Agreement; and Parent, as the sole    
stockholder of Sub, has approved this Agreement;                                

WHEREAS Parent and certain stockholders of the Company (the 
"Principal Company Stockholders") have entered into an agreement (the           
"Stockholders Agreement") pursuant to which the Principal Company Stockholders  
have agreed to take specified actions in furtherance of the Merger;             

   WHEREAS for Federal income tax purposes it is intended that the
Merger qualify as a "reorganization" within the meaning of Section 368(a) of    
the Internal Revenue Code of 1986, as amended (the "Code"); and                 

WHEREAS Parent, Sub and the Company desire to make certain  
representations, warranties, covenants and agreements in connection with the    
Merger and also to prescribe various conditions to the Merger.                  

NOW, THEREFORE, the parties hereto agree as follows:        

ARTICLE I 

THE MERGER  

        SECTION 1.01. THE MERGER. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Nevada Revised          
Statutes (the "NRS"), the Company shall be merged with and into Sub at the      
Effective Time (as defined in Section 1.03). At the Effective Time, the         
separate corporate existence of the Company shall cease and Sub shall continue  
as the surviving corporation (the "Surviving Corporation"). At the election of  
Parent, any direct subsidiary of Parent may be substituted for Sub as a         
constituent corporation in the Merger. In such event, the parties shall         
execute an appropriate amendment to this Agreement in order to reflect the      
foregoing. The Merger, the payment of cash in connection with the Merger, the   
issuance by Parent of shares of common stock, par value $0.01 per share, of     
Parent ("Parent                                                                 

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Common Stock") in connection with the Merger (the "Share                        
Issuance") and the other transactions contemplated by this Agreement and the    
Stockholders Agreement are referred to in this Agreement as the                 
"Transactions".                                                                 

    SECTION 1.02. CLOSING. The closing (the "Closing") of the Merger
shall take place at the offices of Gibson, Dunn & Crutcher LLP (Los Angeles     
office) at 2:00 p.m., Pacific Coast time, on the second business day following  
the satisfaction (or, to the extent permitted by Law (as defined in Section     
3.05(a)), waiver by all parties) of the conditions set forth in Section 7.01,   
or, if on such day any condition set forth in Section 7.02 or 7.03 has not      
been satisfied (or, to the extent permitted by Law, waived by the party or      
parties entitled to the benefits thereof), as soon as practicable after all     
the conditions set forth in Article VII have been satisfied (or, to the extent  
permitted by Law, waived by the party or parties entitled to the benefits       
thereof), or at such other place, time and date as shall be agreed in writing   
between Parent and the Company. The date on which the Closing occurs is         
referred to in this Agreement as the "Closing Date".                            

    SECTION 1.03. EFFECTIVE TIME. Prior to the Closing, Parent shall
prepare, and on the Closing Date the Surviving Corporation shall file with the  
Secretary of State of the State of Nevada, articles of merger or other          
appropriate documents (in any such case, the "Articles of Merger") executed in  
accordance with the relevant provisions of the NRS and shall make all other     
filings or recordings required under the NRS. The Merger shall become           
effective at such time as the Articles of Merger are duly filed with such       
Secretary of State, or at such later time as Parent and the Company shall       
agree and specify in the Articles of Merger (the time the Merger becomes        
effective being the "Effective Time").                                          

      SECTION 1.04. EFFECTS. The Merger shall have the effects set forth
in Section 92A.250 of the NRS.                                                  

SECTION 1.05. ARTICLES OF INCORPORATION AND BY-LAWS. (a) The
Articles of Incorporation of Sub as in effect immediately prior to the          
Effective Time shall be the Articles of Incorporation of the Surviving          
Corporation until thereafter changed or amended as provided therein or by       
applicable Law. The Articles of Incorporation of the Surviving Corporation      
shall be amended at the Effective Time so that Article I thereof reads in its   
entirety as follows:                                                            

I.  

The name of the corporation is as follows:  

COAST CASINOS, INC. 

(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until          
thereafter changed or amended as provided therein or by applicable Law.         

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      SECTION 1.06. DIRECTORS. The directors of Sub immediately prior to
the Effective Time, together with Michael J. Gaughan, shall be the directors    
of the Surviving Corporation, until the earlier of their resignation or         
removal or until their respective successors are duly elected and qualified,    
as the case may be.                                                             

   SECTION 1.07. OFFICERS. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving              
Corporation, until the earlier of their resignation or removal or until their   
respective successors are duly elected or appointed and qualified, as the case  
may be.                                                                         

ARTICLE II  

EFFECT ON THE CAPITAL STOCK OF THE  
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES  

    SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any    
shares of Company Common Stock or any shares of capital stock of Sub:           

  (a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall continue to be outstanding as one fully paid and     
nonassessable share of common stock, par value $1.00 per share, of the          
Surviving Corporation.                                                          

        (b) CANCELATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share
of Company Common Stock that is owned by the Company, Parent or Sub shall no    
longer be outstanding and shall automatically be canceled and retired and       
shall cease to exist, and no cash, Parent Common Stock or other consideration   
shall be delivered or deliverable in exchange therefor.                         

  (c) CONVERSION OF COMPANY COMMON STOCK. (1) Subject to Section
2.02(e), each issued and outstanding share of Company Common Stock held by      
Michael J. Gaughan and each issued and outstanding share of Company Common      
Stock held by Franklin Toti shall be converted into the right to receive 32.80  
(the "Fixed Exchange Ratio") fully paid and nonassessable shares of Parent      
Common Stock.                                                                   

      (2) Each issued and outstanding share of Company Common Stock held
by Jerry Herbst shall be converted into the right to receive $550 in cash.      

     (3) Subject to Sections 2.01(b), 2.01(d) and 2.02(e), each issued
and outstanding share of Company Common Stock held by stockholders of the       
Company other than those stockholders named in Sections 2.01(c)(1) and          
2.01(c)(2) shall be converted into the right to receive, at the election of     
the holder thereof, one of the following (as adjusted pursuant to Section       
2.01(e)):                                                                       

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             (i) for each such share of Company Common Stock with respect to
which an election to receive stock consideration (a "Stock  
  Election") has been effectively made, and not revoked or lost,
      pursuant to Section 2.03 (each, an "Electing Share"), the right to
        receive 32.80 (subject to adjustment as provided in Section 2.01(e),
      the "Variable Exchange Ratio") fully paid and nonassessable shares
of Parent Common Stock (the "Stock Election Amount"); and   

         (ii) for each such share of Company Common Stock other than
     Electing Shares (each, a "Non-Electing Share"), the right receive
       $550 in cash (subject to adjustment as provided in Section 2.01(e),
        the "Cash Election Price"), and each stockholder of the Company that
 holds Non-Electing Shares shall be deemed to have made a cash
  election (a "Cash Election") with respect to such Non-Electing
Shares.                                                     

     (4) The cash payable, and the shares of Parent Common Stock to be
issued, upon the conversion of shares of Company Common Stock pursuant to this  
Section 2.01(c), and any cash payable in lieu of fractional shares of Parent    
Common Stock as contemplated by Section 2.02(e), are referred to collectively   
as "Merger Consideration". As of the Effective Time, all such shares of         
Company Common Stock shall no longer be outstanding and shall automatically be  
canceled and retired and shall cease to exist, and each holder of a             
certificate representing any such shares of Company Common Stock shall cease    
to have any rights with respect thereto, except the right to receive Merger     
Consideration upon surrender of such certificate in accordance with Section     
2.02, without interest.                                                         

       (5) Notwithstanding anything in this Agreement to the contrary, if,
between the date of this Agreement and the Effective Time, the outstanding      
shares of the Parent Common Stock shall have been changed into a different      
number of shares or a different class by reason of any reclassification,        
recapitalization, split-up, combination, exchange of shares or readjustment,    
or a stock dividend thereon shall be declared with a record date within said    
period, each of the Fixed Exchange Ratio and the Variable Exchange Ratio shall  
be correspondingly adjusted.                                                    

       (d) DISSENTER RIGHTS. Notwithstanding anything in this Agreement to
the contrary, shares ("Dissenter Shares") of Company Common Stock that are      
outstanding immediately prior to the Effective Time and that are held by any    
person who is entitled to demand and properly demands payment for such          
Dissenter Shares pursuant to, and who complies in all respects with, Sections   
92A.300 through 92A.500 of the NRS (the "Dissenter Rights") shall not be        
converted into Merger Consideration as provided in Section 2.01(c)(3), but      
rather the holders of Dissenter Shares shall be entitled to payment for such    
Dissenter Shares in accordance with the Dissenter Rights; provided, however,    
that if any such holder shall fail to perfect or otherwise shall waive,         
withdraw or lose the right to receive payment under the Dissenter Rights, then  
the right of such holder to be                                                  

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paid in accordance with the Dissenter Rights shall cease and such Dissenter     
Shares shall be deemed to have been converted as of the Effective Time into,    
and to have become exchangeable solely for the right to receive, Merger         
Consideration as provided in Section 2.01(c)(3). The Company shall serve        
prompt notice to Parent of any written notice of intent to demand payment, or   
any written demand for payment, received by the Company in respect of any       
shares of Company Common Stock, and Parent shall have the right to participate  
in and direct all negotiations and proceedings with respect to such demands.    
Prior to the Effective Time, the Company shall not, without the prior written   
consent of Parent, make any payment with respect to, or settle or offer to      
settle, any such demands, or agree to do any of the foregoing.                  

    (e) PRORATION. Notwithstanding anything in this Agreement to the
contrary: (1) the maximum aggregate number of shares of Parent Common Stock to  
be issued pursuant to Section 2.01(c)(3)(i) shall not exceed 1,009,194 (the     
"Target Stock Amount"), and the maximum aggregate amount of cash to be paid     
pursuant to Section 2.01(c)(3)(ii) shall not exceed $336,170,274.88 (the "Cash  
Cap"); provided, however, that if, on the date specified in the first sentence  
of Section 1.02 (the "Date of Determination"), the opinions of counsel          
referred to in Sections 7.02(e) and 7.03(d) would not be delivered solely by    
reason of the average sale price of a share of Parent Common Stock on The New   
York Stock Exchange (the "NYSE") on the Date of Determination, then the Target  
Stock Amount (and the Variable Exchange Ratio) shall be increased, and the      
Cash Cap (and the Cash Election Price) shall be decreased, in each case by an   
amount sufficient to provide that, on the Closing Date, 40% of the aggregate    
value of all Merger Consideration to be issued or paid pursuant to Section      
2.01(c) shall consist of shares of Parent Common Stock (the value of such       
shares of Parent Common Stock being the average sale price of a share of        
Parent Common Stock on the NYSE on the Date of Determination) and that the      
value of the Merger Consideration payable in respect of each share of Company   
Common Stock exchanged in accordance with Section 2.01(c)(3) shall be in an     
amount equal to $550 (such increase in the Target Stock Amount (and the         
Variable Exchange Ratio) and such decrease in the Cash Cap (and the Cash        
Election Price), the "Merger Consideration Adjustment"); provided further,      
however, that if the Target Stock Amount following the application of the       
Merger Consideration Adjustment would exceed 7,838,462 shares of Parent Common  
Stock (such 7,838,462 shares of Parent Common Stock, the "Stock Cap"), then     
Parent shall have the right to terminate this Agreement in accordance with      
Section 8.01(e);                                                                

  (2) in the event that the aggregate number of shares of Parent
Common Stock requested in Stock Elections received by the Exchange Agent in     
accordance with Section 2.01(c)(3)(i) exceeds the Target Stock Amount (as may   
be adjusted in accordance with this Agreement), then the Electing Shares shall  
be converted into the right to receive the Stock Election Amount in accordance  
with Section 2.01(c)(3)(i) in the following manner:                             

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         (i) a stock proration factor (the "Stock Proration Factor")
        shall be determined by dividing (A) the quotient of the Target Stock
        Amount divided by the Variable Exchange Ratio (as may be adjusted in
       accordance with this Agreement) by (B) the total number of Electing
Shares;                                                     

     (ii) the number of Electing Shares covered by any Stock
       Election which will actually be converted into the right to receive
       the Stock Election Amount shall be equal to the product (rounded up
  to the nearest whole number) obtained by multiplying the Stock
      Proration Factor by the total number of Electing Shares covered by
such Stock Election; and                                    

          (iii) all Electing Shares, other than those shares converted
     into the right to receive the Stock Election Amount in accordance
     with Section 2.01(e)(2)(ii), shall be converted into the right to
receive cash as if such shares were Non-Electing Shares in  
accordance with Section 2.01(c)(3)(ii); and                 

    (3) in the event that the aggregate amount of cash to be paid to
Non-Electing Shares pursuant to Section 2.01(c)(3)(ii) exceeds the Cash Cap     
(as may be adjusted in accordance with this Agreement), then the Non-Electing   
Shares shall be converted into the right to receive the Cash Election Price in  
accordance with Section 2.01(c)(3)(ii) in the following manner:                 

             (i) a cash proration factor (the "Cash Proration Factor") shall
      be determined by dividing (A) the quotient of the Cash Cap (as may
      be adjusted in accordance with this Agreement) divided by the Cash
  Election Price by (B) the total number of Non-Electing Shares;

        (ii) the number of Non-Electing Shares covered by any Cash
       Election which will actually be converted into the right to receive
        the Cash Election Price shall be equal to the product (rounded up to
        the nearest whole number) obtained by multiplying the Cash Proration
     Factor by the total number of Non-Electing Shares covered by such
Cash Election; and                                          

    (iii) all Non-Electing Shares, other than those shares
  converted into the right to receive the Cash Election Price in
       accordance with Section 2.01(e)(3)(ii), shall be converted into the
    right to receive shares of Parent Common Stock as if such shares
  were Electing Shares in accordance with Section 2.01(c)(3)(i).

         SECTION 2.2. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. As soon as
practicable following the date of this Agreement and in any event not less      
than three days prior to dissemination of the Joint Proxy Statement (as         
defined in Section 6.01) to the stockholders of the Company and Parent, Parent  
shall select a bank or trust company reasonably satisfactory to the Company to  
act as exchange agent (the "Exchange Agent")                                    

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for payment of Merger Consideration upon surrender of certificates              
representing Company Common Stock. Promptly following the Effective Time,       
Parent shall deposit with the Exchange Agent, for the benefit of the holders    
of shares of Company Common Stock, for exchange in accordance with this         
Article II, through the Exchange Agent (i) certificates representing the        
maximum number of shares of Parent Common Stock issuable and (ii) 80% of the    
maximum amount of cash consideration payable, in each case, pursuant to         
Section 2.01(c) in exchange for outstanding shares of Company Common Stock. In  
addition, Parent shall take all steps necessary to enable and cause the         
Surviving Corporation to provide to the Exchange Agent on a timely basis, as    
and when needed after the Effective Time, the remaining amount of cash          
necessary to pay for the shares of Company Common Stock converted into the      
right to receive cash pursuant to Section 2.01 (such shares of Parent Common    
Stock and cash, together with any dividends or distributions with respect       
thereto, being hereinafter referred to as the "Exchange Fund"). For the         
purposes of such deposit, Parent shall assume that there will not be any        
fractional shares of Parent Common Stock. Parent shall make available to the    
Exchange Agent, from time to time as needed, cash sufficient to pay cash in     
lieu of fractional shares in accordance with Section 2.02(e). The Exchange      
Agent shall, pursuant to irrevocable instructions, deliver the Parent Common    
Stock contemplated to be issued pursuant to Section 2.01 out of the Exchange    
Fund. The Exchange Fund may not be used for any other purpose.                  

        (b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a     
certificate or certificates (the "Certificates") that immediately prior to the  
Effective Time represented outstanding shares of Company Common Stock whose     
shares were converted into the right to receive Merger Consideration pursuant   
to Section 2.01(c), (i) a letter of transmittal (which shall specify that       
delivery shall be effected, and risk of loss and title to the Certificates      
shall pass, only upon delivery of the Certificates to the Exchange Agent and    
shall be in such form and have such other provisions as Parent may reasonably   
specify) and (ii) instructions for use in effecting the surrender of the        
Certificates in exchange for Merger Consideration. Upon surrender of a          
Certificate for cancelation to the Exchange Agent or to such other agent or     
agents as may be appointed by Parent, together with such letter of              
transmittal, duly executed, and such other documents as may reasonably be       
required by the Exchange Agent, the holder of such Certificate shall be         
entitled to receive in exchange therefor the amount of cash, if any, and the    
number of whole shares of Parent Common Stock, if any, which the aggregate      
number of shares of Company Common Stock previously represented by such         
Certificate shall have been converted pursuant to Section 2.01(c) into the      
right to receive, and the Certificate so surrendered shall forthwith be         
canceled. In the event of a transfer of ownership of Company Common Stock that  
is not registered in the transfer records of the Company, payment may be made   
to a person other than the person in whose name the Certificate so surrendered  
is registered, if such Certificate shall be properly endorsed or otherwise be   
in proper form for transfer and the person requesting such payment shall pay    
any transfer or other taxes required by reason of the payment to a person       
other than the registered holder                                                

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of such Certificate or establish to the satisfaction of Parent that such tax    
has been paid or is not applicable. Until surrendered as contemplated by this   
Section 2.02, each Certificate shall be deemed at any time after the Effective  
Time to represent only the right to receive upon such surrender the Merger      
Consideration into which the shares of Company Common Stock theretofore         
represented by such Certificate have been converted pursuant to Section         
2.01(c). No interest shall be paid or accrue on any cash payable upon           
surrender of any Certificate.                                                   

      (c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions with respect to Parent Common Stock with a record date   
on or after the Effective Time shall be paid to the holder of any Certificate   
formerly representing Company Common Stock with respect to the shares of        
Parent Common Stock issuable upon surrender thereof, and no cash payment in     
lieu of fractional shares shall be paid to any such holder pursuant to Section  
2.02(e) until the surrender of such Certificate in accordance with this         
Article II. Subject to applicable Law, following surrender of any such          
Certificate, there shall be paid to the holder of the Certificate representing  
whole shares of Parent Common Stock issued in exchange therefor, without        
interest, (i) at the time of such surrender, the amount of any cash payable in  
lieu of a fractional share of Parent Common Stock to which such holder is       
entitled pursuant to Section 2.02(e) and the amount of dividends or other       
distributions with a record date after the Effective Time theretofore paid      
with respect to such whole shares of Parent Common Stock, and (ii) at the       
appropriate payment date, the amount of dividends or other distributions with   
a record date after the Effective Time but prior to such surrender and a        
payment date subsequent to such surrender payable with respect to such whole    
shares of Parent Common Stock.                                                  

       (d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration paid (and issued) in accordance with the terms of this Article    
II upon conversion of any shares of Company Common Stock shall be deemed to     
have been paid (and issued) in full satisfaction of all rights pertaining to    
such shares of Company Common Stock, subject, however, to the Surviving         
Corporation's obligation to pay any dividends or make any other distributions   
with a record date prior to the Effective Time that may have been declared or   
made by the Company on such shares of Company Common Stock in accordance with   
the terms of this Agreement or prior to the date of this Agreement and which    
remain unpaid at the Effective Time, and after the Effective Time there shall   
be no further registration of transfers on the stock transfer books of the      
Surviving Corporation of shares of Company Common Stock that were outstanding   
immediately prior to the Effective Time. If, after the Effective Time, any      
Certificates formerly representing shares of Company Common Stock are           
presented to the Surviving Corporation or the Exchange Agent for any reason,    
they shall be canceled and exchanged as provided in this Article II.            

       (e) NO FRACTIONAL SHARES. (1) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the conversion    
of Company Common Stock pursuant to Section 2.01(c), and such fractional share  
interests                                                                       

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shall not entitle the owner thereof to vote or to any rights of a holder of     
Parent Common Stock. For purposes of this Section 2.02(e), all fractional       
shares to which a single record holder would be entitled shall be aggregated    
and calculations shall be rounded to three decimal places.                      

      (2) Except as otherwise provided in Section 2.02(e)(3), in lieu of
any such fractional shares, each holder of Company Common Stock who would       
otherwise be entitled to such fractional shares shall be entitled to an amount  
in cash, without interest, rounded to the nearest cent, equal to the product    
of (A) the amount of the fractional share interest in a share of Parent Common  
Stock to which such holder is entitled under Section 2.01(c) (or would be       
entitled but for this Section 2.02(e)) and (B) an amount equal to the average   
of the closing sale prices for the Parent Common Stock on the NYSE, as          
reported in The Wall Street Journal, Northeastern edition, for each of the ten  
consecutive trading days ending with the second complete trading day prior to   
the Effective Time.                                                             

      (3) Notwithstanding anything in this Agreement to the contrary, in
the event that a Merger Consideration Adjustment is made in accordance with     
Section 2.01(e)(1), each holder of Company Common Stock who would otherwise be  
entitled, upon application of the Merger Consideration Adjustment, to a         
fractional share in accordance with this Section 2.02(e) shall not receive      
cash in lieu of such fractional share but instead shall be entitled only to     
receive one whole share of Parent Common Stock in lieu of such fractional       
share.                                                                          

      (f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains undistributed to the holders of Company Common Stock for six       
months after the Effective Time shall be delivered to Parent, upon demand, and  
any holder of Company Common Stock who has not theretofore complied with this   
Article II shall thereafter look only to Parent and the Surviving Corporation   
for payment of its claim for Merger Consideration and any applicable dividends  
or distributions with respect to any Parent Common Stock constituting Merger    
Consideration as provided in Section 2.02(c).                                   

      (g) NO LIABILITY. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any cash or any shares of     
Parent Common Stock (or dividends or distributions with respect thereto)        
delivered to a public official pursuant to any applicable abandoned property,   
escheat or similar Law. If any Certificate has not been surrendered prior to    
five years after the Effective Time (or immediately prior to such earlier date  
on which Merger Consideration in respect of such Certificate would otherwise    
escheat to or become the property of any Governmental Entity (as defined in     
Section 3.05(b)), any such cash, shares, dividends or distributions in respect  
of such Certificate shall, to the extent permitted by applicable Law, become    
the property of the Surviving Corporation, free and clear of all claims or      
interest of any person previously entitled thereto.                             

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        (h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis.    
Any interest and other income resulting from such investments shall be paid to  
Parent.                                                                         

  (i) WITHHOLDING RIGHTS. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable to any holder of Company      
Common Stock pursuant to this Agreement such amounts as may be required to be   
deducted and withheld with respect to the making of such payment under the      
Code, or under any provision of state, local or foreign tax Law. To the extent  
that amounts are so withheld and paid over to the appropriate taxing            
authority, the Surviving Corporation will be treated as though it withheld an   
appropriate amount of the type of consideration otherwise payable pursuant to   
this Agreement to any holder of Company Common Stock, sold such consideration   
for an amount of cash equal to the fair market value of such consideration at   
the time of such deemed sale and paid such cash proceeds to the appropriate     
taxing authority.                                                               

       (j) INCOME TAX TREATMENT. It is intended by the parties hereto that
the Merger qualify as a "reorganization" within the meaning of Section 368(a)   
of the Code. The parties hereto hereby adopt this Agreement as a "plan of       
reorganization" within the meanings of Sections 1.368-2(g) and 1.368-3(a) of    
the U.S. Treasury Regulations promulgated under the Code.                       

    SECTION 2.03. ELECTIONS. (a) Each person who, on or prior to the
Election Date referred to in paragraph (b) below, is a record holder of shares  
of Company Common Stock shall be entitled, with respect to all or any portion   
of such shares, to make an unconditional Stock Election on or prior to such     
Election Date, on the basis hereinafter set forth.                              

           (b)  Parent shall prepare a form of election, which form shall be
subject to the reasonable approval of the Company (the "Form of Election") and  
shall be mailed with the Joint Proxy Statement (as defined in Section 6.01(a))  
to the record holders of Company Common Stock as of the record date for the     
Company Stockholders Meeting (as defined in Section 6.01(d)), which Form of     
Election shall be used by each record holder of shares of Company Common Stock  
who wishes to elect to receive the Stock Election Amount for any or all shares  
of Company Common Stock held by such holder.  The Company shall use all         
reasonable efforts to make the Form of Election and the Joint Proxy Statement   
available to all persons who become record holders of Company Common Stock      
during the period between such record date and the Election Date.  Any such     
holder's election to receive the Stock Election Amount shall have been properly 
made only if the Exchange Agent shall have received at its designated office,   
by 5:00 p.m., Pacific Coast time, on the business day (the "Election Date")     
immediately preceding the date of the Company Stockholders Meeting, a Form of   
Election properly completed and signed and accompanied by Certificates for the  
shares of Company Common Stock to which such Form of Election relates, duly     
endorsed in blank or otherwise in form acceptable for transfer on the books of  
the Company (or accompanied                                                     

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by an appropriate guarantee of delivery of such Certificates as set forth in    
such Form of Election from a firm which is a member of a registered national    
securities exchange or of the National Association of Securities Dealers, Inc.  
or a commercial bank or trust company having an office or correspondent in the  
United States, provided such Certificates are in fact delivered to the          
Exchange Agent within three NYSE trading days after the date of execution of    
such guarantee of delivery). Failure to deliver Certificates covered by any     
guarantee of delivery within three NYSE trading days after the date of          
execution of such guarantee of delivery shall be deemed to invalidate any       
otherwise properly made Stock Election.                                         

   (c) Any Form of Election may be revoked, by the stockholder who
submitted such Form of Election to the Exchange Agent, only by written notice   
received by the Exchange Agent (i) prior to 5:00 p.m., Pacific Coast time, on   
the Election Date or (ii) after such time, if (and only to the extent that)     
the Exchange Agent is legally required to permit revocations and only if the    
Effective Time shall not have occurred prior to such date. In addition, all     
Forms of Election shall automatically be revoked if the Exchange Agent is       
notified in writing by Parent and the Company that the Merger has been          
abandoned. If a Form of Election is revoked, the Certificate or Certificates    
(or guarantees of delivery, as appropriate) for the shares of Company Common    
Stock to which such Form of Election relates shall be promptly returned to the  
stockholder submitting the same to the Exchange Agent.                          

      (d) The determination of the Exchange Agent in its sole discretion
shall be binding as to whether or not elections to receive the Stock Election   
Amount have been properly made or revoked pursuant to this Section 2.03 with    
respect to shares of Company Common Stock and when elections and revocations    
were received by it. If no Form of Election is received with respect to shares  
of Company Common Stock, or if the Exchange Agent determines that any election  
to receive the Stock Election Amount was not properly made with respect to      
shares of Company Common Stock, such shares shall be treated by the Exchange    
Agent as Non-Electing Shares at the Effective Time, and such shares shall be    
converted into the right to receive the Cash Election Price in accordance with  
Section 2.01(c)(3)(ii). The Exchange Agent shall also make all computations as  
to the proration contemplated by Section 2.01(e), and absent manifest error     
any such computation shall be conclusive and binding on the holders of shares   
of Company Common Stock. The Exchange Agent may, with the mutual agreement of   
Parent and the Company, make such rules as are consistent with this Section     
2.03 for the implementation of the elections provided for herein as shall be    
necessary or desirable fully to effect such elections.                          

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ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

       Except as expressly set forth in that certain letter (with specific
reference to the Section or Subsection of this Agreement to which the           
information stated in such disclosure relates and such other Sections or        
Subsections of this Agreement to the extent a matter is disclosed in such a     
way as to make its relevance to the information called for by such other        
Section or Subsection readily apparent), dated as of the date of this           
Agreement, from the Company to Parent and Sub (the "Company Disclosure          
Letter") or in any Company SEC Document (as defined in Section 3.06) filed and  
publicly available prior to the date of this Agreement (the "Filed Company SEC  
Documents"), the Company represents and warrants to Parent and Sub that:        

       SECTION 3.01. ORGANIZATION, STANDING AND POWER. Each of the Company
and each of its subsidiaries (the "Company Subsidiaries") is duly organized or  
formed, validly existing and in good standing under the laws of the             
jurisdiction in which it is organized and has full corporate or limited         
liability company power and authority to conduct its businesses as presently    
conducted. The Company and each Company Subsidiary is duly qualified to do      
business in each jurisdiction where the nature of its business or the           
ownership or leasing of its properties make such qualification necessary or     
the failure to so qualify, individually or in the aggregate, has had or would   
reasonably be expected to have a Company Material Adverse Effect (as defined    
in Section 9.03). The Company has delivered to Parent true and complete copies  
of the articles of incorporation of the Company, as amended to the date of      
this Agreement (as so amended, the "Company Charter"), and the by-laws of the   
Company, as amended to the date of this Agreement (as so amended, the "Company  
By-laws"), and the comparable charter and organizational documents of each      
Company Subsidiary, in each case as amended to the date of this Agreement.      

     SECTION 3.02. COMPANY SUBSIDIARIES; EQUITY INTERESTS. (a) Section
3.02(a) of the Company Disclosure Letter lists each Company Subsidiary and its  
jurisdiction of organization or formation. All the outstanding shares of        
capital stock of each Company Subsidiary have been validly issued and are       
fully paid and nonassessable and are owned by the Company, by another Company   
Subsidiary or by the Company and another Company Subsidiary, free and clear of  
all pledges, liens, charges, mortgages, encumbrances and security interests of  
any kind or nature whatsoever (collectively, "Liens").                          

 (b) Except for its interests in the Company Subsidiaries, the
Company does not own, directly or indirectly, any capital stock, membership     
interest, partnership interest, joint venture interest or other equity          
interest in any person.                                                         

        SECTION 3.03. CAPITAL STRUCTURE. (a) The authorized capital stock of
the Company consists of 75,000,000 shares of Company Common Stock and           
10,000,000                                                                      

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shares of preferred stock, par value $0.01 per share. At the close of business  
on February 5, 2004, (i) 1,461,177.94 shares of Company Common Stock were       
issued and outstanding, (ii) 33,775 shares of Company Common Stock were held    
by the Company in its treasury and (iii) 35,415 shares of Company Common Stock  
were subject to outstanding Company Employee Stock Options (as defined in       
Section 6.04(d)) and no additional shares of Company Common Stock were          
reserved for issuance pursuant to the Company Stock Plan (as defined in         
Section 6.04(d)). Except as set forth above, at the close of business on        
February 5, 2004, no shares of capital stock or other voting securities of the  
Company were issued, reserved for issuance or outstanding, and since February   
5, 2004, no shares of capital stock or other voting securities of the Company   
were issued by the Company, except for shares of Company Common Stock issued    
upon the exercise of Company Employee Stock Options outstanding as of February  
5, 2004. There are no outstanding stock appreciation rights linked to the       
price of Company Common Stock and granted under the Company Stock Plan or       
otherwise. All outstanding shares of Company Common Stock are, and all such     
shares that may be issued prior to the Effective Time will be when issued,      
duly authorized, validly issued, fully paid and nonassessable and not subject   
to or issued in violation of any purchase option, call option, right of first   
refusal, preemptive right, subscription right or any similar right under any    
provision of the NRS, the Company Charter, the Company By-laws or any Contract  
(as defined in Section 3.05(a)) to which the Company is a party or otherwise    
bound. There are not any bonds, debentures, notes or other indebtedness of the  
Company having the right to vote (or convertible into, or exchangeable for,     
securities having the right to vote) on any matters on which holders of         
Company Common Stock may vote ("Voting Company Debt"). Except as set forth      
above, as of the date of this Agreement, there are not any options, warrants,   
rights, convertible or exchangeable securities, "phantom" stock rights, stock   
appreciation rights, stock-based performance units, commitments, Contracts,     
arrangements or undertakings of any kind to which the Company or any Company    
Subsidiary is a party or by which any of them is bound (i) obligating the       
Company or any Company Subsidiary to issue, deliver or sell, or cause to be     
issued, delivered or sold, additional shares of capital stock or other equity   
interests in, or any security convertible or exercisable for or exchangeable    
into any capital stock of or other equity interest in, the Company or any       
Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or   
any Company Subsidiary to issue, grant, extend or enter into any such option,   
warrant, call, right, security, commitment, Contract, arrangement or            
undertaking or (iii) that give any person the right to receive any economic     
benefit or right similar to or derived from the economic benefits and rights    
occurring to holders of Company Common Stock. As of the date of this            
Agreement, there are not any outstanding contractual obligations of the         
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire    
any shares of capital stock of the Company or any Company Subsidiary.           

     (b) Section 3.03(b) of the Company Disclosure Letter sets forth a
true, complete and correct list of all outstanding Company Employee Stock       
Options, the number of shares of Company Common Stock subject to each such      
Company Employee                                                                

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Stock Option, the grant dates, expiration dates and vesting schedule of each    
such Company Employee Stock Option and the names of the holders of each         
Company Employee Stock Option. All outstanding Company Employee Stock Options   
are evidenced by the Company Employee Stock Option agreements set forth in      
Section 3.03(b) of the Company Disclosure Letter, and no Company Employee       
Stock Option agreement contains terms that are inconsistent with, or in         
addition to, the terms contained therein. Each Company Employee Stock Option    
intended to qualify as an "incentive stock option" under Section 422 of the     
Code so qualifies and the exercise price of each other Company Employee Stock   
Option is not less than the fair market value of a share of Company Common      
Stock as determined on the date of grant of such Company Employee Stock         
Option.                                                                         

        SECTION 3.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a)
The Company has all requisite corporate power and authority to execute and      
deliver this Agreement and to consummate the Merger and the other Transactions  
to be performed or consummated by the Company in accordance with the terms of   
this Agreement. The execution and delivery by the Company of this Agreement     
and the consummation by the Company of the Merger and the other Transactions    
to be performed or consummated by the Company in accordance with the terms of   
this Agreement have been duly authorized by all necessary corporate action on   
the part of the Company, subject, in the case of the Merger, to receipt of the  
Company Stockholder Approval (as defined in Section 3.04(c)). The Company has   
duly executed and delivered this Agreement, and, assuming due authorization,    
execution and delivery of this Agreement by Parent and Sub, this Agreement      
constitutes its legal, valid and binding obligation, enforceable against it in  
accordance with its terms.                                                      

       (b) The Board of Directors of the Company (the "Company Board"), at
a meeting duly called and held, duly [and unanimously] adopted resolutions (i)  
adopting this Agreement and approving the Merger and the other Transactions to  
be performed or consummated by the Company in accordance with the terms of      
this Agreement, (ii) determining that the terms of the Merger and the other     
Transactions to be performed or consummated by the Company in accordance with   
the terms of this Agreement are fair to and in the best interests of the        
Company and its stockholders, (iii) directing that this Agreement be submitted  
to a vote at the Company Stockholders Meeting and (iv) recommending that the    
Company's stockholders approve this Agreement. The Company hereby confirms      
that (A) the Company does not qualify as a "resident domestic corporation", as  
such term is defined in Section 78.427 of the NRS and used in Sections 78.438   
through 78.444 of the NRS, and (B) to the Company's knowledge, no other state   
takeover statute or similar statute or regulation applies or purports to apply  
to the Company with respect to this Agreement, the Merger or any other          
Transaction to be performed or consummated by the Company in accordance with    
the terms of this Agreement.                                                    

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      (c) The only vote of holders of any class or series of the capital
stock of the Company necessary to approve this Agreement and the Merger is the  
approval of this Agreement by a majority of the voting power of the holders of  
the outstanding Company Common Stock (the "Company Stockholder Approval"). The  
affirmative vote of the holders of Company Common Stock, or any of them, is     
not necessary to consummate any Transaction to be performed or consummated by   
the Company in accordance with the terms of this Agreement other than the       
Merger.                                                                         

        SECTION 3.05. NO CONFLICTS; CONSENTS. (a) The execution and delivery
by the Company of this Agreement do not, and the consummation by the Company    
of the Merger and the other Transactions to be performed or consummated by the  
Company in accordance with the terms of this Agreement and compliance by the    
Company with the terms hereof will not, conflict with, or result in any         
violation of or default (with or without notice or lapse of time, or both)      
under, or give rise to a right of termination, cancelation or acceleration of   
any obligation or to loss of a material benefit under, or to increased,         
additional, accelerated or guaranteed rights or entitlements of any person      
under, or result in the creation of any Lien upon any of the properties or      
assets of the Company or any Company Subsidiary under, any provision of (i)     
the Company Charter, the Company By-laws or the comparable charter or           
organizational documents of any Company Subsidiary, (ii) any contract, lease,   
license, indenture, note, bond, agreement, permit, concession, franchise or     
other instrument (a "Contract") to which the Company or any Company Subsidiary  
is a party or by which any of their respective properties or assets is bound    
or (iii) subject to the filings and other matters referred to in Section        
3.05(b), any judgment, order or decree ("Judgment") or statute, law (including  
common law), ordinance, rule or regulation ("Law") applicable to the Company    
or any Company Subsidiary or their respective properties or assets, other       
than, in the case of clauses (ii) and (iii) above, any such items that,         
individually or in the aggregate, have not had and would not reasonably be      
expected to have a Company Material Adverse Effect.                             

     (b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit from,    
any Federal, state, local or foreign government or any court of competent       
jurisdiction, administrative agency or commission or other governmental         
authority or instrumentality, domestic or foreign (a "Governmental Entity"),    
is required to be obtained or made by the Company or any Company Subsidiary in  
connection with the execution, delivery and performance of this Agreement or    
the consummation of the Merger and the other Transactions to be performed or    
consummated by the Company in accordance with the terms of this Agreement,      
other than (i) compliance with and filings under the Hart-Scott-Rodino          
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the        
filing with the Securities and Exchange Commission (the "SEC") of (A) the       
Joint Proxy Statement and (B) such reports under, or other applicable           
requirements of, the Securities Exchange Act of 1934, as amended (the           
"Exchange Act"), as may be required in connection with this Agreement, the      
Merger and the other Transactions to be performed or consummated by the         
Company in accordance with the terms of this Agreement, (iii) the filing of     
the                                                                             

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Articles of Merger with the Secretary of State of the State of Nevada and       
appropriate documents with the relevant authorities of the other jurisdictions  
in which the Company is qualified to do business, (iv) compliance with and      
such filings as may be required under applicable Environmental Laws (as         
defined in Section 3.18(g)), (v) compliance with and such filings as may be     
required under applicable Gaming Laws (as defined in Section 3.13(b))           
(including those promulgated by the Nevada Gaming Authorities (as defined in    
Section 3.13(b)), (vi) such filings as may be required in connection with the   
Taxes described in Section 6.09 and (vii) such other items that, individually   
or in the aggregate, have not had and would not reasonably be expected to have  
a Company Material Adverse Effect.                                              

     SECTION 3.06. COMPANY SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a)
The Company has filed all reports, schedules, forms, statements and other       
documents required to be filed by the Company with the SEC since January 1,     
2003 pursuant to Sections 13(a) and 15(d) of the Exchange Act (the "Company     
SEC Documents").                                                                

        (b) As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the          
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,  
and the rules and regulations of the SEC promulgated thereunder applicable to   
such Company SEC Document, and did not contain any untrue statement of a        
material fact or omit to state a material fact required to be stated therein    
or necessary in order to make the statements therein, in light of the           
circumstances under which they were made, not misleading. Except to the extent  
that information contained in any Filed Company SEC Document has been revised   
or superseded by a later filed Filed Company SEC Document, none of the Company  
SEC Documents contains any untrue statement of a material fact or omits to      
state any material fact required to be stated therein or necessary in order to  
make the statements therein, in light of the circumstances under which they     
were made, not misleading. The consolidated financial statements of the         
Company included in the Company SEC Documents comply as to form in all          
material respects with applicable accounting requirements and the published     
rules and regulations of the SEC with respect thereto, have been prepared in    
accordance with generally accepted accounting principles ("GAAP") (except, in   
the case of unaudited statements, as permitted by Form 10-Q of the SEC)         
applied on a consistent basis during the periods involved (except as may be     
indicated in the notes thereto) and fairly present the consolidated financial   
position of the Company and its consolidated subsidiaries as of the dates       
thereof and the consolidated results of their operations and cash flows for     
the periods shown (subject, in the case of unaudited statements, to normal      
year-end audit adjustments).                                                    

(c) Neither the Company nor any Company Subsidiary has any  
liabilities or obligations of any nature (whether accrued, absolute,            
contingent or otherwise) required by GAAP to be set forth on a consolidated     
balance sheet of the Company and its consolidated subsidiaries or in the notes  
thereto and that, individually or in the aggregate, would reasonably be         
expected to have a Company Material Adverse Effect.                             

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      (d) The effectiveness of any additional SEC disclosure requirement
that, as of the date of this Agreement, have been formally proposed that are    
not yet in effect, is not expected by the Company to lead to any material       
change in the Company's disclosures as set forth in the Filed Company SEC       
Documents.                                                                      

     (e) None of the Company Subsidiaries is, or has at any time since
January 1, 2002 been, subject to the reporting requirements of Sections 13(a)   
and 15(d) of the Exchange Act.                                                  

        SECTION 3.07. INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company for inclusion or incorporation by reference    
in (i) the registration statement on Form S-4 to be filed with the SEC by       
Parent in connection with the Share Issuance (the "Form S-4") will, at the      
time the Form S-4 is filed with the SEC, at any time it is amended or           
supplemented or at the time it becomes effective under the Securities Act,      
contain any untrue statement of a material fact or omit to state any material   
fact required to be stated therein or necessary to make the statements therein  
not misleading, or (ii) the Joint Proxy Statement will, at the date it is       
first mailed to the Company's stockholders or Parent's stockholders or at the   
time of the Company Stockholders Meeting or the Parent Stockholders Meeting     
(as defined in Section 6.01(e)), contain any untrue statement of a material     
fact or omit to state any material fact required to be stated therein or        
necessary in order to make the statements therein, in light of the              
circumstances under which they are made, not misleading. The Joint Proxy        
Statement will comply as to form in all material respects with the              
requirements of the Exchange Act and the rules and regulations thereunder,      
except that no representation is made by the Company with respect to            
statements made or incorporated by reference therein based on information       
supplied by Parent or Sub in writing for inclusion or incorporation by          
reference in the Form S-4 or the Joint Proxy Statement.                         

        SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent audited financial statements included in the Filed Company SEC  
Documents to the date of this Agreement, the Company has conducted its          
business only in the ordinary course, and during such period there has not      
been:                                                                           

(i) any state of facts, event, change, effect, development, 
 condition or occurrence that, individually or in the aggregate, has had
or would reasonably be expected to have a Company Material Adverse    
Effect;                                                               

     (ii) any declaration, setting aside or payment of any dividend or
 other distribution (whether in cash, stock or property) with respect to
any Company Common Stock or any repurchase for value by the Company of
any Company Common Stock;                                             

   (iii) any split, combination or reclassification of any Company
  Common Stock or any issuance or the authorization of any issuance of any
  other securities in respect of, in lieu of or in substitution for shares
of Company Common Stock;                                              

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     (iv) (A) any granting by the Company or any Company Subsidiary to
any Participant (as defined in Section 3.10(a)) of any loan or any    
increase in compensation, benefits, perquisites or any bonus or award,
   except in the ordinary course of business consistent with prior practice,
(B) any payment of any bonus to any Participant or (C) any granting by
the Company or any Company Subsidiary to any such Participant of any  
  increase in severance, change in control or termination pay or benefits,
 in each case, except as was required under any employment, severance or
termination agreements in effect as of the date of the most recent    
   audited financial statements included in the Filed Company SEC Documents;

  (v) any damage, destruction or loss, whether or not covered by
insurance, that individually or in the aggregate has had or would     
reasonably be expected to have a Company Material Adverse Effect;     

     (vi) any change in accounting methods, principles or practices by
the Company or any Company Subsidiary, except insofar as may have been
required by a change in GAAP;                                         

     (vii) any material elections with respect to Taxes (as defined in
 Section 3.09) by the Company or any Company Subsidiary or settlement or
 compromise by the Company or any Company Subsidiary of any material Tax
liability or refund;                                                  

      (viii) any revaluation by the Company or any Company Subsidiary of
 any of the material assets of the Company or any Company Subsidiary; or

   (ix) any other action or inaction by the Company or any Company
Subsidiary that would have violated Section 5.01(a) if taken after the
date of this Agreement.                                               

SECTION 3.09. TAXES. (a) As used in this Agreement:         

     "TAXES" shall mean all (i) Federal, state and local, domestic and
foreign, taxes, assessments, duties or similar charges of any kind whatsoever,  
including all corporate franchise, income, sales, use, ad valorem, receipts,    
value added, profits, license, withholding, employment, excise, property, net   
worth, capital gains, transfer, stamp, documentary, social security, payroll,   
environmental, alternative minimum, occupation, recapture and other taxes, and  
including any interest, penalties and additions imposed with respect to such    
amounts; (ii) liability for the payment of any amounts of the type described    
in clause (i) as a result of being a member of an affiliated, consolidated,     
combined, unitary or aggregate group; and (iii) liability for the payment of    
any amounts as a result of an express or implied obligation to indemnify any    
other person with respect to the payment of any amounts of the type described   
in clause (i) or (ii).                                                          

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       "TAXING AUTHORITY" shall mean any Federal, state or local, domestic
or foreign, governmental body (including any subdivision, agency or commission  
thereof), or any quasi-governmental body, in each case, exercising regulatory   
authority in respect of Taxes.                                                  

      "TAX RETURN" shall mean all returns, declarations of estimated tax
payments, reports, estimates, information returns and statements, including     
any related or supporting information with respect to any of the foregoing,     
filed or to be filed with any Taxing Authority in connection with the           
determination, assessment, collection or administration of any Taxes.           

        (b) The Company and each Company Subsidiary has timely filed, or has
caused to be timely filed on its behalf, all Federal, state and local,          
domestic and foreign, income and franchise Tax Returns and all other Tax        
Returns required to be filed by or on behalf of the Company and each Company    
Subsidiary in the manner prescribed by applicable law. All such Tax Returns     
are complete and correct in all material respects. The Company and each         
Company Subsidiary has timely paid (or Company has paid on any Company          
Subsidiary's behalf) all Taxes due from it with respect to the taxable periods  
covered by such Tax Returns and all other Taxes for which the Company and each  
Company Subsidiary is or might otherwise be liable, and, in accordance with     
GAAP, the most recent financial statements contained in the Filed Company SEC   
Documents reflects an adequate reserve for all Taxes payable by the Company     
and each Company Subsidiary for all taxable periods and portions thereof        
through the date of such balance sheet. Neither the Company nor any Company     
Subsidiary has requested any extension of time within which to file any Tax     
Return which Tax Return has not yet been filed. Neither the Company nor any     
Company Subsidiary has any liability for any Taxes of any person other than     
itself or any other affiliated group of which the Company is the parent (i)     
under Treasury Regulation Section 1.1502-6 (or any similar provision of         
Federal, state or local, domestic or foreign, law), (ii) as a transferee or     
successor or (iii) by contract or otherwise.                                    

      (c) No Federal, state or local, domestic or foreign, Tax Return of
the Company or any Company Subsidiary is under audit or examination by any      
Taxing Authority, and no written or unwritten notice of such an audit or        
examination has been received by the Company or any Company Subsidiary. Each    
material deficiency resulting from any audit or examination relating to Taxes   
by any Taxing Authority has been timely paid and there is no deficiency,        
refund litigation, proposed adjustment or matter in controversy with respect    
to any Taxes due and owing by the Company or any Company Subsidiary. No issues  
relating to Taxes were raised by the relevant Taxing Authority during any       
presently pending audit or examination, and no issues relating to Taxes were    
raised by the relevant Taxing Authority in any completed audit or examination   
that would reasonably be expected to recur in a later taxable period. The       
Company has delivered to Parent documents setting forth the dates of the most   
recent audits or examinations, if any, of the Company or any Company            
Subsidiary by any Taxing Authority in respect of Federal, state and local,      
domestic and foreign, Taxes for                                                 

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all taxable periods for which the statute of limitations has not yet expired.   
The Tax Returns of the Company and each Company Subsidiary have been examined   
by the Internal Revenue Service or other relevant Taxing Authority or the       
relevant statute of limitations has closed with respect to any Federal, state   
and local, domestic and foreign, Tax Returns for all years through 1999.        

        (d) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any Taxes and    
no power of attorney with respect to any Taxes has been executed or filed with  
any Taxing Authority by or on behalf of the Company or any Company Subsidiary.  

       (e) No material Liens for Taxes exist with respect to any assets or
properties of the Company or any Company Subsidiary, except for statutory       
liens for Taxes not yet due.                                                    

(f) Except for agreements among the Company and any Company 
Subsidiary, copies of which have been delivered to Parent, neither the Company  
nor any Company Subsidiary is a party to or bound by any tax sharing            
agreement, tax indemnity obligation or similar agreement, arrangement or        
practice with respect to Taxes (including any advance pricing agreement,        
closing agreement or other agreement relating to Taxes with any Taxing          
Authority).                                                                     

   (g) The Company and each Company Subsidiary has complied in all
material respects with all applicable statutes, ordinances, laws, rules and     
regulations relating to the payment and withholding of Taxes (including         
withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the      
Code or similar provisions under any Federal, state or local, domestic or       
foreign, laws) and has, within the time and the manner prescribed by law,       
withheld from and paid over to the proper Governmental Entities all amounts     
required to be so withheld and paid over under applicable Law.                  

        (h) Neither the Company nor any Company Subsidiary has been a United
States real property holding corporation within the meaning of Section          
897(c)(2) of the Code during the applicable period specified in Section         
897(c)(1)(A)(ii) of the Code or made an election under Section 897(i) of the    
Code to be treated as a domestic corporation for purposes of Sections 897,      
1445 and 6039C of the Code.                                                     

        (i) Neither the Company nor any Company Subsidiary has ever (i) made
an election under Section 1362 of the Code to be treated as an S corporation    
for Federal income tax purposes or (ii) made a similar election under any       
comparable provision of any Federal, state, local, domestic or foreign, tax     
Law.                                                                            

      (j) Neither the Company nor any Company Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" (within the   
meaning of Section 355(a)(1)(A) of the Code) in any distribution of stock       
qualifying or intended to                                                       

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qualify for tax-free treatment under Section 355 of the Code within the         
two-year period ending on the date of this Agreement.                           

      (k) Neither the Company nor any Company Subsidiary is, or has ever
been, a personal holding company within the meaning of Section 542 of the Code  
or a foreign personal holding company within the meaning of Section 552 of the  
Code.                                                                           

        SECTION 3.10. ABSENCE OF CHANGES IN BENEFIT PLANS. (a) From the date
of the most recent audited financial statements included in the Filed Company   
SEC Documents to the date of this Agreement, neither the Company nor any        
Company Subsidiary has terminated, adopted, amended, modified or agreed to      
amend or modify (or announced an intention to amend or modify) any collective   
bargaining agreement or any bonus, pension, profit sharing, deferred            
compensation, incentive compensation, stock ownership, stock purchase, stock    
appreciation, restricted stock, stock option, phantom stock, performance,       
retirement, thrift, savings, stock bonus, cafeteria, paid time off,             
perquisite, fringe benefit, vacation, severance, disability, death benefit,     
hospitalization, medical or other welfare benefit or other plan, program,       
arrangement or understanding, whether oral or written, formal or informal,      
funded or unfunded (whether or not legally binding) maintained, contributed to  
or required to be maintained or contributed to by the Company or any Company    
Subsidiary or any other person or entity that, together with the Company or     
any Company Subsidiary, is treated as a single employer under Section 414(b),   
(c), (m) or (o) of the Code (each, a "Commonly Controlled Entity"), in each     
case providing benefits to any current or former employee, officer, director    
or independent contractor of the Company or any Company Subsidiary (each, a     
"Participant") and whether or not subject to United States law (collectively,   
"Company Benefit Plans") or has made any change in any actuarial or other       
assumption used to calculate funding obligations with respect to any Company    
Benefit Plan that is a Company Pension Plan (as defined in Section 3.11), or    
any change in the manner in which contributions to any such Company Pension     
Plan are made or the basis on which such contributions are determined, other    
than changes made pursuant to any collective bargaining agreement to which the  
Company or any Company Subsidiary is a party. Since December 31, 2002, the      
Company has not adopted, amended, modified or agreed to amend or modify (or     
announced an intention to amend or modify) any Company Benefit Plan so as to    
accelerate the vesting of any Company Employee Stock Option.                    

(b) As of the date of this Agreement there (i) is not any   
employment, deferred compensation, severance, change in control, termination,   
employee benefit, loan, indemnification, retention, stock repurchase, stock     
option, consulting or similar agreement, commitment or obligation between the   
Company or any Company Subsidiary, on the one hand, and any Participant, on     
the other hand, (ii) any agreement between the Company or any Company           
Subsidiary, on the one hand, and any Participant, on the other hand, the        
benefits of which are contingent, or the terms of which are materially          
altered, upon the occurrence of transactions involving the Company or any       
Company Subsidiary of the nature contemplated by this Agreement or (iii) any    
trust or insurance Contract or                                                  

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other agreement to fund or otherwise secure payment of any compensation or      
benefit to be provided to any Participant (all such agreements under this       
clause (b), collectively, "Company Benefit Agreements").                        

  SECTION 3.11. ERISA COMPLIANCE; EXCESS PARACHUTE PAYMENTS. (a)
Section 3.11(a) of the Company Disclosure Letter contains a list of all         
"employee pension benefit plans" (as defined in Section 3(2) of the Employee    
Retirement Income Security Act of 1974, as amended ("ERISA")) ("Company         
Pension Plans"), "employee welfare benefit plans" (as defined in Section 3(1)   
of ERISA) and all other material Company Benefit Plans maintained, or           
contributed to, by the Company or any Company Subsidiary for the benefit of     
any Participant. Each Company Benefit Plan (other than Company Multiemployer    
Pension Plans (as defined in Section 3.11(c)), and, to the knowledge of the     
Company, each Company Multiemployer Pension Plan has been administered in       
material compliance with its terms and applicable Law, and the terms of any     
applicable collective bargaining agreements. The Company has delivered to       
Parent true, complete and correct copies of (i) each Company Benefit Plan       
required to be listed on Section 3.11(a) of the Company Disclosure Letter and   
each Company Benefit Agreement (or, in the case of any unwritten Company        
Benefit Plans or Company Benefit Agreements, written descriptions thereof),     
(ii) the two most recent annual reports required to be filed, or such similar   
reports, statements, information returns or material correspondence filed with  
or delivered to any Governmental Entity, with respect to each Company Benefit   
Plan (including reports filed on Form 5500 with accompanying schedules and      
attachments), (iii) the most recent summary plan description prepared for each  
Company Benefit Plan, (iv) each trust agreement and group annuity contract and  
other documents relating to the funding or payment of benefits under any        
Company Benefit Plan, (v) the most recent determination or qualification        
letter issued by any Governmental Entity for each Company Benefit Plan          
intended to qualify for favorable tax treatment, as well as a true, correct     
and complete copy of each pending application for a determination letter, if    
applicable, and (vi) the two most recent actuarial valuations for each Company  
Benefit Plan. All Participant data necessary to administer each Company         
Benefit Plan, other than any Company Benefit Plan that is a Company             
Multiemployer Pension Plan, and Company Benefit Agreement is in the possession  
of the Company and is in a form that is sufficient for the proper               
administration of the Company Benefit Plans and Company Benefit Agreements in   
accordance with their terms and all applicable Laws and such data is complete   
and correct in all material respects.                                           

   (b) All Company Pension Plans (other than Company Multiemployer
Pension Plans (as defined in Section 3.11(c)), and, to the knowledge of the     
Company, each Company Multiemployer Pension Plan have been the subject of       
determination letters from the Internal Revenue Service to the effect that      
such Company Pension Plans are qualified and exempt from Federal income taxes   
under Sections 401(a) and 501(a), respectively, of the Code, and no such        
determination letter has been revoked nor, to the knowledge of the Company,     
has revocation been threatened, nor has any such Company Pension Plan been      
amended since the date of its most recent determination letter or               

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application therefor in any respect that would adversely affect its             
qualification or materially increase its costs or require security under        
Section 307 of ERISA. No Company Pension Plans are required to have been        
approved by any non-U.S. Governmental Entity.                                   

      (c) During the past six years neither the Company nor any Commonly
Controlled Entity has maintained, contributed to or been obligated to maintain  
or contribute to, or has any actual or contingent liability under, any Company  
Benefit Plan that is subject to Title IV of ERISA, other than any Company       
Pension Plan that is a "multiemployer plan" within the meaning of Section       
4001(a)(3) of ERISA (a "Company Multiemployer Pension Plan"). There have been   
no non-exempt "prohibited transactions" (as such term is defined in Section     
406 of ERISA or Section 4975 of the Code) with respect to any Company Benefit   
Plan that is subject to ERISA or any other breach of fiduciary responsibility   
that could reasonably be expected to subject the Company, any Company           
Subsidiary or any officer of the Company or any Company Subsidiary or any of    
the Company Benefit Plans which are subject to ERISA, or, to the knowledge of   
the Company, any trusts created thereunder or any trustee or administrator      
thereof to the tax or penalty on prohibited transactions imposed by such        
Section 4975 or to any material liability under Section 502(i) or 502(1) of     
ERISA or to any other material liability for breach of fiduciary duty under     
ERISA or any other applicable Law. No Company Pension Plan or related trust     
has been terminated. Neither the Company nor any Company Subsidiary has         
incurred any liability that remains unsatisfied with respect to a "complete     
withdrawal" or a "partial withdrawal" (as such terms are defined in Sections    
4203 and 4205, respectively, of ERISA) since the effective date of such         
Sections 4203 and 4205 with respect to any Multiemployer Pension Plan.          

    (d) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, whether or not subject to ERISA, (i) no such Company      
Benefit Plan is funded through a "welfare benefits fund" (as such term is       
defined in Section 419(e) of the Code), (ii) each such Company Benefit Plan     
that is a "group health plan" (as such term is defined in Section 5000(b)(1)    
of the Code), complies, in all material respects, with the applicable           
requirements of Section 4980B(f) of the Code or any similar state statute,      
(iii) no such Company Benefit Plan provides benefits after termination of       
employment, except where the cost thereof is borne entirely by the former       
employee (or his eligible dependents or beneficiaries) or as required by        
Section 4980B(f) of the Code or any similar state statute, (iv) each such       
Company Benefit Plan (including any such Plan covering retirees or other        
former employees) may be amended or terminated without material liability to    
the Company and the Company Subsidiary on or at any time after the Effective    
Time and (v) Section 3.11(d)(v) of the Company Disclosure Letter indicates      
whether each welfare plan is self-insured or insured through third-party        
coverage.                                                                       

      (e) No amount or other entitlement that could be received (whether
in cash or property or the vesting of property) as a result of any of the       
transactions contemplated hereby (alone or in combination with any other        
event) by any Participant                                                       

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who is a "disqualified individual" (as such term is defined in final Treasury   
Regulation Section 1.280G-1) (each, a "Disqualified Individual") under any      
Company Benefit Plan, Company Benefit Agreement or other compensation           
arrangement currently in effect would be characterized as an "excess parachute  
payment" (as such term is defined in Section 280G(b)(1) of the Code) and no     
such disqualified individual is entitled to receive any additional payment      
from the Company or any other person in the event that the excise tax required  
by Section 4999(a) of the Code is imposed on such disqualified individual.      

      (f) The execution and delivery by the Company of this Agreement do
not, and the consummation of the Transactions and compliance with the terms     
hereof will not (either alone or in combination with any other event) (i)       
entitle any Participant to any additional compensation, severance or other      
benefits, (ii) accelerate the time of payment or vesting or trigger any         
payment or funding (through a grantor trust or otherwise) of compensation or    
benefits under, increase the amount payable or trigger any other material       
obligation pursuant to, any Company Benefit Plan or Company Benefit Agreement   
or (iii) result in any breach or violation of, or a default (with or without    
notice or lapse of time or both) under, any Company Benefit Plan or Company     
Benefit Agreement.                                                              

      (g) Since January 1, 2001, and through the date of this Agreement,
neither the Company nor any Company Subsidiary has received notice of, and, to  
the knowledge of the Company, there are no (i) material pending termination     
proceedings or other suits, claims (except claims for benefits payable in the   
normal operation of the Company Benefit Plans), actions or proceedings against  
or involving or asserting any rights or claims to benefits under any Company    
Benefit Plan or Company Benefit Agreement or (ii) pending investigations        
(other than routine inquiries) by any Governmental Entity with respect to any   
Company Benefit Plan or Company Benefit Agreement. All contributions, premiums  
and benefit payments under or in connection with the Company Benefit Plans or   
Company Benefit Agreements that are required to have been made by the Company   
or any Company Subsidiary have been timely made, accrued or reserved for in     
all material respects.                                                          

       (h) Neither the Company nor any Company Subsidiary has any material
liability or obligations, including under or on account of a Company Benefit    
Plan or Company Benefit Agreement, arising out of the hiring of persons to      
provide services to the Company or any Company Subsidiary and treating such     
persons as consultants or independent contractors and not as employees of the   
Company or any Company Subsidiary.                                              

SECTION 3.12. LITIGATION. There is no suit, claim, action,  
investigation or proceeding pending or, to the knowledge of the Company,        
threatened against the Company or any Company Subsidiary that, individually or  
in the aggregate, has had or would reasonably be expected to have a Company     
Material Adverse Effect, nor is there                                           

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any Judgment outstanding against the Company or any Company Subsidiary that     
has had or would reasonably be expected to have a Company Material Adverse      
Effect.                                                                         

      SECTION 3.13. COMPLIANCE WITH APPLICABLE LAWS. (a) The Company and
the Company Subsidiaries and their relevant personnel and operations are in     
compliance with all applicable Laws, including applicable Gaming Laws and Laws  
relating to occupational health and safety, except to the extent that the       
failure to be in compliance with any such Law has not had and would not         
reasonably be expected to have a Company Material Adverse Effect. Neither the   
Company nor any Company Subsidiary has received any written communication       
during the past two years from a Governmental Entity that alleges that the      
Company or a Company Subsidiary is not in compliance in any material respect    
with any applicable Law. The Company and the Company Subsidiaries have in       
effect all permits, licenses, variances, exemptions, authorizations, operating  
certificates, franchises, orders and approvals of all Governmental Entities     
(collectively, "Permits"), necessary or advisable for them to own, lease or     
operate their properties and assets and to carry on their businesses as now     
conducted, except for such Permits the absence of which has not had or would    
not reasonably be expected to have a Company Material Adverse Effect. There     
has occurred no violation of, default (with or without notice or lapse of time  
or both) under, or event giving to others any right of termination, amendment   
or cancelation of, with or without notice or lapse of time or both, any such    
Permit, except for any such violation, default or event which has not had or    
would not reasonably be expected to have a Company Material Adverse Effect.     
There is no event which, to the knowledge of the Company, would reasonably be   
expected to result in the revocation, cancelation, non-renewal or adverse       
modification of any such Permit, except for any such event that has not had or  
would not reasonably be expected to have a Company Material Adverse Effect.     
Notwithstanding the foregoing, this Section 3.13(a) does not relate to matters  
with respect to Taxes (which are the subject of Section 3.09), ERISA (which     
are the subject of Section 3.11), labor Laws (which are the subject of Section  
3.16) or Environmental Laws (which are the subject of Section 3.18).            

     (b) The term "Gaming Laws" means, with respect to any person, any
Federal, state or local statute, law, ordinance, rule, regulation, permit,      
consent, approval, license, judgment, order, decree, injunction or other        
authorization governing or relating to the current or contemplated casino and   
gaming activities and operations of such person and its subsidiaries,           
including the rules and regulations established by the Nevada State Gaming      
Control Board, the Nevada Gaming Commission and the Clark County Liquor and     
Gaming Licensing Board (collectively, the "Nevada Gaming Authorities").         

        SECTION 3.14. ASSETS OTHER THAN REAL PROPERTY INTERESTS. The Company
and the Company Subsidiaries have good and valid title to all of their          
respective properties and assets, in each case free and clear of all Liens,     
except (i) mechanics', carriers', workmen's, repairmen's or other like Liens    
arising or incurred in the ordinary course of business relating to obligations  
that are not delinquent or that are being contested by the Company or a         

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Company Subsidiary and for which the Company or a Company Subsidiary has        
established adequate reserves, (ii) Liens for Taxes that are not due and        
payable or that may thereafter be paid without interest or penalty, (iii)       
Liens that secure debt obligations that are reflected as liabilities on the     
balance sheet of the Company and its consolidated subsidiaries as of December   
31, 2003 contained in the Filed Company SEC Documents and the existence of      
which is referred to in the notes to such balance sheet, (iv) Liens arising     
under original purchase price conditional sales contracts and equipment leases  
with third parties entered into in the ordinary course of business and (v)      
other imperfections of title or encumbrances, if any, that, individually or in  
the aggregate, do not materially impair, and would not reasonably be expected   
materially to impair, the continued use and operation of the assets to which    
they relate in the conduct of the business of the Company and the Company       
Subsidiaries as presently conducted. This Section 3.14 does not relate to real  
property or interests in real property, such items being the subject of         
Section 3.15, or to Intellectual Property, such items being the subject of      
Section 3.19.                                                                   

       SECTION 3.15. REAL PROPERTY. Section 3.15 of the Company Disclosure
Letter sets forth a complete list of all real property and interests in real    
property owned in fee by the Company or any Company Subsidiary (individually,   
an "Owned Property"). Section 3.15 of the Company Disclosure Letter sets forth  
a complete list of all real property and interests in real property leased by   
the Company or any Company Subsidiary (individually, a "Leased Property") and   
any prime or underlying leases relating thereto. The Company or a Company       
Subsidiary has good and marketable fee title to all Owned Property and good     
and valid interest in the leasehold estates in all Leased Property (an Owned    
Property or Leased Property being sometimes referred to herein, individually,   
as a "Company Property"), in each case subject only to (i) Liens described in   
clause (i), (ii), (iii) or (v) of Section 3.14, (ii) leases, subleases and      
similar agreements set forth in Section 3.15 of the Company Disclosure Letter,  
(iii) easements, covenants, rights-of-way and other similar restrictions of     
record (other than options or rights of first refusal or offer to purchase) or  
(iv) any conditions that would be shown by a current, accurate survey or        
physical inspection of any Company Property made on the date of this            
Agreement. Any material reciprocal easement or operating agreements with        
respect to Company Property are set forth in Section 3.15 of the Company        
Disclosure Letter.                                                              

       SECTION 3.16. LABOR MATTERS. Section 3.16 of the Company Disclosure
Letter contains a list of each collective bargaining agreement between the      
Company or any Company Subsidiary and any labor union. Since January 1, 2001,   
neither the Company nor any Company Subsidiary has experienced any labor        
strikes, union organization attempts, requests for representation, work         
slowdowns or stoppages or disputes due to labor disagreements, and to the       
knowledge of the Company and the Company Subsidiaries there is currently no     
such action threatened against or affecting the Company or any Company          
Subsidiary. The Company and the Company Subsidiaries are each in compliance     
with all applicable Laws with respect to labor relations, employment and        
employment practices, occupational safety and health standards, terms and       
conditions                                                                      

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of employment and wages and hours, human rights, pay equity and workers         
compensation, except to the extent that the failure to be in compliance with    
any such Law has not had and would not reasonably be expected to have a         
Company Material Adverse Effect, and is not engaged in any unfair labor         
practice. There is no unfair labor practice charge or complaint against the     
Company or any Company Subsidiary pending or, to the knowledge of the Company   
or any Company Subsidiary, threatened before the National Labor Relations       
Board or any comparable Federal, state, provincial or foreign agency or         
authority that would reasonably be expected to result in material liability to  
the Company. No grievance or arbitration proceeding arising out of a            
collective bargaining agreement is pending or, to the knowledge of the Company  
or any Company Subsidiary, threatened against the Company or any Company        
Subsidiary that would reasonably be expected to result in material liability    
to the Company.                                                                 

    SECTION 3.17. CONTRACTS. (a) Neither the Company nor any Company
Subsidiary is a party to or bound by any:                                       

(i) employment agreement or employment contract;            

  (ii) covenant not to compete or other covenant restricting the
business or operations of the Company or any Company Subsidiary;      

     (iii) Contract with any officer or director of the Company (other
than employment agreements covered by clause (i) above);              

     (iv) Contract under which the Company or a Company Subsidiary has
borrowed or agreed to borrow any money from, or issued any note, bond,
 debenture or other evidence of indebtedness to, any person or any other
   note, bond, debenture or other evidence of indebtedness of the Company or
 a Company Subsidiary in any such case which, individually, is in excess
of $1,000,000;                                                        

 (v) Contract (including any so-called take-or-pay or keepwell
   agreements) under which (A) any person including the Company or a Company
Subsidiary, has directly or indirectly guaranteed indebtedness,       
liabilities or obligations of the Company or a Company Subsidiary in  
excess of $1,000,000 or (B) the Company or a Company Subsidiary has   
directly or indirectly guaranteed indebtedness, liabilities or        
obligations of any person, including the Company or another Company   
   Subsidiary, in excess of $1,000,000 (in each case other than endorsements
for the purpose of collection in the ordinary course of business);    

      (vi) Contract under which the Company or a Company Subsidiary has,
directly or indirectly, made any advance, loan, extension of credit or
  capital contribution to, or other investment in, any person in excess of
   $1,000,000 (other than the Company or a Company Subsidiary and other than
extensions of trade credit in the ordinary course of business);       

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   (vii) Contract granting a Lien upon any Company Property or any
other asset of the Company or any Company Subsidiary securing         
  indebtedness or other obligations, in each case in excess of $1,000,000;

  (viii) Contract providing for indemnification of any person in
   excess of $1,000,000 with respect to material liabilities relating to any
current or former business of the Company, a Company Subsidiary or any
predecessor person;                                                   

  (ix) a Contract not made in the ordinary course of business in
which the amount involved exceeds $1,000,000;                     

     (x) (A) a Contract with a Governmental Entity in which the amount
involved exceeds $1,000,000 and (B) a material license or permit by or
from any Governmental Entity;                                         

      (xi) currency exchange, interest rate exchange, commodity exchange
or similar Contract;                                                  

  (xii) a Contract for any joint venture, partnership or similar
arrangement;                                                          

 (xiii) a lease, sublease or similar agreement with respect to
Company Property in which the amount involved exceeds $1,000,000;     

        (xiv) a Contract under which the Company or a Company Subsidiary has
agreed to purchase or lease any real property or any interest in real 
   property for a purchase price in excess of $1,000,000 or an annual rental
   in excess of $1,000,000 or to construct any improvements on real property
  or a leasehold interest in real property for a contract sum in excess of
$1,000,000; or                                                        

      (xv) a Contract other than as set forth above to which the Company
   or a Company Subsidiary is a party or by which it or any of its assets or
businesses is bound or subject that is material to the business of the
Company and the Company Subsidiaries or the use or operation of their 
assets and in which the amount involved exceeds $10,000,000.          

     (b) All Contracts required to be listed in the Company Disclosure
Letter (the "Company Contracts") are valid, binding and enforceable against     
the Company or the applicable Company Subsidiary in accordance with their       
respective terms and, to the knowledge of the Company, are in full force and    
effect in all material respects. The Company or the applicable Company          
Subsidiary has performed all material obligations required to be performed by   
it to date under the Company Contracts, and it is not (with or without the      
lapse of time or the giving of notice, or both) in breach or default in any     
material respect thereunder and, to the knowledge of the Company, no other      
party to any Company Contract is (with or without the lapse of time or the      
giving of notice, or both) in breach or default in any material respect         
thereunder. None of the Company and the                                         

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Company Subsidiaries has received any written notice of the intention of any    
party to terminate any Company Contract, and no party has, to the knowledge of  
the Company, any such intention. Complete and correct copies of all Company     
Contracts, together with all modifications and amendments thereto, have been    
previously delivered or made available to Parent.                               

     SECTION 3.18. ENVIRONMENTAL MATTERS. Except for such matters that
individually or in the aggregate have not had, and would not reasonably be      
expected to have, a Company Material Adverse Effect:                            

      (a) the Company and each of the Company Subsidiaries are, and have
been, in compliance with all Environmental Laws (as defined below), and         
neither the Company nor any of the Company Subsidiaries has received any (i)    
communication that alleges that the Company or any of the Company Subsidiaries  
is in violation of, or has liability under, any Environmental Law or (ii)       
written request for information pursuant to any Environmental Law;              

 (b) (i) the Company and each of the Company Subsidiaries have
obtained and are in compliance with all Permits, licenses and governmental      
authorizations pursuant to Environmental Law (collectively "Environmental       
Permits") necessary for their operations as currently conducted, (ii) all such  
Environmental Permits are valid and in good standing and (iii) neither the      
Company nor any of the Company Subsidiaries has been advised by any             
Governmental Entity of any actual or potential change in the status or terms    
and conditions of any Environmental Permit;                                     

        (c) there are no Environmental Claims (as defined below) pending or,
to the knowledge of the Company, threatened, against the Company or any of the  
Company Subsidiaries;                                                           

       (d) there have been no Releases (as defined below) of any Hazardous
Material (as defined below) that would reasonably be expected to form the       
basis of any Environmental Claim against the Company or any of the Company      
Subsidiaries or against any Person whose liabilities for such Environmental     
Claims the Company or any of the Company Subsidiaries has, or may have,         
retained or assumed, either contractually or by operation of law;               

       (e) there are no above-ground or underground storage tanks or known
or suspected asbestos-containing materials on, under or about property owned,   
operated or leased by the Company or any Company Subsidiary, nor, to the        
knowledge of the Company, were there any underground storage tanks on, under    
or about any such property in the past; and                                     

       (f) (i) neither the Company nor any of the Company Subsidiaries has
retained or assumed, either contractually or by operation of law, any           
liabilities or obligations that would reasonably be expected to form the basis  
of any Environmental                                                            

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Claim against the Company or any of the Company Subsidiaries, and (ii) to the   
knowledge of the Company, no Environmental Claims are pending against any       
Person whose liabilities for such Environmental Claims the Company or any of    
the Company Subsidiaries has, or may have, retained or assumed, either          
contractually or by operation of law.                                           

(g) DEFINITIONS. As used in this Agreement:                 

(1) "ENVIRONMENTAL CLAIM" means any and all administrative, 
regulatory or judicial actions, suits, orders, demands, directives, claims,     
liens, judgments, investigations, proceedings or written or oral notices of     
noncompliance or violation by or from any Person alleging liability of          
whatever kind or nature (including liability or responsibility for the costs    
of enforcement proceedings, investigations, cleanup, governmental response,     
removal or remediation, natural resources damages, property damages, personal   
injuries, medical monitoring, penalties, contribution, indemnification and      
injunctive relief) arising out of, based on or resulting from (y) the presence  
or Release of, or exposure to, any Hazardous Materials at any location; or (z)  
the failure to comply with any Environmental Law;                               

       (2) "ENVIRONMENTAL LAWS" means all applicable federal, state, local
and foreign laws, rules, regulations, orders, decrees, judgments, legally       
binding agreements or Environmental Permits issued, promulgated or entered      
into by or with any Governmental Entity, relating to pollution, natural         
resources or protection of endangered or threatened species, human health or    
the environment (including ambient air, surface water, groundwater, land        
surface or subsurface strata);                                                  

  (3) "HAZARDOUS MATERIALS" means (y) any petroleum or petroleum
products, radioactive materials or wastes, asbestos in any form, urea           
formaldehyde foam insulation and polychlorinated biphenyls; and (z) any other   
chemical, material, substance or waste that in relevant form or concentration   
is prohibited, limited or regulated under any Environmental Law; and            

(4) "RELEASE" means any actual or threatened release, spill,
emission, leaking, dumping, injection, pouring, deposit, disposal, discharge,   
dispersal, leaching or migration into or through the environment (including     
ambient air, surface water, groundwater, land surface or subsurface strata) or  
within any building, structure, facility or fixture.                            

    SECTION 3.19. INTELLECTUAL PROPERTY. The Company and the Company
Subsidiaries own, or are validly licensed or otherwise have the right to use,   
all patents, patent rights, trademarks, trademark rights, trade names, trade    
name rights, service marks, service mark rights, copyrights and other           
proprietary intellectual property rights and computer programs (collectively,   
"Intellectual Property Rights"), other than such Intellectual Property Rights   
the absence of which have not had or would not reasonably be expected to have   
a Company Material Adverse Effect. No claims are pending or, to                 

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the knowledge of the Company, threatened that the Company or any Company        
Subsidiary is infringing or otherwise adversely affecting the rights of any     
person with regard to any Intellectual Property Right. To the knowledge of the  
Company, no person is infringing the rights of the Company or any Company       
Subsidiary with respect to any Intellectual Property Right.                     

    SECTION 3.20. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than Banc of        
America Securities LLC, the fees and expenses of which will be paid by the      
Company, is entitled to any broker's, finder's, financial advisor's or other    
similar fee or commission in connection with the Merger and the other           
Transactions based upon arrangements made by or on behalf of the Company. The   
Company has furnished to Parent a true and complete copy of all agreements      
between the Company and Banc of America Securities LLC relating to the Merger   
and the other Transactions.                                                     

        SECTION 3.21. OPINION OF FINANCIAL ADVISOR. The Company has received
the written opinion of Banc of America Securities LLC, dated the date of this   
Agreement, to the effect that, as of such date, the consideration to be         
received in the Merger by the holders of Company Common Stock, other than       
those holders receiving Merger Consideration in accordance with Sections        
2.01(c)(1) and 2.01(2), is fair to such holders from a financial point of       
view, a signed copy of which opinion has been (or will be promptly following    
the date of this Agreement) delivered to Parent.                                

ARTICLE IV  

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB  

       Except as expressly set forth in that certain letter (with specific
reference to the Section or Subsection of this Agreement to which the           
information stated in such disclosure relates and such other Sections or        
Subsections of this Agreement to the extent a matter is disclosed in such a     
way as to make its relevance to the information called for by such other        
Section or Subsection readily apparent), dated as of the date of this           
Agreement, from Parent and Sub to the Company (the "Parent Disclosure Letter")  
or in any Parent SEC Document (as defined in Section 4.06) filed and publicly   
available prior to the date of this Agreement (the "Filed Parent SEC            
Documents"), Parent and Sub, jointly and severally, represent and warrant to    
the Company that:                                                               

      SECTION 4.01. ORGANIZATION, STANDING AND POWER. Each of Parent and
each Significant Subsidiary (as such term is defined in Regulation S-X) of      
Parent is duly organized, validly existing and in good standing under the laws  
of the jurisdiction in which it is organized and has full corporate power and   
authority to conduct its businesses as presently conducted. Parent and each     
Significant Subsidiary (each, a "Parent Subsidiary") is duly qualified to do    
business in each jurisdiction where the nature of its business or the           
ownership or leasing of its properties make such qualification necessary        

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or the failure to so qualify individually or in the aggregate has had or would  
reasonably be expected to have a Parent Material Adverse Effect (as defined in  
Section 9.03). Parent has delivered to the Company true and complete copies of  
the articles of incorporation of Parent, as amended to the date of this         
Agreement (as so amended, the "Parent Charter"), and the by-laws of Parent, as  
amended to the date of this Agreement (as so amended, the "Parent By-laws").    

     SECTION 4.02. SUB; PARENT SUBSIDIARIES. (a) Since the date of its
incorporation, Sub has not carried on any business or conducted any operations  
other than the execution of this Agreement, the performance of its obligations  
hereunder and matters ancillary thereto.                                        

       (b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $1.00 per share, all of which have been validly         
issued, are fully paid and nonassessable and are owned by Parent free and       
clear of any Lien.                                                              

        (c) All the outstanding shares of capital stock of each other Parent
Subsidiary (other than Marine District Development Company, LLC, which is a     
joint venture of which Parent is a 50% owner) have been validly issued and are  
fully paid and non-assessable and are owned by Parent, by another Parent        
Subsidiary or by Parent and another Parent Subsidiary.                          

    SECTION 4.03. CAPITAL STRUCTURE. The authorized capital stock of
Parent consists of 200,000,000 shares of Parent Common Stock and 5,000,000      
shares of preferred stock, par value $0.01 per share. At the close of business  
on February 5, 2004, (i) 65,086,471 shares of Parent Common Stock were issued   
and outstanding, (ii) no shares of Parent Common Stock were held by Parent in   
its treasury and (iii) 7,617,524 shares of Parent Common Stock were subject to  
outstanding options to purchase Parent Common Stock granted under any stock     
option plan of Parent (a "Parent Employee Stock Option") and [187,122]          
additional shares of Parent Common Stock were reserved for issuance pursuant    
to stock option plans of Parent. Except as set forth above, at the close of     
business on February 5, 2004, no shares of capital stock or other voting        
securities of Parent were issued, reserved for issuance or outstanding, and     
since February 5, 2004, no shares of capital stock or other voting securities   
of Parent were issued by Parent, except for shares of Parent Common Stock       
issued upon the exercise of Parent Employee Stock Options outstanding as of     
February 5, 2004. There are no outstanding stock appreciation rights linked to  
the price of Parent Common Stock that were not granted in tandem with a         
related Parent Employee Stock Option. All outstanding shares of Parent Common   
Stock are, and all such shares that may be issued prior to the Effective Time   
will be when issued, duly authorized, validly issued, fully paid and            
nonassessable and not subject to or issued in violation of any purchase         
option, call option, right of first refusal, preemptive right, subscription     
right or any similar right under any provision of the NRS, the Parent Charter,  
the Parent By-laws or any Contract to which Parent is a party or otherwise      
bound. There are not any bonds, debentures, notes or other indebtedness         

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of Parent having the right to vote (or convertible into, or exchangeable for,   
securities having the right to vote) on any matters on which holders of Parent  
Common Stock may vote ("Voting Parent Debt"). Except as set forth above, as of  
the date of this Agreement, there are not any options, warrants, rights,        
convertible or exchangeable securities, "phantom" stock rights, stock           
appreciation rights, stock-based performance units, commitments, Contracts,     
arrangements or undertakings of any kind to which Parent or any Parent          
Subsidiary is a party or by which any of them is bound (i) obligating Parent    
or any Parent Subsidiary to issue, deliver or sell, or cause to be issued,      
delivered or sold, additional shares of capital stock or other equity           
interests in, or any security convertible or exercisable for or exchangeable    
into any capital stock of or other equity interest in, Parent or any Parent     
Subsidiary or any Voting Parent Debt, (ii) obligating Parent or any Parent      
Subsidiary to issue, grant, extend or enter into any such option, warrant,      
call, right, security, commitment, Contract, arrangement or undertaking or      
(iii) that give any person the right to receive any economic benefit or right   
similar to or derived from the economic benefits and rights occurring to        
holders of Parent Common Stock. As of the date of this Agreement, there are     
not any outstanding contractual obligations of Parent or any Parent Subsidiary  
to repurchase, redeem or otherwise acquire any shares of capital stock of       
Parent or any Parent Subsidiary.                                                

        SECTION 4.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a)
Each of Parent and Sub has all requisite corporate power and authority to       
execute and deliver this Agreement and to consummate the Merger and the other   
Transactions. The execution and delivery by each of Parent and Sub of this      
Agreement and the consummation by it of the Merger and the other Transactions   
have been duly authorized by all necessary corporate action on the part of      
Parent and Sub. Parent, as sole stockholder of Sub, has approved this           
Agreement. Each of Parent and Sub has duly executed and delivered this          
Agreement, and, assuming due authorization, execution and delivery of this      
Agreement by the Company, this Agreement constitutes its legal, valid and       
binding obligation, enforceable against it in accordance with its terms.        

   (b) The Board of Directors of Parent (the "Parent Board"), at a
meeting duly called and held, duly [and unanimously] adopted resolutions (i)    
approving this Agreement, the Merger and the Share Issuance, (ii) directing     
that the Share Issuance be submitted to a vote at the Parent Stockholders       
Meeting and (iii) recommending that Parent's stockholders approve the Share     
Issuance.                                                                       

        (c) The only vote of holders of any class or series of capital stock
of Parent necessary to approve the Share Issuance is the approval by the        
holders of a majority of the stockholders of Parent present and voting, in      
accordance with the requirements of the NYSE (the "Parent Stockholder           
Approval"). The affirmative vote of the holders of capital stock of Parent, or  
any of them, is not necessary to consummate any Transaction other than the      
Share Issuance.                                                                 

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        SECTION 4.05. NO CONFLICTS; CONSENTS. (a) The execution and delivery
by each of Parent and Sub of this Agreement do not, and the consummation by     
Parent and Sub of the Merger and the other Transactions and compliance by       
Parent and Sub with the terms hereof will not, conflict with, or result in any  
violation of or default (with or without notice or lapse of time, or both)      
under, or give rise to a right of termination, cancelation or acceleration of   
any obligation or to loss of a material benefit under, or to increased,         
additional, accelerated or guaranteed rights or entitlements of any person      
under, or result in the creation of any Lien upon any of the properties or      
assets of Parent or any of its subsidiaries under, any provision of (i) the     
Parent Charter, the Parent By-laws or the charter or organizational documents   
of any Parent Subsidiary, (ii) any Contract to which Parent or any Parent       
Subsidiary is a party or by which any of their respective properties or assets  
is bound or (iii) subject to the filings and other matters referred to in       
Section 4.04(b), any Judgment or Law applicable to Parent or any Parent         
Subsidiary or their respective properties or assets, other than, in the case    
of clauses (ii) and (iii) above, any such items that, individually or in the    
aggregate, have not had and would not reasonably be expected to have a Parent   
Material Adverse Effect.                                                        

      (b) No Consent of, or registration, declaration or filing with, or
permit from, any Governmental Entity is required to be obtained or made by      
Parent or any Parent Subsidiary in connection with the execution, delivery and  
performance of this Agreement or the consummation of the Transactions, other    
than (i) compliance with and filings under the HSR Act, (ii) the filing with    
the SEC of (A) the Form S-4 and the Joint Proxy Statement and (B) such reports  
under, or other applicable requirements of, the Exchange Act, as may be         
required in connection with this Agreement, the Merger and the other            
Transactions, (iii) the filing of the Articles of Merger with the Secretary of  
State of the State of Nevada, (iv) compliance with and such filings as may be   
required under applicable Environmental Laws, (v) compliance with and such      
filings as may be required under applicable Gaming Laws (including those        
promulgated by the Nevada Gaming Authorities), (vi) such filings as may be      
required in connection with the Taxes described in Section 6.09 and (vii) such  
other items that, individually or in the aggregate, have not had and would not  
reasonably be expected to have a Parent Material Adverse Effect.                

    SECTION 4.06. PARENT SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a)
Parent has filed all reports, schedules, forms, statements and other documents  
required to be filed by Parent with the SEC since January 1, 2003 pursuant to   
Sections 13(a) and 15(d) of the Exchange Act (the "Parent SEC Documents").      

       (b) As of its respective date, each Parent SEC Document complied in
all material respects with the requirements of the Exchange Act or the          
Securities Act, as the case may be, and the rules and regulations of the SEC    
promulgated thereunder applicable to such Parent SEC Document, and did not      
contain any untrue statement of a material fact or omit to state a material     
fact required to be stated therein or necessary in order to make the            
statements therein, in light of the circumstances under which they were made,   
not misleading. Except to the extent that information contained in any Filed    
Parent SEC                                                                      

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Document has been revised or superseded by a later filed Filed Parent SEC       
Document, none of the Parent SEC Documents contains any untrue statement of a   
material fact or omits to state any material fact required to be stated         
therein or necessary in order to make the statements therein, in light of the   
circumstances under which they were made, not misleading. The consolidated      
financial statements of Parent included in the Parent SEC Documents comply as   
to form in all material respects with applicable accounting requirements and    
the published rules and regulations of the SEC with respect thereto, have been  
prepared in accordance with GAAP (except, in the case of unaudited statements,  
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the  
periods involved (except as may be indicated in the notes thereto) and fairly   
present the consolidated financial position of Parent and its consolidated      
subsidiaries as of the dates thereof and the consolidated results of their      
operations and cash flows for the periods shown (subject, in the case of        
unaudited statements, to normal year-end audit adjustments).                    

       (c) Neither Parent nor any Parent Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)  
required by GAAP to be set forth on a consolidated balance sheet of Parent and  
its consolidated subsidiaries or in the notes thereto and that, individually    
or in the aggregate, would reasonably be expected to have a Parent Material     
Adverse Effect.                                                                 

      (d) The effectiveness of any additional SEC disclosure requirement
that, as of the date of this Agreement, have been formally proposed that are    
not yet in effect, is not expected by Parent to lead to any material change in  
Parent's disclosures as set forth in the Filed Parent SEC Documents.            

        SECTION 4.07. INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Parent or Sub for inclusion or incorporation by reference  
in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at    
any time it is amended or supplemented or at the time it becomes effective      
under the Securities Act, contain any untrue statement of a material fact or    
omit to state any material fact required to be stated therein or necessary to   
make the statements therein not misleading, or (ii) the Joint Proxy Statement   
will, at the date it is first mailed to the Company's stockholders or Parent's  
stockholders or at the time of the Company Stockholders Meeting or the Parent   
Stockholders Meeting, contain any untrue statement of a material fact or omit   
to state any material fact required to be stated therein or necessary in order  
to make the statements therein, in light of the circumstances under which they  
are made, not misleading. The Form S-4 will comply as to form in all material   
respects with the requirements of the Securities Act and the rules and          
regulations thereunder, except that no representation is made by Parent or Sub  
with respect to statements made therein based on information supplied by the    
Company for inclusion therein or incorporation by reference therein. The Joint  
Proxy Statement will comply as to form in all material respects with the        
requirements of the Exchange Act and the rules and regulations thereunder,      
except that no representation is made by Parent with respect to statements      
made or incorporated by                                                         

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reference therein based on information supplied by the Company in writing for   
inclusion or incorporation by reference in the Form S-4 or the Joint Proxy      
Statement.                                                                      

        SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent audited financial statements included in the Filed Parent SEC   
Documents to the date of this Agreement, (i) Parent has conducted its business  
only in the ordinary course and (ii) there has not been any state of facts,     
event, change, effect, development, condition or occurrence that, individually  
or in the aggregate, has had or would reasonably be expected to have a Parent   
Material Adverse Effect.                                                        

    SECTION 4.09. LITIGATION. There is no suit, action or proceeding
pending or, to the knowledge of Parent, threatened against Parent or any        
Parent Subsidiary that, individually or in the aggregate, has had or would      
reasonably be expected to have a Parent Material Adverse Effect, nor is there   
any Judgment outstanding against Parent or any Parent Subsidiary that has had   
or would reasonably be expected to have a Parent Material Adverse Effect.       

        SECTION 4.10. COMPLIANCE WITH APPLICABLE LAWS. Parent and the Parent
Subsidiaries and their relevant personnel and operations are in compliance      
with all applicable Laws, including applicable Gaming Laws and Laws relating    
to occupational health and safety, except to the extent that the failure to be  
in compliance with any such Law has not had and would not reasonably be         
expected to have a Parent Material Adverse Effect. Neither Parent nor any       
Parent Subsidiary has received any written communication during the past two    
years from a Governmental Entity that alleges that Parent or a Parent           
Subsidiary is not in compliance in any material respect with any applicable     
Law. Parent and the Parent Subsidiaries have in effect all Permits necessary    
or advisable for them to own, lease or operate their properties and assets and  
to carry on their businesses as now conducted, except for such Permits the      
absence of which has not had and would not reasonably be expected to have a     
Parent Material Adverse Effect. There has occurred no violation of, default     
(with or without notice or lapse of time or both) under, or event giving to     
others any right of termination, amendment or cancelation of, with or without   
notice or lapse of time or both, any such Permit, except for any such           
violation, default or event which has not had or would not reasonably be        
expected to have a Parent Material Adverse Effect. There is no event which, to  
the knowledge of Parent, would reasonably be expected to result in the          
revocation, cancelation, non-renewal or adverse modification of any such        
Permit.                                                                         

    SECTION 4.11. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than Deutsche Bank  
Group, the fees and expenses of which will be paid by Parent, is entitled to    
any broker's, finder's, financial advisor's or other similar fee or commission  
in connection with the Merger and the other Transactions based upon             
arrangements made by or on behalf of Parent or Sub.                             

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ARTICLE V 

COVENANTS RELATING TO CONDUCT OF BUSINESS 

     SECTION 5.01. CONDUCT OF BUSINESS. (a) Conduct of Business by the
Company. Except for matters set forth in Section 5.01(a) of the Company         
Disclosure Letter or otherwise expressly permitted by this Agreement, from the  
date of this Agreement to the Effective Time the Company shall, and shall       
cause each Company Subsidiary to, conduct its business in the usual, regular    
and ordinary course in substantially the same manner as previously conducted    
and use all reasonable efforts to preserve intact its current business          
organization, keep available the services of its current officers and           
employees and keep its relationships with customers, suppliers, licensors,      
licensees, distributors and others having business dealings with them to the    
end that its goodwill and ongoing business shall be unimpaired at the           
Effective Time. In addition, and without limiting the generality of the         
foregoing, except for matters set forth in Section 5.01(a) of the Company       
Disclosure Letter or otherwise expressly permitted by this Agreement, from the  
date of this Agreement to the Effective Time, the Company shall not, and shall  
not permit any Company Subsidiary to, do any of the following without the       
prior written consent of Parent, which consent shall not be unreasonably        
withheld or delayed:                                                            

   (i) (A) declare, set aside or pay any dividends on, or make any
 other distributions in respect of, any of its capital stock, other than
   the $3.50 per share dividend declared prior to the date of this Agreement
or dividends and distributions by a direct or indirect wholly owned   
   Company Subsidiary to its parent, (B) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other     
   securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (C) purchase, redeem or otherwise acquire any (1)   
   shares of capital stock of the Company or any Company Subsidiary, (2) any
other securities thereof or any rights, warrants or options to acquire
   any such shares or other securities or (3) any options, warrants, rights,
 securities, units, commitments, Contracts, arrangements or undertakings
of any kind that give any person the right to receive any economic    
 benefits and rights accruing to holders of capital stock of the Company
or any Company Subsidiary;                                            

    (ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
   securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, Voting Company Debt, voting    
 securities or convertible or exchangeable securities, (D) any "phantom"
 stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units or (E) any options, warrants, rights, securities,   
 units, commitments, Contracts, arrangements or undertakings of any kind
that give any person the right to receive any economic benefits and   
   rights accruing to holders of capital stock of the Company or any Company
Subsidiary,                                                           

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other than the issuance of Company Common Stock upon the exercise of  
  Company Employee Stock Options outstanding on the date of this Agreement
and in accordance with their present terms;                           

(iii) amend its articles of incorporation, by-laws or other 
comparable charter or organizational documents;                       

    (iv) acquire or agree to acquire (A) by merging or consolidating
  with, or by purchasing a substantial portion of the assets of, or by any
other manner, any equity interest in or business or any corporation,  
   partnership, joint venture, association or other business organization or
  division thereof or (B) any assets that are material, individually or in
the aggregate, to the Company and the Company Subsidiaries, taken as a
 whole, except purchases of inventory in the ordinary course of business
consistent with past practice;                                        

(v) (A) grant to any Participant any loan or increase in    
compensation, benefits, perquisites or any bonus or award, or pay any 
  bonus to any such person, except to the extent required under employment
agreements in effect as of the date of this Agreement as set forth in 
Section 3.10(b) of the Company Disclosure Letter, (B) grant to any    
 Participant any increase in severance, change in control or termination
pay or benefits, except to the extent required under any agreement in 
  effect as of the date of this Agreement, as set forth in Section 3.10(b)
 of the Company Disclosure Letter, (C) enter into any employment, change
in control, loan, retention, consulting, indemnification, severance,  
termination or similar agreement with any Participant, (D) take any   
  action to fund or in any other way secure the payment of compensation or
   benefits under any Company Benefit Plan or Company Benefit Agreement, (E)
establish, adopt, enter into, terminate or amend any collective       
 bargaining agreement, Company Benefit Plan or Company Benefit Agreement
or (F) take any action to accelerate any rights or benefits, including
vesting and payment, or make any material determinations, under any   
  collective bargaining agreement, Company Benefit Plan or Company Benefit
Agreement;                                                            

       (vi) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or 
results of operations of the Company, except insofar as may have been 
required by a change in GAAP;                                         

     (vii) sell, lease (as lessor), license or otherwise dispose of or
  subject to any Lien any properties or assets that have a fair value,
    individually, in excess of $250,000 or, in the aggregate, in excess of
$2,500,000;                                                       

    (viii) other than with respect to any credit facility or line of
   credit existing prior to the date of this Agreement, copies of which have
been previously delivered or made available to Parent, (A) incur any  
indebtedness for borrowed                                             

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   money or guarantee any such indebtedness of another person, issue or sell
any debt securities or warrants or other rights to acquire any debt   
 securities of the Company or any Company Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other     
   agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the
foregoing, except for short- term borrowings incurred in the ordinary 
  course of business consistent with past practice, or (B) make any loans,
advances or capital contributions to, or investments in, any other    
  person, other than to or in the Company or any direct or indirect wholly
owned Company Subsidiary;                                             

(ix) make or agree to make any new capital expenditure or   
  expenditures that, in the aggregate, would exceed the amount budgeted in
the Company's 2004 budget previously delivered to Parent;             

  (x) make any material Tax election or settle or compromise any
material Tax liability or refund;                                     

 (xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or 
  otherwise), other than the payment, discharge or satisfaction in respect
of any credit facility or line of credit existing prior to the date of
this Agreement, copies of which have been previously delivered or made
available to Parent, or the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in       
   accordance with their terms, of liabilities reflected or reserved against
   in, or contemplated by, the most recent consolidated financial statements
(or the notes thereto) of the Company included in the Company SEC     
  Documents or incurred in the ordinary course of business consistent with
 past practice, (B) cancel any indebtedness in excess of $50,000 owed to
the Company or waive any claims or rights of substantial value owed to
the Company or (C) waive the benefits of, or agree to modify in any   
   manner, any confidentiality, standstill or similar agreement to which the
Company or any Company Subsidiary is a party;                         

       (xii) enter into any Contract not set forth above having a duration
of more than one year and total payment obligations of the Company in 
excess of $1,000,000 (other than (A) the renewal, on substantially    
   similar terms, of any Contract existing on the date of this Agreement and
 (B) Contracts entered into in respect of capital expenditures permitted
by Section 5.01(a)(ix)); or                                           

   (xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.                                                    

      (b) OTHER ACTIONS. The Company and Parent shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or  
that would reasonably be expected to, result in (i) any of the representations  
and warranties of such                                                          

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party set forth in this Agreement that is qualified as to materiality becoming  
untrue, (ii) any of such representations and warranties that is not so          
qualified becoming untrue in any material respect or (iii) any condition to     
the Merger set forth in Article VII not being satisfied.                        

       (c) ADVICE OF CHANGES. The Company and Parent shall promptly advise
the other orally and in writing of any state of facts, event, change, effect,   
development, condition or occurrence that, individually or in the aggregate,    
has had or would reasonably be expected to have a Material Adverse Effect on    
such party.                                                                     

       SECTION 5.02. NO SOLICITATION. (a) The Company shall not, nor shall
it authorize or permit any Company Subsidiary to, nor shall it authorize or     
permit any officer, director or employee of, or any investment banker,          
attorney or other advisor or representative (collectively, "Representatives")   
of, the Company or any Company Subsidiary to, (i) directly or indirectly        
solicit, initiate or encourage the submission of, any Company Takeover          
Proposal (as defined in Section 5.02(e)), (ii) enter into any agreement with    
respect to any Company Takeover Proposal or (iii) directly or indirectly        
participate in any discussions or negotiations regarding, or furnish to any     
person any information with respect to, or take any other action to facilitate  
any inquiries or the making of any proposal that constitutes, or may            
reasonably be expected to lead to, any Company Takeover Proposal; provided,     
however, that prior to receipt of the Company Stockholder Approval, the         
Company may, in response to an unsolicited bona fide Company Takeover Proposal  
which did not result from a breach of this Section 5.02(a) and which the        
Company Board determines, in good faith, after consultation with outside        
counsel and financial advisors, may reasonably be expected to lead to a         
Superior Company Proposal (as defined in Section 5.02(e)), and subject to       
compliance with Section 5.02(c), (x) furnish information with respect to the    
Company to the person making such Company Takeover Proposal and its             
Representatives pursuant to a customary confidentiality agreement not less      
restrictive of the other party than the Confidentiality Agreement (as defined   
in Section 6.02) and (y) participate in discussions or negotiations with such   
person and its Representatives regarding any Company Takeover Proposal.         
Without limiting the foregoing, it is agreed that any violation of the          
restrictions set forth in the preceding sentence by any Representative of the   
Company or any Company Subsidiary, whether or not such person is purporting to  
act on behalf of the Company or any Company Subsidiary or otherwise, shall be   
deemed to be a breach of this Section 5.02(a) by the Company.                   

     (b) Neither the Company Board nor any committee thereof shall (i)
withdraw or modify in a manner adverse to Parent or Sub, or propose to          
withdraw or modify in a manner adverse to Parent or Sub, the approval or        
recommendation by the Company Board of this Agreement or the Merger, (ii)       
approve any letter of intent, agreement in principle, acquisition agreement or  
similar agreement relating to any Company Takeover Proposal or (iii) approve    
or recommend, or propose to approve or recommend, any Company Takeover          
Proposal. Notwithstanding the foregoing, if, prior                              

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to receipt of the Company Stockholder Approval, (v) the Company Board has       
received a Superior Company Proposal, (w) as a result thereof the Company       
Board shall have determined in good faith, after consultation with outside      
counsel, that it is required for the purpose of fulfilling its fiduciary        
duties under applicable Law, (x) the Company has notified Parent in writing of  
the determination described in clause (w) above, (y) at least three business    
days following receipt by Parent of the notice received in clause (x) above,    
and taking into account any revised proposal made by Parent since receipt of    
the notice referred to in clause (x) above, the Company Board determines that   
such Superior Company Proposal remains a Superior Company Proposal in           
accordance with clause (w) above, and (z) the Company is in compliance with     
this Section 5.02, the Company Board may withdraw or modify its approval or     
recommendation of the Merger and this Agreement.                                

      (c) The Company promptly shall advise Parent orally and in writing
of any Company Takeover Proposal or any inquiry with respect to or that would   
reasonably be expected to lead to any Company Takeover Proposal, the identity   
of the person making any such Company Takeover Proposal or inquiry and the      
material terms of any such Company Takeover Proposal or inquiry. The Company    
shall (i) keep Parent informed of the status (including any change to the       
terms thereof) of any such Company Takeover Proposal or inquiry and (ii)        
provide to Parent as soon as practicable after receipt or delivery thereof      
with copies of the Company Takeover Proposal (including any amendments or       
supplements thereto) and all such other material information provided in        
writing to the Company by the party making such Company Takeover Proposal.      

 (d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated  
by Rule 14e-2(a) promulgated under the Exchange Act or from making any          
required disclosure to the Company's stockholders if, in the good faith         
judgment of the Company Board, after consultation with outside counsel,         
failure so to disclose would be inconsistent with the fulfillment of its        
fiduciary duties or any other obligations under applicable Law.                 

(e) For purposes of this Agreement:                         

     "COMPANY TAKEOVER PROPOSAL" means (i) any proposal or offer for a
merger, consolidation, dissolution, recapitalization or other business
  combination involving the Company, (ii) any proposal for the issuance by
   the Company of over 30% of its equity securities as consideration for the
  assets or securities of another person or (iii) any proposal or offer to
acquire in any manner, directly or indirectly, over 30% of the equity 
securities or consolidated total assets of the Company, in each case  
other than the Merger.                                                

        "SUPERIOR COMPANY PROPOSAL" means any proposal made by a third party
to acquire substantially all the equity securities or assets of the   
Company, pursuant to a tender or exchange offer, a merger, a          
 consolidation, a liquidation or dissolution, a recapitalization, a sale
of all or substantially all its assets or                             

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otherwise, on terms which the Company Board determines in good faith, 
   after consultation with the Company's outside legal counsel and financial
advisors, to be more favorable from a financial point of view to the  
  holders of the Company Common Stock than the Merger, taking into account
all the terms and conditions of such proposal and this Agreement      
 (including any proposal by Parent to amend the terms of the Merger) and
  the Transactions; provided that the Company Board shall not so determine
 that any such proposal is a Superior Company Proposal prior to the time
  that is 36 hours after the time at which the Company has complied in all
material respects with Section 5.02(c) with respect to such proposal. 

ARTICLE VI  

ADDITIONAL AGREEMENTS 

 SECTION 6.01. PREPARATION OF THE FORM S-4 AND THE JOINT PROXY
STATEMENT; STOCKHOLDERS MEETINGS. (a) As soon as practicable following the      
date of this Agreement, the Company and Parent shall prepare and file with the  
SEC a joint proxy statement (the "Joint Proxy Statement") in preliminary form   
and Parent shall prepare and file with the SEC the Form S-4, in which the       
Joint Proxy Statement will be included as a prospectus, and each of the         
Company and Parent shall use its reasonable efforts to respond as promptly as   
practicable to any comments of the SEC with respect thereto. Each of the        
Company and Parent shall use its reasonable efforts to have the Form S-4        
declared effective under the Securities Act as promptly as practicable after    
such filing. Parent shall also take any action (other than qualifying to do     
business in any jurisdiction in which it is not now so qualified) required to   
be taken under any applicable state securities laws in connection with the      
issuance of Parent Common Stock in the Merger and under the Company Stock       
Plans and the Company shall furnish all information concerning the Company and  
the holders of the Company Common Stock and rights to acquire Company Common    
Stock pursuant to the Company Stock Plans as may be reasonably requested in     
connection with any such action. The parties shall notify each other promptly   
of the receipt of any comments from the SEC or its staff and of any request by  
the SEC or its staff for amendments or supplements to the Joint Proxy           
Statement or the Form S-4 or for additional information and shall supply each   
other with copies of all correspondence between such or any of its              
representatives, on the one hand, and the SEC or its staff, on the other hand,  
with respect to the Joint Proxy Statement, the Form S-4 or the Merger.          

       (b) If, at any time prior to the receipt of the Company Stockholder
Approval or the Parent Stockholder Approval, any event occurs with respect to   
the Company or any Company Subsidiary, or any change occurs with respect to     
other information supplied by the Company for inclusion in the Joint Proxy      
Statement or the Form S-4, which is required to be described in an amendment    
of, or a supplement to, the                                                     

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Joint Proxy Statement or the Form S-4, the Company shall promptly notify        
Parent of such event, and the Company and Parent shall cooperate in the prompt  
filing with the SEC of any necessary amendment or supplement to the Joint       
Proxy Statement and the Form S-4 and, as required by Law, in disseminating the  
information contained in such amendment or supplement to the Company's          
stockholders.                                                                   

       (c) If, at any time prior to the receipt of the Company Stockholder
Approval or the Parent Stockholder Approval, any event occurs with respect to   
Parent or any Parent Subsidiary, or change occurs with respect to other         
information supplied by Parent for inclusion in the Joint Proxy Statement or    
the Form S-4, which is required to be described in an amendment of, or a        
supplement to, the Joint Proxy Statement or the Form S-4, Parent shall          
promptly notify the Company of such event, and Parent and the Company shall     
cooperate in the prompt filing with the SEC of any necessary amendment or       
supplement to the Joint Proxy Statement and the Form S-4 and, as required by    
Law, in disseminating the information contained in such amendment or            
supplement to the Company's stockholders.                                       

       (d) The Company shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its    
stockholders (the "Company Stockholders Meeting") for the purpose of seeking    
the Company Stockholder Approval. The Company shall use its reasonable efforts  
to cause the Joint Proxy Statement to be mailed to the Company's stockholders   
as promptly as practicable after the date of this Agreement. The Company        
shall, through the Company Board, recommend to its stockholders that they give  
the Company Stockholder Approval, except to the extent that the Company Board   
shall have withdrawn or modified its approval or recommendation of this         
Agreement or the Merger as permitted by the last sentence of Section 5.02(b).   
Without limiting the generality of the foregoing, the Company agrees that its   
obligations pursuant to the first sentence of this Section 6.01(d) shall not    
be affected by the commencement, public proposal, public disclosure or          
communication to the Company of any Company Takeover Proposal; it being         
understood and agreed among Parent, Sub and the Company that in the event       
that, prior to the date of the Company Stockholders Meeting, the Company        
withdraws or modifies its approval or recommendation of the Merger and this     
Agreement in accordance with the last sentence of Section 5.02(b), then for     
purposes of the first sentence of this Section 6.01(d), the term "Company       
Stockholder Approval" shall mean both (i) the approval of this Agreement by a   
majority of the voting power of the holders of the outstanding Company Common   
Stock and (ii) the approval of this Agreement by a majority of the voting       
power of the holders of the outstanding Company Common Stock present and duly   
voted (in person or by proxy) at the Company Stockholders Meeting, exclusive    
of those votes taken in respect of the shares of Company Common Stock held by   
Michael J. Gaughan, Jerry Herbst and Franklin Toti.                             

       (e) Parent shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its         
stockholders (the                                                               

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"Parent Stockholders Meeting") for the purpose of seeking the Parent            
Stockholder Approval. Parent shall use its reasonable efforts to cause the      
Joint Proxy Statement to be mailed to Parent's stockholders as promptly as      
practicable after the date of this Agreement. Parent shall, through the Parent  
Board, recommend to its stockholders that they give the Parent Stockholder      
Approval.                                                                       

   (f) The Company shall use all reasonable efforts to cause to be
delivered to Parent a letter of PricewaterhouseCoopers LLP, the Company's       
independent public accountants, dated a date within two business days before    
the date on which the Form S-4 shall become effective and addressed to Parent,  
in form and substance reasonably satisfactory to Parent and customary in scope  
and substance for letters delivered by independent public accountants in        
connection with registration statements similar to the Form S-4.                

        (g) Parent shall use all reasonable efforts to cause to be delivered
to the Company a letter of Deloitte & Touche LLP, Parent's independent public   
accountants, dated a date within two business days before the date on which     
the Form S-4 shall become effective and addressed to the Company, in form and   
substance reasonably satisfactory to the Company and customary in scope and     
substance for letters delivered by independent public accountants in            
connection with registration statements similar to the Form S-4.                

     SECTION 6.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Each of the
Company and Parent shall, and shall cause each of its respective subsidiaries   
to, afford to the other party and to the officers, employees, accountants,      
counsel, financial advisors and other representatives of such other party,      
reasonable access during normal business hours during the period prior to the   
Effective Time to all their respective properties, books, contracts,            
commitments, personnel and records and, during such period, each of the         
Company and Parent shall, and shall cause each of its respective subsidiaries   
to, furnish promptly to the other party (a) a copy of each report, schedule,    
registration statement and other document filed by it during such period        
pursuant to the requirements of Federal or state securities laws and (b) all    
other information concerning its business, properties and personnel as such     
other party may reasonably request. All information exchanged pursuant to this  
Section 6.02 shall be subject to the confidentiality agreement dated February   
2, 2004 between the Company and Parent (the "Confidentiality Agreement").       

      SECTION 6.03. REASONABLE EFFORTS; NOTIFICATION. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties  
shall use all reasonable efforts to take, or cause to be taken, all actions,    
and to do, or cause to be done, and to assist and cooperate with the other      
parties in doing, all things necessary, proper or advisable to consummate and   
make effective, in the most expeditious manner practicable, the Merger and the  
other Transactions, including (i) in the case of Parent, the obtaining of all   
necessary approvals under any applicable Gaming Laws required in connection     
with                                                                            

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this Agreement, the Merger and the other Transactions, (ii) the obtaining       
of all necessary actions or nonactions, waivers, consents and approvals from    
Governmental Entities and the making of all necessary registrations and         
filings (including filings with Governmental Entities, if any) and the taking   
of all reasonable steps as may be necessary to obtain an approval or waiver     
from, or to avoid an action or proceeding by, any Governmental Entity, (iii)    
the obtaining of all necessary consents, approvals or waivers from third        
parties, (iv) the defending of any lawsuits or other legal proceedings,         
whether judicial or administrative, challenging this Agreement or the           
consummation of the Transactions to be performed or consummated by such party   
in accordance with the terms of this Agreement, including seeking to have any   
stay or temporary restraining order entered by any court or other Governmental  
Entity vacated or reversed and (v) the execution and delivery of any            
additional instruments necessary to consummate the Transactions to be           
performed or consummated by such party in accordance with the terms of this     
Agreement and to fully carry out the purposes of this Agreement. In connection  
with and without limiting the foregoing, the Company and the Company Board      
shall (x) take all reasonable action necessary to ensure that no state          
takeover statute or similar statute or regulation is or becomes applicable to   
any Transaction or this Agreement and (y) if any state takeover statute or      
similar statute or regulation becomes applicable to any Transaction or this     
Agreement, take all reasonable action necessary to ensure that the Merger and   
the other Transactions may be consummated as promptly as practicable on the     
terms contemplated by this Agreement and otherwise to minimize the effect of    
such statute or regulation on the Merger and the other Transactions.            

     (b) The Company shall give prompt notice to Parent, and Parent or
Sub shall give prompt notice to the Company, of (i) any representation or       
warranty made by it contained in this Agreement that is qualified as to         
materiality becoming untrue or inaccurate in any respect or any such            
representation or warranty that is not so qualified becoming untrue or          
inaccurate in any material respect or (ii) the failure by it to comply with or  
satisfy in any material respect any covenant, condition or agreement to be      
complied with or satisfied by it under this Agreement; provided, however, that  
no such notification shall affect the representations, warranties, covenants    
or agreements of the parties or the conditions to the obligations of the        
parties under this Agreement.                                                   

     (c) Nothing in Section 6.03(a) shall require Parent to dispose of
any of its assets or to limit its freedom of action with respect to any of its  
businesses, or to consent to any disposition of the Company's assets or limits  
on the Company's freedom of action with respect to any of its businesses, or    
to commit or agree to any of the foregoing, and nothing in Section 6.03(a)      
shall authorize the Company to commit or agree to any of the foregoing, to      
obtain any consents, approvals, permits or authorizations or to remove any      
impediments to the Merger relating solely to the HSR Act or other antitrust,    
competition or premerger notification, trade regulation law, regulation or      
order ("Antitrust Laws") or to avoid the entry of, or to effect the             
dissolution of, any injunction, temporary restraining order or other order in   
any suit or proceeding relating solely to Antitrust Laws.                       

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      SECTION 6.04. COMPANY STOCK OPTIONS. Except as otherwise agreed in
writing between Parent and any holder of Company Employee Stock Options,        
Parent shall not assume any Company Employee Stock Options that are not         
intended to qualify as "incentive stock options" within the meaning of Section  
422 of the Code ("Company ISOs") in connection with the transactions            
contemplated by this Agreement. Accordingly, as soon as reasonably practicable  
following the date of this Agreement, the Company Board (or, if appropriate,    
any committee administering the Company Stock Plan) shall adopt such            
resolutions or take such other actions as may be required to:                   

        (i) provide that each outstanding Company Employee Stock Option that
 is not a Company ISO (a "Company NQSO") that is outstanding immediately
prior to the Effective Time shall be canceled immediately prior to the
Effective Time, whether vested or unvested, with the holder thereof   
becoming entitled to receive an amount of cash equal to the excess, if
any, of $550 in cash over the exercise price of such Company NQSO,    
multiplied by the number of shares of Company Common Stock subject to 
such Company NQSO, subject to any applicable withholding of taxes; and

    (ii) adjust the terms of all outstanding Company ISOs to provide
that, at the Effective Time, each Company ISO outstanding immediately 
prior to the Effective Time shall be deemed to constitute an option to
 acquire, on the same terms and conditions as were applicable under such
Company ISO, the same number of shares of Parent Common Stock as the  
 holder of such Company ISO would have been entitled to receive pursuant
to the Merger had such holder exercised such Company ISO in full      
immediately prior to the Effective Time, assuming such holder was     
entitled to receive only shares of Company Common Stock as Merger     
 Consideration, at a price per share equal to (A) the aggregate exercise
price for the shares of Parent Common Stock otherwise purchasable     
pursuant to such Company ISO divided by (B) the number of shares of   
Parent Common Stock deemed purchasable pursuant to such Company ISO in
accordance with the foregoing (each, as so adjusted, an "Adjusted     
  Option"); provided, however, that the foregoing shall be adjusted to the
minimum extent necessary to comply with Section 424(a) of the Code;   

   (iii) make such other changes to the Company Stock Plans as the
Company and Parent shall mutually agree.                              

       (b) At the Effective Time, and subject to compliance by the Company
with Section 6.04(a), Parent shall assume all the obligations of the Company    
under the Company Stock Plans, each outstanding Adjusted Option and the         
agreements evidencing the grants thereof. As soon as practicable after the      
Effective Time, Parent shall deliver to the holders of Adjusted Options         
appropriate notices setting forth such holders' rights pursuant to the Company  
Stock Plan and indicating that the agreements evidencing the grants of such     
Adjusted Options shall continue in effect on the same terms and conditions      

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(subject to the adjustments required by this Section 6.04 after giving effect   
to the Merger). Parent shall comply with the terms of the Company Stock Plan    
and ensure, to the extent required by, and subject to the provisions of, the    
Company Stock Plan, that the Adjusted Options continue to qualify as            
"incentive stock options" after the Effective Time.                             

       (c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery      
upon exercise of the Adjusted Options assumed in accordance with this Section   
6.04. As soon as reasonably practicable after the Effective Time, Parent shall  
file a registration statement on Form S-8 (or any successor or other            
appropriate form) with respect to the shares of Parent Common Stock subject to  
such Adjusted Options and shall use all reasonable efforts to maintain the      
effectiveness of such registration statement or registration statements (and    
maintain the current status of the prospectus or prospectuses contained         
therein) for so long as such Adjusted Options remain outstanding.               

(d) In this Agreement:                                      

        "COMPANY EMPLOYEE STOCK OPTION" means any option to purchase Company
Common Stock granted under the Company Stock Plan or otherwise.                 

     "COMPANY STOCK PLAN" means the Company 1996 Stock Incentive Plan.

     SECTION 6.05. BENEFIT PLANS. (a) Parent shall cause the Surviving
Corporation to maintain for a period of one year after the Effective Time the   
Company Benefit Plans as in effect on the date of this Agreement as set forth   
on the Company Disclosure Letter (other than the Company Stock Plan and any     
other Company Benefit Plan that provides benefits based on the value of         
Company Common Stock) or to provide benefits (excluding benefits attributable   
to equity-based plans or grants) to each current employee of the Company and    
the Company Subsidiaries that are at least as favorable in the aggregate to     
such employees as those in effect on the date of this Agreement.                

        (b) From and after the Effective Time, Parent shall, and shall cause
the Surviving Corporation to honor in accordance with their respective terms    
(as in effect on the date of this Agreement), all the Company's employment,     
severance and termination agreements, plans and policies disclosed in the       
Company Disclosure Letter.                                                      

(c) With respect to any employee benefit plan, program or   
arrangement maintained by Parent or any Parent Subsidiary (including any        
severance plan), for all purposes of determining eligibility to participate     
and vesting but not for purposes of benefit accrual, service with the Company   
or any Company Subsidiary shall be treated as service with Parent or any        
Parent Subsidiary; provided, however, that such service need not be recognized  
to the extent that such recognition would result in any duplication of          
benefits.                                                                       

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   (d) Parent shall waive, or cause to be waived, any pre-existing
condition limitation under any welfare benefit plan maintained by Parent or     
any of its affiliates (other than the Company) in which employees of the        
Company and the Company Subsidiaries (and their eligible dependents) will be    
eligible to participate from and after the Effective Time, except to the        
extent that such pre-existing condition limitation would have been applicable   
under the comparable Company welfare benefit plan immediately prior to the      
Effective Time. Parent shall recognize, or cause to be recognized, the dollar   
amount of all expenses incurred by each Company employee (and his or her        
eligible dependents) during the calendar year in which the Effective Time       
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 Effective Time.                      

   SECTION 6.06. INDEMNIFICATION. (a) Parent shall, to the fullest
extent permitted by Law, cause the Surviving Corporation to honor all the       
Company's obligations to indemnify (including any obligations to advance funds  
for expenses) the current or former directors or officers of the Company for    
acts or omissions by such directors and officers occurring prior to the         
Effective Time to the extent that such obligations of the Company exist on the  
date of this Agreement, whether pursuant to the Company Charter, the Company    
By-laws, individual indemnity agreements or otherwise, and such obligations     
shall survive the Merger and shall continue in full force and effect in         
accordance with the terms of the Company Charter, the Company By-laws and such  
individual indemnity agreements from the Effective Time until the expiration    
of the applicable statute of limitations with respect to any claims against     
such directors or officers arising out of such acts or omissions.               

        (b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and         
officers' liability insurance maintained by the Company (provided that Parent   
may substitute therefor policies with reputable and financially sound carriers  
of at least the same coverage and amounts containing terms and conditions       
which are no less advantageous) with respect to claims arising from or related  
to facts or events which occurred at or before the Effective Time; provided,    
however, that Parent shall not be obligated to make annual premium payments     
for such insurance to the extent such premiums exceed 175% of the annual        
premiums paid as of the date hereof by the Company for such insurance (such     
175% amount, the "Maximum Premium"). If such insurance coverage cannot be       
obtained at all, or can only be obtained at an annual premium in excess of the  
Maximum Premium, Parent shall maintain the most advantageous policies of        
directors' and officers' insurance obtainable for an annual premium equal to    
the Maximum Premium. The Company represents to Parent that the Maximum Premium  
is $270,156.25.                                                                 

      SECTION 6.07. FEES AND EXPENSES. (a) Except as provided below, all
fees and expenses incurred in connection with the Merger shall be paid by the   
party incurring such fees or expenses, whether or not the Merger is             
consummated, except that                                                        

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expenses incurred in connection with filing, printing                           
and mailing the Joint Proxy Statement and the Form S-4 shall be shared equally  
by Parent and the Company.                                                      

   (b) If (i) after the date of this Agreement, any person makes a
Company Takeover Proposal or amends a Company Takeover Proposal made prior to   
the date of this Agreement, (ii) this Agreement is terminated by either the     
Company or Parent pursuant to Section 8.01(b)(i) or 8.01(b)(iii) or by Parent   
pursuant to Section 8.01(c) and (iii) within 30 months after the date of this   
Agreement the Company enters into a definitive agreement to consummate, or      
consummates, the transactions contemplated by a Company Takeover Proposal,      
then the Company shall pay to Parent by wire transfer of same-day funds a fee   
of $30,000,000 (the "Break-up Fee"), which fee shall be payable and shall be    
paid on the date of consummation of such transactions. Solely for the purposes  
of Section 6.07(b)(iii), the term "Company Takeover Proposal" shall have the    
meaning assigned to such term in Section 5.02(e), except that all references    
to "30%" shall be changed to "40%". The Company acknowledges that the           
agreements contained in this Section 6.07(b) are an integral part of the        
transaction contemplated by this Agreement, and that, without these             
agreements, Parent would not enter into this Agreement; accordingly, if the     
Company fails promptly to pay the Break-up Fee, and, in order to obtain such    
payment, Parent commences a suit that results in a judgment against the         
Company for the amount of the Break-up Fee, the Company shall pay to Parent     
interest on the amount of the Break-up Fee from and including the date payment  
of such amount was due to but excluding the date of actual payment at the       
prime rate of Bank of America, National Association in effect on the date such  
payment was required to be made, together with reasonable legal fees and        
expenses incurred in connection with such suit.                                 

        SECTION 6.08. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, shall consult with each other before        
issuing, and provide each other reasonable opportunity to review and comment    
upon, any press release or other public statements with respect to the Merger   
and the other Transactions and shall not issue any such press release or make   
any such public statement prior to such consultation, except as may be          
required by applicable Law, court process or by obligations pursuant to any     
listing agreement with any national securities exchange.                        

 SECTION 6.09. TRANSFER TAXES. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including      
interest, penalties and additions to any such Taxes) ("Transfer Taxes")         
incurred in connection with the Transactions shall be paid by either Sub or     
the Surviving Corporation, and the Company shall cooperate with Sub and Parent  
in preparing, executing and filing any Tax Returns with respect to such         
Transfer Taxes.                                                                 

      SECTION 6.10. AFFILIATES. Promptly following the date of execution
of this Agreement, the Company shall deliver to Parent a letter identifying     
all persons who are expected by the Company to be, at the date of the Company   
Stockholders Meeting,                                                           

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"affiliates" of the Company for purposes of Rule 145 under the Securities Act.  
The Company shall use all reasonable efforts to cause each such person to       
deliver to Parent on or prior to the date of mailing of the Joint Proxy         
Statement a written agreement substantially in the form attached as Exhibit A.  

SECTION 6.11. STOCK EXCHANGE LISTING. Parent shall use all  
reasonable efforts to cause the shares of Parent Common Stock to be issued in   
the Merger to be approved for listing on the NYSE, subject to official notice   
of issuance, prior to the Closing Date.                                         

 SECTION 6.12. TAX TREATMENT. The parties intend the Merger to
qualify as a reorganization under Section 368(a) of the Code. Each party and    
its affiliates shall use all reasonable efforts to cause the Merger to so       
qualify and to obtain the opinions of Gibson, Dunn & Crutcher LLP and Cravath,  
Swaine & Moore LLP to the effect that the Merger will be treated for U.S.       
Federal income tax purposes as a "reorganization" within the meaning of         
Section 368(a) of the Code and that Parent, Sub and the Company will each be a  
party to that reorganization within the meaning of Section 368(b) of the Code.  
For purposes of the tax opinions described in Sections 7.02(e) and 7.03(d) of   
this Agreement, each of Parent and the Company will provide customary           
representation letters, substantially in the form attached hereto as Exhibits   
B and C each dated on or about the date that is two business days prior to the  
date the Joint Proxy Statement is mailed to the stockholders of Parent and the  
Company and reissued as of the Closing Date. Each of Parent, Sub and the        
Company and each of their respective affiliates shall not take any action and   
shall not fail to take any action or suffer to exist any condition which        
action or failure to act or condition would prevent, or would reasonably be     
likely to prevent, the Merger from qualifying as a reorganization within the    
meaning of Section 368(a) of the Code.                                          

       SECTION 6.13. STOCKHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder  
litigation against the Company and its directors relating to the Merger or any  
other Transaction; provided, however, that no such settlement shall be agreed   
to without Parent's consent.                                                    

        SECTION 6.14. PARENT BOARD. Parent shall take all actions reasonably
necessary to provide that the Parent Board be expanded, on or prior to the      
Closing Date, to include, as directors, each of Michael J. Gaughan and two      
designees of Michael J. Gaughan satisfactory to Parent.                         

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ARTICLE VII 

CONDITIONS PRECEDENT  

     SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is         
subject to the satisfaction or waiver on or prior to the Closing Date of the    
following conditions:                                                           

  (a) STOCKHOLDER APPROVALS. The Company shall have obtained the
Company Stockholder Approval and Parent shall have obtained the Parent          
Stockholder Approval.                                                           

        (b) NYSE LISTING. The shares of Parent Company Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been approved for  
listing on the NYSE, subject to official notice of issuance.                    

        (c) CONSENTS, APPROVALS AND AUTHORIZATIONS. All consents, approvals,
orders or authorizations from, and all declarations, filings and registrations  
with, any Governmental Entity, including all necessary approvals under any      
applicable Gaming Laws, required to consummate the Merger and the other         
Transactions shall have been obtained or made without the imposition of any     
material conditions, and the waiting period (and any extension thereof)         
applicable to the Merger under the HSR Act shall have expired or been           
terminated.                                                                     

     (d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of       
competent jurisdiction or other legal restraint or prohibition preventing the   
consummation of the Merger shall be in effect; provided, however, that prior    
to asserting this condition, subject to Section 6.03, each of the parties       
shall have used its reasonable efforts to prevent the entry of any such         
injunction or other order and to appeal as promptly as possible any such        
injunction or other order that may be entered.                                  

    (e) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings    
seeking a stop order, and Parent shall have received all state securities or    
"blue sky" authorizations necessary to issue Parent Common Stock pursuant to    
the Merger.                                                                     

   (f) NO LITIGATION. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity or any other person, in   
each case that has a reasonable likelihood of success, (i) challenging the      
acquisition by Parent or Sub of any Company Common Stock, seeking to restrain   
or prohibit the consummation of the Merger or any other Transaction or seeking  
to obtain from the Company, Parent or Sub any damages that are material in      
relation to the Company and the Company Subsidiaries taken as a whole, (ii)     
seeking to prohibit or limit the ownership or operation by the Company, Parent  
or any of their respective subsidiaries of any material portion of the          

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business or assets of the Company, Parent or any of their respective            
subsidiaries of any material portion of the business or assets of the Company,  
Parent or any of their respective subsidiaries, or to compel the Company,       
Parent or any of their respective subsidiaries to dispose of or hold separate   
any material portion of the business or assets of the Company, Parent or any    
of their respective subsidiaries, as a result of the Merger or any other        
Transaction, (iii) seeking to impose limitations on the ability of Parent to    
acquire or hold, or exercise full rights of ownership of, any shares of         
Company Common Stock, including the right to vote the Company Common Stock      
purchased by it on all matters properly presented to the stockholders of the    
Company, (iv) seeking to prohibit Parent or any of its subsidiaries from        
effectively controlling in any material respect the business or operations of   
the Company and the Company Subsidiaries or (v) which otherwise is reasonably   
likely to have a Company Material Adverse Effect or a Parent Material Adverse   
Effect.                                                                         

  SECTION 7.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the   
following conditions:                                                           

(a) REPRESENTATIONS AND WARRANTIES. The representations and 
warranties of the Company in this Agreement that are qualified as to            
materiality shall be true and correct and those not so qualified shall be true  
and correct in all material respects, as of the date of this Agreement and as   
of the Closing Date as though made on the Closing Date, except to the extent    
such representations and warranties expressly relate to an earlier date (in     
which case such representations and warranties qualified as to materiality      
shall be true and correct, and those not so qualified shall be true and         
correct in all material respects, on and as of such earlier date). Parent       
shall have received a certificate signed on behalf of the Company by an         
executive officer of the Company to such effect.                                

    (b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be          
performed by it under this Agreement at or prior to the Closing Date, and       
Parent shall have received a certificate signed on behalf of the Company by an  
executive officer of the Company to such effect.                                

       (c) ABSENCE OF COMPANY MATERIAL ADVERSE EFFECT. Except as disclosed
in the Company Disclosure Letter, since the date of this Agreement there shall  
not have been any state of facts, event, change, effect, development,           
condition or occurrence that, individually or in the aggregate, has had or      
would reasonably be expected to have a Company Material Adverse Effect.         

        (d) LETTERS FROM COMPANY AFFILIATES. Parent shall have received from
each person named in the letter referred to in Section 6.10 an executed copy    
of an agreement substantially in the form of Exhibit A.                         

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        (e) TAX OPINION. Parent shall have received a written opinion, dated
as of the Closing Date, from Cravath, Swaine & Moore LLP, counsel to Parent,    
to the effect that the Merger will be treated for federal income tax purposes   
as a reorganization within the meaning of Section 368(a) of the Code, and that  
Parent, Sub and the Company will each be a party to that reorganization within  
the meaning of Section 368(b) of the Code; it being understood that in          
rendering such opinion, such tax counsel shall be entitled to rely upon         
customary representations provided by the parties hereto substantially in the   
form attached hereto as Exhibit B.                                              

SECTION 7.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The  
obligation of the Company to effect the Merger is further subject to the        
following conditions:                                                           

(a) REPRESENTATIONS AND WARRANTIES. The representations and 
warranties of Parent and Sub in this Agreement that are qualified as to         
materiality shall be true and correct and those not so qualified shall be true  
and correct in all material respects, as of the date of this Agreement and on   
the Closing Date as though made on the Closing Date, except to the extent such  
representations and warranties expressly relate to an earlier date (in which    
case such representations and warranties qualified as to materiality shall be   
true and correct, and those not so qualified shall be true and correct in all   
material respects, on and as of such earlier date). The Company shall have      
received a certificate signed on behalf of Parent by an executive officer of    
Parent to such effect.                                                          

    (b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub
shall have performed in all material respects all obligations required to be    
performed by them under this Agreement at or prior to the Closing Date, and     
the Company shall have received a certificate signed on behalf of Parent by an  
executive officer of Parent to such effect.                                     

      (c) ABSENCE OF PARENT MATERIAL ADVERSE EFFECT. Except as disclosed
in the Parent Disclosure Letter, since the date of this Agreement there shall   
not have been any state of facts, event, change, effect, development,           
condition or occurrence that, individually or in the aggregate, has had or      
would reasonably be expected to have a Parent Material Adverse Effect.          

       (d) TAX OPINION. The Company shall have received a written opinion,
dated as of the Closing Date, from Gibson, Dunn & Crutcher LLP, counsel to the  
Company, to the effect that the Merger will be treated for federal income tax   
purposes as a reorganization within the meaning of Section 368(a) of the Code,  
and that Parent, Sub and the Company will each be a party to that               
reorganization within the meaning of Section 368(b) of the Code; it being       
understood that in rendering such opinion, such tax counsel shall be entitled   
to rely upon customary representations provided by the parties hereto           
substantially in the form attached hereto as Exhibit C.                         

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SECTION 7.04. FRUSTRATION OF CLOSING CONDITIONS. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in    
Section 7.01, 7.02 or 7.03, as the case may be, to be satisfied if such         
failure was caused by such party's failure to use all reasonable efforts to     
consummate the Merger and the other Transactions to be performed or             
consummated by such party in accordance with the terms of this Agreement as     
required by and subject to Section 6.03.                                        

ARTICLE VIII  

TERMINATION, AMENDMENT AND WAIVER 

      SECTION 8.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the        
Company Stockholder Approval:                                                   

 (a) by mutual written consent of Parent, Sub and the Company;

(b) by either Parent or the Company:                        

           (i) if the Merger is not consummated on or before January 31,
   2005 (the "Outside Date"), unless the failure to consummate the
 Merger is the result of a willful and material breach of this
Agreement by the party seeking to terminate this Agreement; 
        provided, however, that if, as of the Outside Date, any hearing with
        respect to any necessary approval under applicable Gaming Laws shall
have been scheduled for a later date or is pending, then the
"Outside Date" shall mean April 30, 2005;                   

        (ii) if any Governmental Entity issues an order, decree or
       ruling or takes any other action permanently enjoining, restraining
      or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable;  

        (iii) if, upon a vote at a duly held meeting to obtain the
     Company Stockholder Approval, the Company Stockholder Approval is
      not obtained; it being understood and agreed among Parent, Sub and
        the Company that in the event that, prior to the date of the Company
        Stockholders Meeting, the Company withdraws or modifies its approval
    or recommendation of the Merger and this Agreement in accordance
     with the last sentence of Section 5.02(b), then the term "Company
  Stockholder Approval" shall mean both (i) the approval of this
     Agreement by a majority of the voting power of the holders of the
  outstanding Company Common Stock and (ii) the approval of this
     Agreement by a majority of the voting power of the holders of the
      outstanding Company Common Stock present and duly voted (in person
or by proxy) at the Company                                 

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      Stockholders Meeting, exclusive of those votes taken in respect of
        the shares of Company Common Stock held by Michael J. Gaughan, Jerry
Herbst and Franklin Toti; or                                

       (iv) if, upon a vote at a duly held meeting to obtain the
       Parent Stockholder Approval, the Parent Stockholder Approval is not
obtained;                                                   

     (c) by Parent, if the Company breaches or fails to perform in any
material respect any of its representations, warranties or covenants  
   contained in this Agreement, which breach or failure to perform (i) would
 give rise to the failure of a condition set forth in Section 7.02(a) or
7.02(b), and (ii) cannot be or has not been cured within 30 days after
the giving of written notice to the Company of such breach;           

(d) by Parent, if the Company Board or any committee thereof
  withdraws or modifies, in a manner adverse to Parent or Sub, or publicly
   proposes to withdraw or modify, in a manner adverse to Parent or Sub, its
  adoption, approval or recommendation of this Agreement or the Merger, or
fails to recommend to the Company's stockholders that they give the   
Company Stockholder Approval;                                         

     (e) by Parent, if the aggregate number of shares of Parent Common
Stock required to be issued by Parent in accordance with Section      
2.01(c)(3) (as determined in accordance with Section 2.01(e) without  
  regard to the second provision contained in Section 2.01(e)) in order to
enable the opinions referred to in Sections 7.02(e) and 7.03(d) to be 
delivered would exceed the Stock Cap; or                              

     (f) by the Company, if Parent breaches or fails to perform in any
 material respect of any of its representations, warranties or covenants
   contained in this Agreement, which breach or failure to perform (i) would
 give rise to the failure of a condition set forth in Section 7.03(a) or
7.03(b), and (ii) cannot be or has not been cured within 30 days after
the giving of written notice to Parent of such breach.                

       SECTION 8.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.01,     
this Agreement shall forthwith become void and have no effect, without any      
liability or obligation on the part of Parent, Sub or the Company, other than   
Section 3.20, Section 4.11, the last sentence of Section 6.02, Section 6.07,    
this Section 8.02 and Article IX, which provisions shall survive such           
termination, and except to the extent that such termination results from the    
willful and material breach by a party of any representation, warranty or       
covenant set forth in this Agreement.                                           

 SECTION 8.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after receipt of the Company Stockholder          
Approval or the Parent Stockholder Approval; provided, however, that (i) after  
receipt of the Company                                                          

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Stockholder Approval or the Parent Stockholder Approval, there shall be made    
no amendment that by law (or, in the case of the Parent Stockholder Approval,   
by the regulations established by the NYSE) requires further approval by the    
stockholders of the Company or Parent without the further approval of such      
stockholders, (ii) no amendment shall be made to this Agreement after the       
Effective Time and (iii) except as provided above no amendment of this          
Agreement by the Company shall require the approval of the stockholders of the  
Company. This Agreement may not be amended except by an instrument in writing   
signed on behalf of each of the parties.                                        

       SECTION 8.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the     
obligations or other acts of the other parties, (b) waive any inaccuracies in   
the representations and warranties of the other parties contained in this       
Agreement or in any document delivered pursuant to this Agreement or (c)        
subject to the proviso in Section 8.03, waive compliance by the other parties   
with any of the agreements or conditions contained in this Agreement. Subject   
to the proviso in Section 8.03, no extension or waiver by the Company shall     
require the approval of the stockholders of the Company. Any agreement on the   
part of a party to any such extension or waiver shall be valid only if set      
forth in an instrument in writing signed on behalf of such party. The failure   
of any party to this Agreement to assert any of its rights under this           
Agreement or otherwise shall not constitute a waiver of such rights.            

    SECTION 8.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 8.01, an amendment  
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant   
to Section 8.04 shall, in order to be effective, require in the case of Sub or  
the Company, action by its Board of Directors or the duly authorized designee   
of its Board of Directors. Termination of this Agreement prior to the           
Effective Time shall not require the approval of the stockholders of the        
Company.                                                                        

ARTICLE IX  

GENERAL PROVISIONS  

        SECTION 9.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument       
delivered pursuant to this Agreement shall survive the Effective Time. This     
Section 9.01 shall not limit any covenant or agreement of the parties which by  
its terms contemplates performance after the Effective Time.                    

     SECTION 9.02. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be      
deemed given (i) upon personal delivery, (ii) one business day after being      
sent via a nationally recognized overnight courier service if overnight         
courier service is requested or (iii) upon                                      

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receipt of electronic or other confirmation of transmission if sent via         
facsimile, in each case at the addresses or fax numbers (or at such other       
address or fax number for a party as shall be specified by like notice) set     
forth below:                                                                    

(a) if to Parent or Sub, to                                 

Boyd Gaming Corporation                           
2950 Industrial Road                              
Las Vegas, NV 89109                               

Attention: General Counsel                        
Fax No.: (702) 792-7335                           

with a copy to:                                   

Cravath, Swaine & Moore LLP                       
Worldwide Plaza                                   
825 Eighth Avenue                                 
New York, NY 10019                                

Attention:Mark I. Greene, Esq.                    
Fax No.: (212) 474-3700                           

(b) if to the Company, to                                   

Coast Casinos, Inc.                               
4500 West Tropicana Avenue                        
Las Vegas, NV 89103                               

Attention: President                              
Fax No.: (702) 365-7566                           

with a copy to:                                   

Gibson, Dunn & Crutcher, LLP                      
333 South Grand Avenue                            
Los Angeles, CA 90071                             

Attention: Karen E. Bertero, Esq.                 
Fax No.: (213) 229-7520                           

SECTION 9.03. DEFINITIONS. For purposes of this Agreement:  

      An "AFFILIATE" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or  
is under common control with, such first person.                                

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   "KNOWLEDGE OF THE COMPANY" means, with respect to any matter in
question, the actual knowledge of the Company's executive officers and general  
counsel.                                                                        

        "KNOWLEDGE OF PARENT" means, with respect to any matter in question,
the actual knowledge of Parent's executive officers.                            

  "MATERIAL ADVERSE EFFECT" on a person means a material adverse
effect on (i) the business, assets, financial condition or results of           
operations of such person and its subsidiaries, taken as a whole, (ii) the      
ability of such person to perform its obligations under this Agreement or       
(iii) the ability of such person to consummate the Merger and the other         
Transactions to be performed or consummated by such person, other than any      
state of facts, event, change, effect, development, condition or occurrence     
relating (A) to the economy in general, (B) to such person's industry in        
general and not specifically relating to such person or such person's           
subsidiaries and (C) primarily to the entering into by Company of this          
Agreement with Parent as opposed to any other third party.                      

   A "PERSON means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,          
Governmental Entity or other entity.                                            

       A "SUBSIDIARY" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of    
which is sufficient to elect at least a majority of its Board of Directors or   
other governing body (or, if there are no such voting interests, 50% or more    
of the equity interests of which) is owned directly or indirectly by such       
first person.                                                                   

      SECTION 9.04. INTERPRETATION; DISCLOSURE LETTERS. When a reference
is made in this Agreement to a Section or Subsection, such reference shall be   
to a Section or Subsection of this Agreement unless otherwise indicated. The    
table of contents and headings contained in this Agreement are for reference    
purposes only and shall not affect in any way the meaning or interpretation of  
this Agreement. Whenever the words "include", "includes" or "including" are     
used in this Agreement, they shall be deemed to be followed by the words        
"without limitation".                                                           

      SECTION 9.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or     
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.                                               

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SECTION 9.06. COUNTERPARTS; FACSIMILE. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and  
the same agreement and shall become effective when one or more counterparts     
have been signed by each of the parties and delivered to the other parties.     
Facsimile transmission of any signed original document and/or retransmission    
of any signed facsimile transmission will be deemed the same as delivery of an  
original. At the request of any party, the parties will confirm facsimile       
transmission by signing a duplicate original document.                          

      SECTION 9.07. ENTIRE AGREEMENT; No Third-Party Beneficiaries. This
Agreement, taken together with the Company Disclosure Letter, (a) constitute    
the entire agreement and supersede all prior agreements and understandings,     
both written and oral, among the parties with respect to the Merger and (b)     
except for Section 6.06, are not intended to confer upon any person other than  
the parties hereto any rights or remedies hereunder. Notwithstanding clause     
(b) of the immediately preceding sentence, following the Effective Time the     
provisions of Article II shall be enforceable by holders of Certificates.       

     SECTION 9.08. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Nevada, regardless   
of the laws that might otherwise govern under applicable principles of          
conflicts of laws thereof.                                                      

   SECTION 9.09. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in     
whole or in part, by operation of law or otherwise by any of the parties        
without the prior written consent of the other parties, except that Sub may     
assign, in its sole discretion, any of or all its rights, interests and         
obligations under this Agreement to Parent or to any direct or indirect wholly  
owned subsidiary of Parent, but no such assignment shall relieve Sub of any of  
its obligations under this Agreement. Any purported assignment without such     
consent shall be void. Subject to the preceding sentences, this Agreement will  
be binding upon, inure to the benefit of, and be enforceable by, the parties    
and their respective successors and assigns.                                    

        SECTION 9.10. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not  
performed in accordance with their specific terms or were otherwise breached.   
It is accordingly agreed that the parties shall be entitled to an injunction    
or injunctions to prevent breaches of this Agreement and to enforce             
specifically the terms and provisions of this Agreement in any Nevada state     
court or any Federal court located in the County of Clark in the State of       
Nevada, this being in addition to any other remedy to which they are entitled   
at law or in equity. In addition, each of the parties hereto (a) consents to    
submit itself to the personal jurisdiction of any Nevada state court or any     
Federal court located in the County of Clark in the State of Nevada in the      
event any dispute arises out of this Agreement or the Merger, (b) agrees that   
it will not attempt to deny or defeat such personal jurisdiction by motion or   
other request for leave from any such court, (c) agrees that it will not bring  

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any action relating to this Agreement or the Merger in any court other than     
any Nevada state court or any Federal court sitting in the County of Clark in   
the State of Nevada and (d) waives any right to trial by jury with respect to   
any action related to or arising out of this Agreement or the Merger.           

[The remainder of this page has been left blank intentionally.  
Signature page follows.]  

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      IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.                         

                        BOYD GAMING CORPORATION,

    by
                              ------------------------
           Name:
            Title:

          BGC, INC.,

    by
                              ------------------------
           Name:
            Title:

                    COAST CASINOS, INC.,

    by
                              ------------------------
           Name:
            Title:

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EXHIBIT A 

FORM OF AFFILIATE LETTER  

Ladies and Gentlemen:                                                           

   The undersigned refers to the Agreement and Plan of Merger (the
"Merger Agreement") dated as of February 6, 2004, among Boyd Gaming             
Corporation, a Nevada corporation, BGC, Inc., a Nevada corporation and a        
wholly owned subsidiary of Boyd Gaming Corporation, and Coast Casinos, Inc., a  
Nevada corporation. Capitalized terms used but not defined in this letter have  
the meanings give such terms in the Merger Agreement.                           

   The undersigned, a holder of shares of Company Common Stock, is
entitled to receive in connection with the Merger shares of Parent Common       
Stock. The undersigned acknowledges that the undersigned may be deemed an       
"affiliate" of the Company within the meaning of Rule 145 ("Rule 145")          
promulgated under the Securities Act, although nothing contained herein should  
be construed as an admission of such fact.                                      

     If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the Parent Common    
Stock received by the undersigned in exchange for any shares of Company Common  
Stock pursuant to the Merger may be restricted unless such sale, assignment,    
or transfer is registered under the Securities Act or an exemption from such    
registration is available. The undersigned (i) understands that such            
exemptions are limited and (ii) has obtained advice of counsel as to the        
nature and conditions of such exemptions, including information with respect    
to the applicability to the sale of such securities of Rules 144 and 145(d)     
promulgated under the Securities Act. The undersigned understands that Parent   
will not be required to maintain the effectiveness of any registration          
statement under the Securities Act for purposes of resale of Parent Common      
Stock by the undersigned.                                                       

       The undersigned hereby represents to and covenants with Parent that
the undersigned will not sell, assign or transfer any of the Parent Common      
Stock received by the undersigned in exchange for shares of Company Common      
Stock pursuant to the Merger except (i) pursuant to an effective registration   
statement under the Securities Act, (ii) in conformity with the volume and      
other limitations of Rule 144 or (iii) in a transaction that, in the opinion    
of independent counsel reasonably satisfactory to Parent or as described in a   
"no- action" or interpretive letter from the Staff of the SEC, is not required  
to be registered under the Securities Act.                                      

  In the event of a sale or other disposition by the undersigned
pursuant to Rule 145, of Parent Common Stock received by the undersigned in     
the Merger, the undersigned will supply Parent with evidence of compliance      
with such Rule, in the form                                                     

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                                                                           2

of a letter in the form of Annex I hereto and the opinion of counsel or         
no-action letter referred to above. The undersigned understands that Parent     
may instruct its transfer agent to withhold the transfer of any Parent Common   
Stock disposed of by the undersigned, but that upon receipt of such evidence    
of compliance the transfer agent shall effectuate the transfer of the Parent    
Common Stock sold as indicated in the letter.                                   

    The undersigned acknowledges and agrees that appropriate legends
will be placed on certificates representing Parent Common Stock received by     
the undersigned in the Merger or held by a transferee thereof, which legends    
will be removed by delivery of substitute certificates upon receipt of an       
opinion in form and substance reasonably satisfactory to Parent from            
independent counsel reasonably satisfactory to Parent to the effect that such   
legends are no longer required for purposes of the Securities Act.              

       The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations    
imposed upon the distribution, sale, transfer or other disposition of Parent    
Common Stock and (ii) the receipt by Parent of this letter is an inducement     
and a condition to Parent's obligations to consummate the Merger.               

       This Agreement shall only become effective as of the Effective Time
of the Merger.                                                                  

                 Very truly yours,

Dated:                                                                          

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                                                                  ANNEX I TO
                                                                   EXHIBIT A

[NAME]                                                                          

On [ ], the undersigned sold the securities of Boyd Gaming  
Corporation ("Parent") described below in the space provided for that purpose   
(the "Securities"). The Securities were received by the undersigned in          
connection with the merger of BGC, Inc., a Nevada corporation and a wholly      
owned subsidiary of Parent, with Coast Casinos, Inc., a Nevada corporation.     

       Based upon the most recent report or statement filed by Parent with
the Securities and Exchange Commission, the Securities sold by the undersigned  
were within the prescribed limitations set forth in paragraph (e) of Rule 144   
promulgated under the Securities Act of 1933, as amended (the "Securities       
Act").                                                                          

        The undersigned represents that the Securities were sold in "brokers
transactions", within the meaning of Section 4(4) of the Securities Act or in   
transactions with a "market maker" as that term is defined in Section 3(a)(38)  
of the Securities Exchange Act of 1934, as amended. The undersigned further     
represents that the undersigned has not solicited or arranged for the           
solicitation of orders to buy the Securities, and that the undersigned has not  
made any payment in connection with the offer or sale of the Securities to any  
person other than to the broker who executed the order in respect of such       
sale.                                                                           

                 Very truly yours,

[Space to be provided for description of the Securities]  

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SC 13D’ Filing		Date		First		Last			Other Filings
		4/30/05		70					4
		1/31/05		70
Filed on:		2/12/04							3
		2/6/04		1		78			3,  8-K
		2/5/04		29		48
		2/2/04		60					3,  4,  8-K
		12/31/03		42					10-K,  4
		1/1/03		32		50
		12/31/02		37					10-K,  8-K
		1/1/02		33
		1/1/01		40		42
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