MEMORANDUM OF UNDERSTANDING

Exhibit 7.04

This MEMORANDUM OF UNDERSTANDING (“MOU”) is made and entered into as of March 23, 2010 by and among the following parties:

(a) Xxxxxxxx Gaming LLC, a Nevada limited liability company (“FG”), Xxxxx X. Xxxxxxxx III (“FJF”), Xxxxxxx X. Xxxxxxxx (“LJF” and collectively with FJF and their respective estate planning entities, the “Fertittas”), FJF Investco, LLC (“FJF Investco”) LJF Investco, LLC (“LJF Investco”), and FCP Class B HoldCo LLC (“Class B HoldCo,” and collectively with FG, the FJF, LJF, FJF Investco and LJF Investco, the “Xxxxxxxx Parties”);

(b) FC Investor LLC (“FC Investor”), Xxxxxx Xxxxxxx, Jr. (solely in his capacity as a equity holder of Voteco, as managing member of Colony Capital, LLC, as a director of SCI and a manager of FCP, “Barrack”), and any affiliate of Colony Capital LLC that may be added as a party to this MOU by way of joinder (such affiliates together with FC Investor and Barrack, “Colony” or the “Colony Parties”);

(c) Colony Capital, LLC (“Colony Capital”) solely for the purposes of giving releases as provided in Section 4 of this MOU.

Each party named above is a “Party”, and collectively are referred to as the “Parties”.

RECITALS

WHEREAS, Station Casinos, Inc. (“SCI”) and each and every one of its direct and indirect subsidiaries, including without limitation, each direct and indirect subsidiary of SCI that is a debtor in the Bankruptcy Cases (collectively, the “Station Group”) constitute a gaming entertainment enterprise that owns and/or operates gaming properties under the “Station” and “Fiesta” brand names;

WHEREAS, on November 7, 2007, SCI consummated the transactions contemplated by that certain Agreement and Plan of Merger by and among SCI, Xxxxxxxx Colony Partners, LLC (“FCP”), and FCP Acquisition Sub (“FCP Merger Sub”), as amended by that certain Amendment to Agreement and Plan of Merger dated by and among SCI, FCP, and FCP Merger Sub (such transactions, collectively the “Transaction”);

WHEREAS, Colony provided a portion of the funding for the Transaction and, in return, acquired an indirect ownership interest in SCI;

WHEREAS, as part of the Transaction, FCP PropCo, LLC (“Propco”) entered into that certain Loan and Security Agreement, dated as of November 7, 2007 (the “Original Mortgage Loan Agreement”), with the German American Capital Corporation (“GACC”) and XX Xxxxxx Xxxxx Bank, N.A. (“JPM” and together with GACC collectively, the “Mortgage Lenders”) pursuant to which the Mortgage Lenders made loans and other financial accommodations to Propco (the “Mortgage Loan”). The Original Mortgage Loan Agreement has been amended and restated by that certain Amended and Restated Loan and Security Agreement, dated as of March 19, 2008 (the “Mortgage Loan Agreement”). The Propco Properties, the

Note: portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the SEC.

Master Lease (as defined below), the rent due under the Master Lease, the cash collateral and certain other assets pledged under the Security Instruments, Security Documents or other Loan Documents (as such terms are defined in the Mortgage Loan Agreement), are pledged to the Mortgage Lenders or to German American Capital Corporation, as the Collateral Agent for the Mortgage Lenders to secure the obligations due under the Mortgage Loan Agreement;

WHEREAS, FCP VoteCo, LLC (“VoteCo”) owns 100% of the voting stock of SCI;

WHEREAS, FCP Holding, Inc. (“FCP Holding”), owns 74.8% of the non-voting stock of SCI, and Xxxxxxxx Partners, LLC (“Xxxxxxxx Partners”) owns 24.2% of the non-voting stock of SCI;

WHEREAS, FCP owns 100% of the stock of FCP Holding;

WHEREAS, FCP’s (i) Class A membership interests are owned by FC Investor, an entity indirectly controlled by Colony, (ii) Class B membership interests are owned by Class B HoldCo, an entity indirectly controlled by the Fertittas, and (iii) Class C membership interests are owned by certain current and former members of SCI’s management;

WHEREAS, effective as of November 7, 2007, SCI, FCP, Xxxxxxxx Partners, FCP Holding, VoteCo, FC Investor, FJF Investco, LJF Investco, BLS Investco LLC, Class B HoldCo, and certain individuals holding Class A membership interests of Xxxxxxxx Partners and/or Class C membership interests of Xxxxxxxx Partners and/or FCP entered into the Equityholders Agreement of Station Casinos, Inc., Xxxxxxxx Colony Partners LLC and Xxxxxxxx Partners LLC (the “Equityholders Agreement”);

WHEREAS, effective as of November 7, 2007, FC Investor, Class B HoldCo, each of the Class C members of FCP, and the Fertittas entered into the Second Amended and Restated Operating Agreement of Xxxxxxxx Colony Partners LLC (the “FCP LLC Agreement” and together with the Equityholders Agreement, the “Equity Agreements”);

WHEREAS, the Station Group operates and owns certain assets associated with: (i) Palace Station Hotel & Casino (“Palace Station”), (ii) Boulder Station Hotel & Casino (“Boulder Station”), (iii) Sunset Station Hotel & Casino (“Sunset Station”), and (iv) Red Rock Casino Resort Spa (“Red Rock”) (collectively, the “Propco Properties”);

WHEREAS, Propco owns the real property (or, with respect to a portion of Boulder Station, a leasehold interest in the real property pursuant to a ground lease) associated with the Propco Properties, and Propco, as landlord, and SCI, as tenant, entered into that certain Master Lease Agreement, dated as of November 7, 2007 and amended by that certain First Amendment to Master Lease Agreement dated as of March 19, 2008 (collectively, the “Master Lease”), under which SCI leases the Propco Properties from Propco;

WHEREAS, on July 28, 2009, SCI, Propco and certain of their affiliates (the “Debtors”) commenced voluntary cases in the District of Nevada, administratively consolidated under case no. BK-09-52477 (the “Bankruptcy Cases”) under chapter 11 of 11 U.S.C. §§ 101-

1532 (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Nevada (the “Bankruptcy Court”);

WHEREAS, Propco will, pursuant to the Plan or the Propco Plan (each as defined below) transfer substantially all of its assets to a new entity (such entity, “New Propco”) and all of the non-voting equity of New Propco shall be held by its parent company “Propco Holdco”, which entity shall initially be wholly owned by the Mortgage Lenders;

WHEREAS, FG and the Mortgage Lenders have negotiated a term sheet that summarizes the material terms of a joint chapter 11 plan (the “Plan”) with the terms and conditions set forth in the term sheet annexed hereto as Attachment 1, (including all of its annexes, the “Propco Plan Term Sheet”). As defined in this MOU, the Plan, including any Propco Plan (as defined below), means the chapter 11 plan of reorganization described in the Propco Plan Term Sheet or any chapter 11 plan incorporating the material terms of the Propco Plan Term Sheet, provided that in no event shall the Plan (i) alter the terms set forth in the Propco Plan Term Sheet in a manner that is materially or disproportionally adverse to the Colony, (ii) adversely alter any rights specific to Colony set forth in the Propco Plan Term Sheet, (iii) impair the rights of the holders of the FG Warrants collectively to receive 2.5% of the equity of Propco Holdco, subject to dilution as provided on Attachment 2, (iv) substantively alter the terms and conditions of the FG Warrants described in Attachment 2 hereto or the Effective Date Deliverables, the Colony Equity Consideration, and Participation Rights described herein and in Attachment 3 hereto, or (v) alter the equity ownership of Propco Holdco, New Propco or reorganized SCI if New Propco acquires the equity or assets of SCI, each as set forth in the Propco Plan Term Sheet, in a manner that is materially or disproportionately adverse to Colony, provided, however, that the reallocation by the Xxxxxxxx Affiliates or the Mortgage Lenders of equity it would otherwise receive under the Plan shall not constitute an alteration of such equity ownership.

WHEREAS, concurrently herewith, the Xxxxxxxx Affiliates(1) and the Mortgage Lenders are executing a Plan Support Agreement pursuant to which the Xxxxxxxx Affiliates and the Mortgage Lenders have agreed, inter alia, to support the Plan on the terms and conditions set forth therein (including all of its attachments, the “Plan Support Agreement”);

(1) As used in this MOU and the attachments hereto, “Xxxxxxxx Affiliates” shall mean, individually and collectively, (a) FJF or LJF, any spouse or child or Xxxxxxxx Family Entity (as defined in Propco Plan Term Sheet) (each, a “Specified Person”), (b) a person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, a Specified Person, (c) any person that is an officer, director, partner, manager or trustee of, or serves in a similar capacity with respect to, a Specified Person or of which a Specified Person is an officer, partner, manager or trustee, or with respect to which a Specified Person serves in a similar capacity; or (d) any person one-third or more of whose equity securities are owned by Specified Persons. Without otherwise limiting the scope of the definition of Xxxxxxxx Affiliates, it is agreed that neither Zuffa, LLC nor its subsidiaries and joint ventures shall constitute a Xxxxxxxx Affiliate unless engaged in the investment in, ownership of or management of a hotel in the Las Vegas Locals Market, or any activity wherever located that requires licensing as a casino gaming company.

WHEREAS, the Colony Parties also support the approval and consummation of the Plan and the related transactions described in the Plan Support Agreement;

WHEREAS, the Parties desire to resolve any Claims (as defined in Paragraph 4(a) hereof);

WHEREAS, the Parties have negotiated the material terms of the consideration that the Colony Parties shall receive in consideration for the releases of Claims described herein if the Plan is confirmed and becomes effective;

WHEREAS, the Parties have engaged in good faith negotiations with one another with regard to this MOU; and

WHEREAS, each Party has reviewed, or has had the opportunity to review, this MOU with the assistance of professional legal advisors of its own choosing;

AGREEMENT

NOW THEREFORE, in consideration for the promises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and intending to be legally bound hereby, the Parties hereby agree as follows:

1. Consideration to Colony Parties.

In consideration to the Colony Parties for the releases to be granted by the Colony Parties to the Xxxxxxxx Release Parties and the Station Release Parties as described in Paragraphs 4(a) and 4(b) hereof, the Xxxxxxxx Affiliates, as more particularly described in Attachment 3 hereto, shall (a) purchase from the Mortgage Lenders fifty percent 50% of the equity of Propco Holdco and immediately thereafter sell to Colony and/or any Colony Designee (as defined in this Paragraph 1), and Colony or such Colony Designee shall purchase, 4.375% of the equity of Propco Holdco (the “Colony Propco Holdco Equity”), which equity of Propco Holdco and all other equity of Propco Holdco purchased by or assigned to Colony or any Colony Designee pursuant to this MOU shall be non-voting equity (or, if voting equity as of the date of such purchase or assignment, shall immediately convert into non-voting equity) for cash consideration of $8.75 million provided that if the Xxxxxxxx Affiliates are offered the opportunity to purchase additional equity in Propco Holdco pursuant to the Propco Plan Term Sheet, then the percentage set forth in this clause (a) will be automatically reduced to take into account the dilutive effect of the resulting increase in total capitalization, except if Colony and/or a Colony Designee, at the time of committing to purchase and at the time of purchase, elects to increase the equity purchase and purchase price to account for such increase in total capitalization and maintain the related 4.375% equity interest,(2) (b) grant to Colony and/or any Colony Designees an option to purchase

(2) By way of example, based on a $200 million plan of reorganization value for standalone Propco, if $50 million of additional equity contributions are made, the 4.375% would be reduced to 3.5%, unless the purchaser increased its purchase price by 4.375% of the additional $50 million.

from the Xxxxxxxx Affiliates a total of up to 5.625% of the equity of Propco Holdco (the “Colony Equity Option”), exercisable at any time during the first year following the Effective Date for cash consideration of the greater of fair market value(3) on the option exercise date or the per unit price applicable to the original purchase of Colony Propco Holdco Equity provided in clause (a) (or such lower price if equity has been issued by Propco Holdco for a price below plan value), (c) subject to the terms and conditions set forth in Attachment 3 hereto, grant to Colony and/or any Colony Designee a right of first refusal to purchase equity of Propco Holdco offered to the Xxxxxxxx Affiliates by the Mortgage Lenders (“ML ROFR”) at the price offered to the Xxxxxxxx Affiliates, with such ML ROFR to be exercised no later than ten (10) days prior to the last day for the Xxxxxxxx Affiliates to exercise such right (or if the Xxxxxxxx Affiliates have a period of less than 20 days to exercise such right, one half of such lesser time period), together with delivery of a firm funding commitment, (d) purchase from the Mortgage Lenders all FG Warrants (as defined in and on the terms and conditions set forth in Attachment 2 hereto), and immediately thereafter assign all such FG Warrants to Colony and/or any Colony Designee for no further consideration, (e) pay or cause to be paid to the Colony Parties on the effective date of the Plan or the Propco Plan (as defined below) (the “Effective Date”) a settlement fee in the amount of US $1,762,500 in immediately available funds (the “Settlement Fee”) (the Colony Propco Holdco Equity sold to Colony, the FG Warrants, the Colony Equity Option, the ML ROFR and the Settlement Fee are collectively the “Effective Date Deliverables”), (f) deliver to an employee or member of Colony Capital licensed by all applicable regulatory authorities the “Colony Proxy” subject to and as described in Annex 7 of the Propco Plan Term Sheet, (g) grant to Colony and/or the Colony Designees, as of the Effective Date (x) a co-investment right with respect to certain gaming or hotel investment opportunities in the Las Vegas Locals Market (as defined in Attachment 3 hereto) that may be pursued by FG or any Xxxxxxxx Affiliate (other than indirectly through their equity investment in New Propco), and (y) a third party equity investment right with respect to certain gaming opportunities arising outside of the Las Vegas Locals Market that may be pursued by FG or any Xxxxxxxx Affiliate, all on the terms and conditions set forth in Attachment 3 (items (x) and (y), as more particularly described on Attachment 3, being collectively, the “Participation Rights” and, together with the FG Warrants and the Colony Propco Holdco Equity, the “Colony Equity Consideration”), (h) grant to Colony and/or the Colony Designees such other rights as set forth in Attachment 3 hereto, and (i) release the Colony Release Parties as described in Paragraph 4(c) hereof. Unless otherwise specified in writing by Colony (or a representative or agent thereof), the Xxxxxxxx Affiliates must pay, deliver, or assign, as the case may be, all Effective Date Deliverables and Participation Rights to Colony and not to any Colony Designee. For purposes of this MOU, the term “Colony Designee” shall mean any current or future Colony affiliate, funds and separate accounts for which Colony or an affiliate under Colony’s control acts as an investment advisor, or any limited partner or co-investor in any such affiliate or entity. It is expressly acknowledged and agreed that it will be a condition to any sale of equity in Propco (including by reason of exercise of any option) that no such sale shall cause the Colony Parties and the Xxxxxxxx Parties to own, or be deemed to own for purposes of Section 267 of the Internal Revenue Code of 1986, as amended, (the “Code”), more than fifty percent (50%) of the equity of Propco Holdco and/or New PropCo as of the Effective Date.

(3) Fair market value to be determined pursuant to a reasonably agreed procedure set forth in definitive documents.

2. Consideration to Xxxxxxxx Parties.

In consideration to the Xxxxxxxx Parties for the Colony Equity Consideration and the releases described in Paragraph 4(b) hereof, the Colony Parties and Colony Capital shall release the Xxxxxxxx Release Parties as described in Paragraph 4(a) hereof, the Equityholders Agreement shall be terminated and FCP, FCP Holding, Xxxxxxxx Partners and Voteco shall be dissolved or merged out of existence pursuant to applicable law or court order, including pursuant to the Plan, on the Effective Date.

3. Commitments of the Parties to this Agreement.

(a) MOU Termination Event.

As used herein, “MOU Termination Event” means: (i) the occurrence of both of (A) either (x) the Plan Support Agreement being terminated by mutual agreement of the parties thereto (and other than as a result of the occurrence of the Effective Date ) or (y) the occurrence a “Termination Event” as defined in the Plan Support Agreement (other than as a result of the occurrence of the Effective Date ) that has not been duly waived or cured in accordance with the terms of the Plan Support Agreement; and (B) the parties to the Plan Support Agreement not thereafter pursuing a “propco stand-alone plan” consistent with the terms and conditions of the Propco Plan Term Sheet (a “Propco Plan”) or (ii) the agreement of any Xxxxxxxx Affiliate to support, the filing with the Bankruptcy Court of, or the effectiveness of any chapter 11 plan of the Debtors other than the Plan or the Propco Plan.

(b) Mutual Commitments.

As long as a MOU Termination Event has not occurred, each Party hereto agrees for itself, that it will:

i. promptly following the execution of this MOU, negotiate in good faith to prepare definitive documentation, which documentation shall be in agreed final form on or before April 15, 2010, which shall contain provisions consistent with this MOU, the attachments hereto, and such other provisions as are mutually acceptable to the Parties;

ii. not object to or otherwise commence any proceeding or take any other action opposing any of the terms of the Plan Support Agreement, the disclosure statement associated with the Plan or a Propco Plan, the Plan or a Propco Plan or any other agreement or transaction that is contemplated by the Propco Plan Term Sheet or the Plan Support Agreement, or a Propco Plan;

iii. not directly or indirectly, solicit, support or vote in favor of, as applicable, any other plan, sale, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of SCI, Propco or any of their respective affiliates that could reasonably be expected to prevent, delay or impede solicitation,

confirmation or consummation of the Plan or the Propco Plan or any document filed with the Bankruptcy Court in furtherance of soliciting or confirming the Plan or the Propco Plan or consummating the transactions contemplated thereby;

iv. support approval of the Plan or the Propco Plan, any associated disclosure statement, the amended Compromise and other related matters in proceedings before the Bankruptcy Court;

v. following receipt of the disclosure statement associated with the Plan or the Propco Plan and other related solicitation materials approved by the Bankruptcy Court, vote all claims that it holds or controls, if any, in favor of the Plan or the Propco Plan by delivering its duly executed and timely completed ballot or ballots accepting the Plan or the Propco Plan to the balloting agent for the Plan or the Propco Plan, and it shall not thereafter withdraw or change such vote so long as the Plan and associated disclosure statement are not modified except in such manner that does not affect or in any way alter materially or disproportionately adversely the terms of the Colony Equity Consideration; and

vi. take all reasonable and customary steps necessary or desirable to cause the Equityholders Agreement to be terminated and FCP, FCP Holding, Xxxxxxxx Partners and Voteco to be dissolved or merged out of existence pursuant to applicable law or court order, including pursuant to the Plan, on the Effective Date.

(c) Colony Commitments.

As long as a MOU Termination Event has not occurred each Colony Party agrees for itself, that it will from and after the date hereof:

i. promptly disclose to the Xxxxxxxx Parties any agreement (other than procedural or immaterial understandings) between any Colony Party and any Mortgage Lender related to or in connection with the Plan, the Xxxxxxxx Affiliates, New Propco, the sale or auction of SCI’s assets, or any transaction described in the Propco Plan Term Sheet; provided, however, that the Colony Parties shall be under no obligation to disclose any such agreement if the agreement relates to the Mortgage Loan or any investment referencing the Mortgage Loan.

(d) Xxxxxxxx Party Commitments.

As long as a MOU Termination Event has not occurred each Xxxxxxxx Party agrees for itself, that it will from and after the date hereof:

i. promptly disclose to the Colony Parties any proposed revision or modification to the Propco Plan Term Sheet or Plan Support Agreement;

ii. not to enter into any agreement or otherwise take any action that could be reasonably expected to interfere with the Xxxxxxxx Parties’ or the Xxxxxxxx Affiliates’ collective ability to perform their obligations to grant and to honor the exercise of any rights of Colony and/or the Colony Designees in respect of the Colony Equity Consideration granted to Colony and/or the Colony Designees pursuant to this MOU; and

iii. promptly disclose to the Colony Parties any agreement (other than procedural or immaterial understandings) between any Xxxxxxxx Party and any Mortgage Lender related to or in connection with the Plan, the Xxxxxxxx Affiliates, New Propco, the sale of SCI’s equity or assets, or any transaction described in the Propco Plan Term Sheet.

4. Releases

(a) Releases of the Xxxxxxxx Release Parties by Colony Releasing Parties.

Subject only to the condition precedent of the occurrence of (i) the Effective Date, (ii) the tender of the Effective Date Deliverables to the Colony Parties or their designees as and to the extent required by applicable definitive documentation, and (iii) entry by the Parties into and effectiveness of binding documentation memorializing the rights of the Colony Parties and the Colony Designees to the Colony Equity Consideration other than the Effective Date Deliverables (the date of such occurrence of items (i), (ii), and (iii), the “Xxxxxxxx Release Effective Date”), the Colony Parties and Colony Capital (the “Colony Releasing Parties”) on the Xxxxxxxx Release Effective Date hereby knowingly and voluntarily, expressly and absolutely forever release and discharge the Xxxxxxxx Parties, and each and every one of them, (whether individually or collectively) and each of their respective agents, principals, managers, managing members, members, stockholders, “controlling persons” (within the meaning of the United States federal securities laws), partners, limited partners, investors, parents, subsidiaries, affiliates, directors, officers, employees, attorneys, accountants, successors, assigns, consultants, advisors, agents, trusts, trustors, beneficiaries, heirs, executors, and administrators (the “Xxxxxxxx Release Parties”), from any and all claims, potential claims, demands, rights, actions or causes of action, debts, liabilities, damages, losses, obligations, accounts, attorneys’ fees, reckonings, judgments, suits, costs, expenses, liens, matters and issues of any kind or nature whatsoever, whether known or unknown, contingent or absolute, suspected or unsuspected, disclosed or undisclosed, matured or unmatured arising out of, related to, based upon, by reason of, or in any way involving, directly or indirectly, (1) the Transaction, (2) any contract, agreement, document or obligation (including the Equity Agreements and any amendments thereto) pursuant to which any of the Xxxxxxxx Release Parties owes, is bound to, or subject to any obligation or duty to any of the Colony Releasing Parties, (3) the Plan and any transactions described in the Plan; or (4) any prior transactions referred to herein (collectively, the “Xxxxxxxx Claims”), which any of them

respectively now has, owns or holds, or at any time heretofore had, owned or held, or could, shall or may hereafter have, own, or hold. For avoidance of doubt, this release of all Xxxxxxxx Claims by the Colony Releasing Parties is inclusive of, and, on the Xxxxxxxx Release Effective Date, hereby releases all Xxxxxxxx Claims that the Colony Parties may hold against the Xxxxxxxx Release Parties derivatively by, though or under FCP, FCP Holding, Voteco or Xxxxxxxx Partners, including by reason of the dissolution of any thereof. Such releases shall expressly be inapplicable to any claims of the Colony Parties (i) for indemnification arising under the Equityholders Agreements, the VoteCo operating agreement, the SCI articles of incorporation, SCI by-laws or applicable law, (ii) that expressly survive the Effective Date pursuant to the Plan’s terms, (iii) relating to or arising under this MOU or any definitive documentation entered into by the Parties reflecting the terms contemplated by this MOU or otherwise acceptable to the Parties and (iv) relating to or arising under any documents or agreements entered into in connection with or evidencing the ownership interests obtained by Colony or its affiliates or designees as a result of the Colony Equity Consideration.

(b) Releases of the Station Group by the Colony Releasing Parties and the Xxxxxxxx Parties.

Subject only to the condition precedent of the occurrence of (i) the Effective Date, (ii) the tender of the Effective Date Deliverables to the Colony Parties or their designees as and to the extent required by applicable definitive documentation, (iii) entry by the Parties into and effectiveness of binding documentation memorializing the rights of the Colony Parties and the Colony Designees to the Colony Equity Consideration other than the Effective Date Deliverables, and (iv) the effectiveness of a release by SCI and each direct and indirect subsidiary of SCI that is a debtor in the Bankruptcy Cases of all Claims against the Colony Release Parties (as defined below) and the Xxxxxxxx Release Parties, (the date of such occurrence of items (i), (ii), (iii) and (iv), the “Station Group Release Effective Date”), the Xxxxxxxx Parties and the Colony Releasing Parties on the Station Group Release Effective Date hereby knowingly and voluntarily, expressly and absolutely forever release and discharge the Station Group, and each and every one of them, (whether individually or collectively) and each of their respective agents, principals, managers, managing members, members, stockholders, “controlling persons” (within the meaning of the United States federal securities laws), partners, limited partners, investors, parents, subsidiaries, affiliates, directors, officers, employees, attorneys, accountants, successors, assigns, consultants, advisors, agents, trusts, trustors, beneficiaries, heirs, executors, and administrators (the “Station Group Release Parties”), from any and all claims, potential claims, demands, rights, actions or causes of action, debts, liabilities, damages, losses, obligations, accounts, attorneys’ fees, reckonings, judgments, suits, costs, expenses, liens, matters and issues of any kind or nature whatsoever, whether known or unknown, contingent or absolute, suspected or unsuspected, disclosed or undisclosed, matured or unmatured arising out of, related to, based upon, by reason of, or in any way involving, directly or indirectly, (1) the Transaction, (2) either of the Equity Agreements and any amendments thereto, or (3) the Plan and any transactions described in the Plan; or (4) any prior transaction referred to herein (the “Station Claims”), which any of them respectively now has, owns or holds, or at any time heretofore had, owned or held, or could, shall or may hereafter have, own, or hold. For avoidance of doubt, this release of all Station Claims by the Colony Releasing Parties and the Xxxxxxxx Parties is inclusive of, and, on the Station Group Release Effective Date, hereby releases all Station Claims that the Colony Releasing Parties or the Xxxxxxxx Parties may hold against the

Station Group derivatively by, though or under FCP, FCP Holding, Voteco or Xxxxxxxx Partners, including by reason of the dissolution of any thereof. Such releases shall expressly be inapplicable to any Station Claims of the Colony Releasing Parties or the Xxxxxxxx Parties (i) for indemnification, reimbursement of expenses, compensation, contribution, or subrogation arising under the Equity Agreements, the VoteCo operating agreement, the SCI articles of incorporation, SCI by-laws, SCI board resolutions, SCI policies, or applicable law, (ii) that expressly survive the Effective Date pursuant to the Plan’s terms, (iii) relating to or arising under this MOU or any definitive documentation entered into by the Parties reflecting the terms contemplated by this MOU or otherwise acceptable to the Parties and (iv) relating to or arising under any documents or agreements entered into in connection with or evidencing the ownership invests obtained by Colony or its affiliates or designees as a result of the Colony Equity Consideration.

(c) Releases of Colony Release Parties by Xxxxxxxx Parties.

Subject only to the condition precedent of the occurrence of (i) the Effective Date, (ii) the tender of the Effective Date Deliverables to the Colony Parties or their designees as and to the extent required by applicable definitive documentation, and (iii) entry by the Parties into and effectiveness of binding documentation memorializing the rights of the Colony Parties and the Colony Designees to the Colony Equity Consideration other than Effective Date Deliverables (the date of such occurrence of items (i), (ii), and (iii), heretofore defined as the “Colony Release Effective Date”), each of the Xxxxxxxx Parties on the Colony Release Effective Date hereby knowingly and voluntarily, expressly and absolutely forever release and discharge the Colony Parties and Colony Capital (whether individually or collectively) and each of their respective agents, principals, managers, managing members, members, stockholders, “controlling persons” (within the meaning of the United States federal securities laws), partners, limited partners, investors, parents, subsidiaries, affiliates, directors, officers, employees, attorneys, accountants, successors, assigns, consultants, advisors, agents, lenders, investors, investment banks, trusts, trustors, beneficiaries, heirs, executors, and administrators (collectively, the “Colony Release Parties”) from any and all claims, potential claims, demands, rights, actions or causes of action, debts, liabilities, damages, losses, obligations, accounts, attorneys’ fees, reckonings, judgments, suits, costs, expenses, liens, matters and issues of any kind or nature whatsoever, whether known or unknown, contingent or absolute, suspected or unsuspected, disclosed or undisclosed, matured or unmatured arising out of, related to, based upon, by reason of, or in any way involving, directly or indirectly, (1) the Transaction, (2) any contract, agreement, document or obligation (including the Equity Agreements and any amendments thereto) pursuant to which any of the Colony Release Parties owes, is bound to, or subject to any obligation or duty to any of the Xxxxxxxx Releasing Parties, (3) the Plan and any transactions described in the Plan; or (4) any prior transactions referred to herein (the “Colony Claims”), which any of them respectively now has, owns or holds, or at any time heretofore had, owned or held, or could, shall or may hereafter have, own, or hold. For avoidance of doubt, this release of all Colony Claims by the Xxxxxxxx Releasing Parties is inclusive of, and, on the Colony Release Effective Date, hereby releases all Colony Claims that the Xxxxxxxx Parties may hold against the Colony Release Parties derivatively by, though or under FCP, FCP Holding, Voteco or Xxxxxxxx Partners, including by reason of the dissolution of any thereof. Such releases shall expressly be inapplicable to any Colony Claims of the Xxxxxxxx Parties (i) for indemnification arising under the Equityholders Agreements, the VoteCo operating agreement, the SCI articles of incorporation, SCI by-laws or applicable law, (ii) relating to or arising under this MOU or any definitive documentation entered into by the

Parties reflecting the terms contemplated by this MOU or otherwise acceptable to the Parties and (iii) relating to or arising under any documents or agreements entered into in connection with or evidencing the ownership invests obtained by Colony or its affiliates or designees as a result of the Colony Equity Consideration.

(d) Additional Common Release Terms. Notwithstanding any statute or provision of the common law that provides that a general release does not extend to claims that a releasor does not know or suspect to exist at the time of executing the release, the releases provided for herein are deemed to constitute a full release in accordance with their terms. The foregoing shall include, but not be limited to, a waiver of all rights provided by California Civil Code Section 1542, or by any similar provision of federal, state or territorial law. Each Party hereby acknowledges that, except as otherwise set forth herein, the agreements in this Section 4 are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the applicable released claims. In entering into the aforementioned releases, each Party expressly disclaims any reliance on any representations, acts, or omissions by any of the Parties and agrees and acknowledges that the validity and effectiveness of the releases described above do not depend in any way on any such representation, acts and/or omissions or the accuracy, completeness, or validity thereof. Each Party further represents, warrants and acknowledges that it is familiar with and voluntarily waives any right or benefit arising from Section 1542 of the Civil Code of the State of California, which provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his settlement with the debtor.”

Each Party covenants and agrees never to institute or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any person released by such Party, by reason of or in connection with any of the matters, claims or causes of action released by such Party in this MOU. The provisions of this MOU, including this Section 4, may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any action, suit, or other proceeding that may be instituted, prosecuted, or attempted in breach of the foregoing release.

(e) Mortgage Lender Release. The Colony Releasing Parties further agree that, on or prior to the Effective Date, the Colony Releasing Parties will, as contemplated under the Propco Plan Term Sheet, enter into a release of the Mortgage Lenders, Deutsche Bank AG, as swap counterparty under the Propco swap agreement and each other direct lender to any one or more of the FCP MezzCo Borrower I, II, III or IV (the “Mortgage Lender Release Parties”), on the same terms as those set forth in the preceding sections of this Section 4, subject only to the effectiveness of the conditions precedent described in clause 4(a) and the receipt of a reciprocal release from the Mortgage Lender Release Parties on the same terms; provided, however, that such releases shall provide that (x) the release by the Colony Releasing Parties of the Mortgage Lender Release Parties (i) shall only be a release of claims held by the Colony Releasing Parties with respect to their direct or indirect equity interests in SCI, FCP, FCP Holding, and VoteCo, including without limitation any such claims under, arising from, or related to non-compete agreements, joint ventures agreements, and limited liability company agreements, and (ii) for

avoidance of doubt, shall not apply to any existing business relationships between or among the Mortgage Lender Release Parties, the Colony Releasing Parties, or co-investors of the Colony Parties or any affiliate thereof that are not directly related to (1) the Transaction, (2) the Plan and any transactions described in the Plan; or (3) any prior transaction referred to herein and (y) the release by the Mortgage Lender Release Parties of the Colony Release Parties shall not apply to any existing business relationships between or among the Mortgage Lender Release Parties, the Colony Release Parties, or co-investors of the Colony Parties or any affiliate thereof that are not directly related to (1) the Transaction (2) the Plan and any transactions described in the Plan; or (3) any prior transaction referred to herein.

5. Mutual Representations, Warranties, and Covenants.

Each Party makes the following representations and warranties, solely with respect to itself, to each of the other Parties:

(a) Enforceability. This MOU is a legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

(b) No Consent or Approval. Except as expressly provided in this MOU, no consent or approval is required by any other entity for it to carry out the provisions of this MOU.

(c) Power and Authority. The Party has all requisite power and authority to enter into this MOU and to carry out the transactions contemplated by, and perform its respective obligations under, this MOU.

(d) Authorization. The execution and delivery of this MOU and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.

(e) No Conflicts. The execution, delivery and performance of this MOU does not and shall not: (a) violate any provision of law, rule or regulations applicable to it or any of its subsidiaries; (b) violate its certificate of incorporation, bylaws or other organizational documents or those of any of its subsidiaries; or (c) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party.

6. No Waiver of Participation and Preservation of Rights.

This MOU is part of a proposed settlement of disputes among the Parties. Without limiting the foregoing sentence in any way, if the transactions contemplated by this MOU, the Participation Term Sheet, or otherwise set forth in the Propco Plan Term Sheet and the Plan are not consummated as provided herein, if a MOU Termination Event occurs, or if this MOU is otherwise terminated for any reason, the Parties each fully reserve any and all of their respective rights, remedies, claims and interests.

7. Acknowledgement.

This MOU and the transactions contemplated herein are the product of negotiations between the Parties and their respective representatives.

8. Effect of MOU Termination Event.

If a MOU Termination Event as defined in section 3(a) occurs, then upon delivery of written notice of such MOU Termination Event from the Xxxxxxxx Parties to the Colony Parties or from the Colony Parties to the Xxxxxxxx Parties pursuant to Section 9(j), this MOU (including, without limitation, the releases in Section 4) shall terminate for all purposes without the need for any further action by any party and without obligation or liability to any party.

9. Miscellaneous Terms.

(f) Binding Obligation; Assignment; Duties.

i. Binding Obligation. This MOU is a legally valid and binding obligation of the Parties, enforceable in accordance with its terms, and shall inure to the benefit of the Parties and their representatives. Nothing in this MOU, express or implied, shall give to any entity, other than the Parties and their respective members, officers, directors, agents, financial advisors, attorneys, employees, partners, affiliates, successors, assigns, heirs, executors, administrators and representatives, any benefit or any legal or equitable right, remedy or claim under this MOU.

ii. Assignment. No rights or obligations of any Party under this MOU may be assigned or transferred to any other entity.

iii. Fiduciary Obligations. Nothing in this MOU shall prevent or limit FJF, LJF, Xxxxxx X. Xxxxxxx, Xx., Xxxxxxxx X. Xxxxxxxxx, or any other representative of the Colony Parties from fulfilling his or her fiduciary duties to any of the Debtors by voting or taking other actions in his or her capacity as a director, manager, member, or officer of any Debtor, and neither such voting nor the taking of any such other actions in such capacities shall result in a breach of any provision of this MOU.

(g) Further Assurances.

The Parties agree to execute and deliver such other instruments and perform such acts, in addition to the matters herein specified, as may be reasonably appropriate or necessary, from time to time, to effectuate the agreements and understandings of the Parties, whether the same occurs before or after the date of this MOU.

(h) Headings.

The headings of all sections of this MOU are inserted solely for the convenience of reference and are not a part of and are not intended to govern, limit or aid in the construction or interpretation of any term or provision hereof.

(i) Governing Law.

THIS MOU IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS PRINCIPLES THEREOF. By its execution and delivery of this MOU, each of the Parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding with respect to any matter under or arising out of or in connection with this MOU or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, shall be brought exclusively in either the United States District Court for the Southern District of New York or the United States District Court for the District of Nevada. By execution and delivery of this MOU, each of the Parties hereto hereby irrevocably accepts and submits itself to the exclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit or proceeding.

(j) Specific Performance.

The Parties hereby acknowledge that the rights of the Parties under this MOU are unique and that remedies at law for breach or threatened breach of any provision of this MOU would be inadequate and, in recognition of this fact, agree that, in the event of a breach or threatened breach of the provisions of this MOU, in addition to any remedies at law, the Parties shall, without posting any bond, be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available and the Parties hereby waive any objection to the imposition of such relief.

(k) Complete Agreement, Interpretation and Modification.

i. Complete Agreement. This MOU constitutes the complete agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, oral or written, between or among the Parties with respect thereto.

ii. Interpretation. This MOU is the product of negotiation by and among the Parties. Any Party enforcing or interpreting this MOU shall interpret it in a neutral manner. There shall be no presumption concerning whether to interpret this MOU for or against any Party by reason of that Party having drafted this MOU, or any portion thereof, or caused it or any portion thereof to be drafted.

iii. Modification of this MOU. The MOU may only be modified, altered, amended or supplemented, or otherwise deviated from by waiver, consent or otherwise, by an agreement in writing signed by each Party hereto.

(l) Effectiveness.

This MOU shall become effective immediately once each Party hereto has duly executed and delivered a counterpart to this MOU to each other Party hereto.

(m) Execution of this MOU.

This MOU may be executed and delivered (by facsimile, email, or otherwise) in any number of counterparts, each of which, when executed and delivered, shall be deemed an original, and all of which together shall constitute the same agreement. Except as expressly provided in this MOU, each individual executing this MOU on behalf of a Party has been duly authorized and empowered to execute and deliver this MOU on behalf of said Party.

(n) Settlement Discussions.

This MOU is part of a proposed settlement of a dispute among the Parties. Nothing herein shall be deemed an admission of any kind. Pursuant to Federal Rule of Evidence 408 and any applicable state rules of evidence, this MOU and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce the terms of this MOU.

(o) Notices.

All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, email, courier or by registered or certified mail (return receipt requested) to the following addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice):

i. If to the Xxxxxxxx Affiliates, to:

Xxxxxxxx Gaming, LLC

00000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000

Xxx Xxxxx, Xxxxxx 00000

Attn: Xxxxx X. Xxxxxxxx, III

with a copy (which shall not constitute notice) to:

Xxxxxx, Xxxxxx and Xxxxx

000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx XX 00000-0000

Attn: Xxxxx Xxxxx

iii. If to the Colony Parties, to:

Colony Capital, LLC

0000 Xxxxxxxx, 0xx Xxxxx

Xxxxx Xxxxxx, Xxxxxxxxxx 00000

Attn: Xxxxxxx Xxxxxx

with a copy (which shall not constitute notice) to:

O’Melveny & Xxxxx, LLP

Two Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx

Xxx Xxxxxxxxx, Xxxxxxxxxx 00000

Attn: Xxxxxxxx X. Xxxxxx

and

Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxxx

Any notice given by delivery, mail or courier shall be effective when received. Any notice given by facsimile or email shall be effective upon oral or machine confirmation of transmission.

(p) Time of the Essence.

The Parties agree that time is of the essence with respect to each and every term and provision of this MOU.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Parties have entered into this MOU on the day and year first above written.

	XXXXXXXX GAMING LLC,
	A Nevada Limited Liability Company

	By:	/s/ Xxxxx X. Xxxxxxxx III
	Name:
	Title:

[Signature Page Memorandum of Understanding]

	XXXXX X. XXXXXXXX III
	An individual

	/s/ Xxxxx X. Xxxxxxxx III

[Signature Page Memorandum of Understanding]

	XXXXXXX X. XXXXXXXX
	An individual

	/s/ Xxxxxxx X. Xxxxxxxx

[Signature Page Memorandum of Understanding]

	FJF INVESTCO, LLC

	By:	/s/ Xxxxx X. Xxxxxxxx III
		Xxxxx X. Xxxxxxxx III
		Manager

[Signature Page Memorandum of Understanding]

	LJF INVESTCO, LLC

	By:	/s/ Xxxxxxx X. Xxxxxxxx
		Xxxxxxx X. Xxxxxxxx
		Manager

[Signature Page Memorandum of Understanding]

	FCP CLASS B HOLDCO, LLC

	By:	/s/ Xxxxxxx X. Xxxxxxxx
		Xxxxxxx X. Xxxxxxxx
		Vice President

[Signature Page Memorandum of Understanding]

	FC INVESTOR, LLC

	By:	/s/ Xxxxxxxx Xxxxxxxxx
	Name:	Xxxxxxxx Xxxxxxxxx
	Title:	Vice President

[Signature Page Memorandum of Understanding]

	XXXXXX XXXXXXX, JR. Solely in his capacity as a equity holder of Voteco and as managing member of FC Investor, as a director of SCI and a manager of FCP

	/s/ Xxxxxx Xxxxxxx, Jr.

[Signature Page Memorandum of Understanding]

	COLONY CAPITAL, LLC Solely for the purposes of giving releases as provided in Section 4 and covenanting to the miscellaneous provisions of Section 9 of this MOU


	By:	/s/ Xxxxxxxx Xxxxxxxxx
	Name:	Xxxxxxxx Xxxxxxxxx
	Title:	Principal and CIO

[Signature Page Memorandum of Understanding]

Attachment 1

PLAN TERM SHEET

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN OF REORGANIZATION, IT BEING UNDERSTOOD THAT SUCH AN OFFER OR SOLICITATION, IF ANY, WILL ONLY BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES AND/OR BANKRUPTCY LAWS. THIS TERM SHEET IS A DRAFT FOR DISCUSSION PURPOSES ONLY AND DOES NOT ADDRESS ALL MATERIAL TERMS THAT WOULD BE REQUIRED IN CONNECTION WITH THE RESTRUCTURING (AS DEFINED HEREIN) AND IS SUBJECT TO THE COMPLETION AND EXECUTION OF DEFINITIVE DOCUMENTATION ACCEPTABLE TO THE PARTIES AND THE RECEIPT BY THE MORTGAGE LENDERS OF CREDIT AND OTHER INTERNAL APPROVALS.

STATION CASINOS, INC.

FCP PROPCO, LLC

RESTRUCTURING TERM SHEET

MARCH 24, 2010

This term sheet (the “Term Sheet”) outlines a proposed restructuring transaction (as further defined below, the “Restructuring”) for Station Casinos, Inc. and certain of its subsidiaries and FCP PropCo, LLC to be implemented pursuant to a joint plan of reorganization (the “Plan”) under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”) and certain related transactions. Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Bankruptcy Code. This Term Sheet does not include a description of all of the terms, conditions and other provisions that are to be contained in the definitive documentation governing the Restructuring, which remain subject to discussion and negotiation.

Relevant Parties:

Opco:		Station Casinos, Inc., a Nevada corporation (“Opco”) and certain of its subsidiaries and affiliates described on Annex 1 (the “Opco Debtors”).

Propco:		FCP PropCo, LLC, a Delaware limited liability company (“Propco”).

New Propco:		A new entity formed by the Mortgage Lenders for the purpose of acquiring the assets of Propco and certain of the assets of the Opco Debtors and certain other Opco subsidiaries as part of the Restructuring, together with its subsidiaries, all in accordance with the terms and conditions summarized herein (“New Propco”).

MezzCo Debtors:		FCP MezzCo Parent, LLC, FCP MezzCo Parent Sub, LLC, FCP MezzCo Borrower VII, LLC, FCP MezzCo Borrower VI, LLC, FCP MezzCo Borrower V, LLC, FCP MezzCo Borrower IV, LLC, FCP MezzCo Borrower III, LLC, FCP MezzCo Borrower II, LLC, FCP MezzCo Borrower I, LLC, each a Delaware limited liability company (the “MezzCo Debtors”). FCP MezzCo Borrower IV, LLC, FCP MezzCo Borrower III, LLC, FCP MezzCo Borrower II, LLC, FCP MezzCo Borrower I, LLC are also collectively the “MezzCo Borrowers”.

Land Loan Borrower:		CV PropCo, LLC, a Nevada limited liability company (the “Land Loan Borrower”).

FG:		Xxxxxxxx Gaming LLC, a Nevada limited liability company (“FG”).

Existing Opco Capital Structure:

Credit Agreement:		Credit Agreement, dated as of November 7, 2007, among Opco, as borrower, Deutsche Bank Trust Company Americas, as Administrative Agent, the other lenders party thereto, Deutsche Bank Securities Inc. and X.X. Xxxxxx Securities Inc., as joint lead arrangers and joint book runners, JPMorgan Chase Bank, N.A., as Syndication Agent, and Bank of Scotland plc, Bank of America, N.A., and Wachovia Bank, N.A., as Co-Documentation Agents.

General Unsecured Claims:		General unsecured claims against Opco, including without limitation the Opco Senior Notes, the Opco Subordinated Notes and any lease rejection claims.

Equity Holders:		100% of the equity issued by Opco is held by debtors FCP Holding, Inc., FCP Voteco, LLC and Xxxxxxxx Partners LLC.

Existing Propco Capital Structure:

Mortgage Loans:		The loans (the “Mortgage Loans”) made pursuant to the Amended and Restated Loan and Security Agreement, dated as of March 19, 2008, among Propco, as Borrower, and German American Capital Corporation and JPMorgan Chase Bank N.A., as lenders (the “Mortgage Lenders”).

General Unsecured Claims:		General unsecured claims, if any, against Propco (“Propco General Unsecured Claims”), including without limitation deficiency claims of Mortgage Lenders, swap claims of Deutsche Bank AG (“Swap Counterparty”) and any allowed prepetition claims of Opco against Propco.

*Mezzanine Loans*:		Mezzanine debt (the “Mezzanine Loans”) incurred by the MezzCo Debtors.

Equity Holders:		100% of the equity issued by Propco (“Propco Equity”) is held by FCP MezzCo Borrower I, LLC.

*Master Lease and License:*		Master Lease, dated as of November 7, 2007 (as amended), between Propco and Opco (the “Master Lease”) and License and Reservation Service Agreement, also dated as of November 7, 2007, between Propco and Opco (the “License” and together with the Master Lease, the “Master Lease and License”).

*Amended and Restated Master Lease Compromise Agreement (the “Compromise”):*		The Amended and Restated Master Lease Compromise Agreement dated as of and approved by the Bankruptcy Court on December 11, 2009, among Opco and certain of its wholly owned subsidiaries and Propco, as amended by that certain First

		Amendment to Amended and Restated Master Lease Compromise Agreement, dated as of February 24, 2010 and approved by the Bankruptcy Court on March 2, 2010.

Land Loan:		Approximately $250 million delay-draw term loan of the Land Loan Borrower that is collateralized by land (the “Land Loan Collateral”) located on the southern end of Las Vegas Boulevard at Cactus Avenue and land surrounding Wild Wild West in Las Vegas, Nevada (the “Land Loan”).

Structure of the Plan:		The Plan will principally consist of (a) the satisfaction of the Mortgage Loans by transferring the assets of PropCo (including all FF&E on which Propco has a lien and which Propco acquires from Opco and its subsidiaries in partial satisfaction of its secured claims against those entities) to New Propco, an entity the economics of which will be initially wholly-owned by the Mortgage Lenders in accordance with their ratable interests in the Mortgage Loan, as more fully set forth on Annex 7, with such transfer to occur, pursuant to the Plan, free and clear of all liens, claims and encumbrances, (b) [*], (e) the rejection, as of the effective date under the Plan (the “Effective Date”), by Opco of the Master Lease and License (with the License and Master Lease, as amended by the Compromise, to remain in place without rejection so long as the Plan Support Agreement (as defined below) remains in effect). Concurrently with or immediately upon consummation of the Plan, the following additional steps are also contemplated: (1) the restructuring of the Land Loan and the transfer of the Land Loan Borrower or the assets constituting collateral under the Land Loan to New Propco, (2) the issuance by New Propco of certain out of the money warrants for non-voting equity in New Propco as described in Annex 3, (3) the issuance by New PropCo of new senior secured debt to the Mortgage Lenders in consideration of the asset transfers from Propco, (4) the sale by the Mortgage Lenders to FG, ratably in accordance with their interests (prior to giving effect to any other sales of equity by the Mortgage Lenders) of (i) 50% of the equity in New Propco and (ii) certain of the warrants as further described in Annex 3 and (5) the entry into a management agreement between FG and New Propco, in each case, as set forth in more detail herein (the Plan and such other steps described in (1) through (5) above, collectively, the “Restructuring”).

Plan:		General. The Restructuring shall be implemented pursuant to the Plan and disclosure statement discussing the Plan (the “Disclosure Statement” a Co-Investment Agreement by and among the Mortgage Lenders and FG (the “Co-Investment Agreement”) (collectively, together with the Plan and any definitive documents

* Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

		relating thereto, the “Restructuring Documents”), in each case in form and substance acceptable to the Mortgage Lenders, New Propco and FG. Tax. The parties will endeavor to structure the Restructuring (including the closing thereof) and the Plan in a tax efficient manner. The tax structure shall be agreed by the Mortgage Lenders and FG in the Restructuring Documents. Regulatory. The Restructuring and the Plan will be subject to all regulatory requirements, including gaming regulations. The gaming regulatory approach will be agreed by the Mortgage Lenders and FG in the Restructuring Documents.

Propco Restructuring Transactions:

Propco Restructuring:		The Plan will provide for the following treatment of claims against and interests in Propco: (a) Propco Plan Recipients: The holders of Mortgage Loans (collectively, the “Propco Plan Recipients”), will be entitled under the Plan, ratably in accordance with their 62.5% and 37.5% shares of the outstanding Mortgage Loans, to receive, directly or through New Propco as their designee, the following (collectively, the “Senior Plan Recovery”): (i) all existing collateral for the Mortgage Loan; (ii) [*]; (iii) any other FF&E and reserves pledged to Propco under the Master Lease and the existing FF&E Security Agreement; (iv) all cash collateral held at Propco; (v) all distributions from Opco received by Propco on account of the claims of Propco against Opco, including claims for rejection of the Master Lease; and (vi) general releases from Opco, Propco and their respective estates and affiliates as described below under Definitive Documentation. Concurrently therewith, CV Holdco, LLC shall transfer to New Propco or a subsidiary thereof all of its equity interests in the Land Loan Borrower, CV Propco, LLC. Transfers to New Propco or the Land Loan Borrower will include all construction, design and branding assets related to any of the properties to be transferred to such entity (b) Formation of New Propco: The Propco Plan Recipients will form New Propco prior to the Effective Date and will designate New Propco or a subsidiary thereof as their designee to receive all asset transfers described above

* Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

		(other than any claims under the rejected Master Lease and the rejected License Agreement and “Excess Effective Date Cash”, as defined below, which will be retained by the Propco Plan Recipients) and will capitalize New Propco with all Retained Available Cash (as defined below) and in consideration of such asset transfers the Propco Plan Recipients will receive, ratably in accordance with their interests in the Mortgage Loans, a senior secured mortgage loan facility, in an aggregate principal amount equal to $1.6 billion, to be secured by (x) substantially all of the assets of New Propco, including the assets described in items (i) through (iv) of paragraph (a) above (but excluding collateral for the Land Loan and including the other collateral and terms described on Annex 2), (y) any equity interests in any subsidiaries acquired or formed by New Propco in connection with the Restructuring; and (z) 100% of the limited liability company interests of New Propco (the “New Propco Equity”). The New Propco Equity shall consist both of non-voting interests to be issued to a holding company (“Holdco”) owned by the Propco Plan Recipients and voting equity interests with minimal economic rights to be issued in favor of a limited liability company called “Voteco” as more particularly described on Annex 7. References herein to New Propco Equity or New Propco, as the case may be, shall refer to either New Propco, Holdco or both such entities, as the context may require. Holdco would also issue certain out-of-the-money warrants on terms described in Annex 3. (c) Holders of Other General Unsecured Claims: Holders of Propco general unsecured claims will not be entitled to distributions under the Plan. (d) Equity: Holders of existing Propco Equity will not be entitled to distributions under the Plan. On the Effective Date, all existing Propco Equity will be extinguished.

Mezzanine Debtors and Borrowers Plan Treatment:		Holders of Mezzanine Loans and any other creditors of MezzCo Debtors will not be entitled to any distributions under the Plan from the Debtors. On the Effective Date, the Mezzanine Debtors will be dissolved and all equity issued by the Mezzanine Debtors will, unless otherwise agreed by the Mortgage Lenders, be distributed in satisfaction of the claims of the lenders to the Mezzanine Debtors; provided that any equity so distributed will be deemed cancelled upon delivery and the holders thereof will have no rights to pursue any claims or rights against Propco, Opco or their respective affiliates.

Assignments by Propco Plan Recipients and FG:		The Propco Plan Recipients may assign to certain parties in interest cash and/or portions of their interests in New Propco. Specifically it is contemplated that, in settlement of certain

disputes and other contract claims (i) the Propco Plan Recipients may assign the Lender Warrants (as described on Annex 3) to certain parties in interest, (ii) the Propco Plan Recipients will assign to the Swap Counterparty, ratably in accordance with their interests, $7.9 million in cash (as defined below) paid to them, (iii) JPMorgan Chase may separately sell to one or more parties in interest non-voting equity of up to 4.375% of total equity in New Propco out of the equity acquired by JPMorgan Chase provided that it will be a condition to acquiring equity in New Propco that no such purchaser nor any direct or indirect equity owner of such purchaser (excluding for this purpose any direct or indirect equity owner who would not be deemed to own an interest in the capital or profits of New Propco for purposes of Section 267 of the Internal Revenue Code of 1986, as amended, (the “Code”), including by reason of Section 267(e)(3)(B), through its interest in such purchaser) own or be deemed to own, any interest in the stock of Opco for purposes of Section 267 of the Code and the Treasury regulations promulgated thereunder, including any deemed ownership resulting from the application of the constructive ownership provisions of Section 267(c) of the Code, which shall include but not be limited to any deemed ownership of Opco stock as a result of an ownership interest in any fund managed or operated by Colony Capital that holds an indirect interest in Opco stock and such purchaser will be required to represent that the foregoing is true in the instrument through which it obtains such equity, (iv) FG may sell to certain parties in interest non-voting equity of up to 10.0% of total equity in New Propco out of the equity acquired by FG in the Restructuring, (v) prior to the date that is six months after the date of confirmation of the Plan by the Bankruptcy Court, the Mortgage Lenders or FG may cause New Propco to issue(1) additional non-voting equity in an amount not to exceed 20% of the total equity value of New Propco (after giving effect to such new issuance) directly to any persons (excluding (1) the Mortgage Lenders and their respective affiliates, (2) any person that owns or is deemed to own any interest in the stock of Opco for purposes of Section 267 of the Code as more particularly described in clause (iii) above and (3) any person if (x) a direct or indirect equity owner of such person owns or is deemed to own any interest in the stock of Opco for purposes of Section 267 of the Code as more particularly described in clause (iii) above and (y) any direct or indirect equity owner of such person described in (x) would be deemed to own an interest in the capital or profits of New Propco for purposes of Section 267 of the Code as a result of such equity owner’s interest

(1) The Co-Investment Agreement shall provide that all allocations of governance authority and voting rights between FG equity holders and non-FG equity holders shall, following any such issuance under this subclause (v) remain the same as before such issuance for all purposes, regardless of who purchases such subclause (v) issuance or the size of such purchase.

in such person, and further excluding any person listed on Annex 6, none of whom may participate in any such offering without the consent of FG and the Mortgage Lenders), so long as (a) such equity is sold at a price equal to (or, if initially offered and sold after the Effective Date equal to or greater than) 100% of the equity value for such shares set forth in the Co-Investment Agreement (b) the cash proceeds received are applied to reduce the Term Facility provided for in Annex 2, and (c) except as otherwise agreed between FG and the Propco Plan Recipients, each of the Propco Plan Recipients, FG and certain parties-in-interest who acquire their interests from FG at closing, is given the right to participate in each such offering to the extent necessary to maintain the same percentage of ownership the Propco Plan Recipients or the Xxxxxxxx Affiliates (as defined below) or such other parties, respectively, would have had absent such additional offering, and (vi) the Mortgage Lenders and FG may collectively elect to have New Propco participate in a bid for Opco and to make additional equity investments in New Propco in connection with such bid. If the Xxxxxxxx Affiliates, the Mortgage Lenders or any other persons purchase additional equity in New Propco in connection with the Restructuring, then the percentages set forth in clauses (iii) and (iv) of the immediately preceding sentence (and the percentage of equity to be acquired under the warrants) will be automatically reduced to take into account the dilutive effect of the resulting increase in total capitalization(2) FG may assign to Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx or (so long as Xxxxx or Xxxxxxx Xxxxxxxx, as applicable, control the voting of such shares) to any family-owned estate planning affiliates (Xxxxx and Xxxxxxx Xxxxxxxx, collectively, the “Xxxxxxxx Brothers” and such family-owned affiliates holding economic but not voting control of shares, the “Xxxxxxxx Family Entities”), or designate any one or more of the same to initially receive, all equity and warrants designated under this Term Sheet to be sold by the Propco Plan Recipients to FG.

(2) By way of example, based on a $200mm plan of reorganization value for standalone Propco, if $50mm of additional equity contributions is invested in New Propco, the 4.375% would be reduced to 3.5%.

Rejection of Master Lease and License:		Effective as of the Effective Date, the Master Lease and License will be rejected by Opco. Upon plan confirmation and as a condition to the Effective Date, all necessary steps, including licensing and transition assistance in order to accomplish a prompt and relatively seamless transition (as contemplated in the Plan) of Propco operations to New Propco with FG as manager, shall have occurred such that, on the Effective Date, New Propco, with FG as manager, will have assumed full operational management of the Propco locations. The new credit documentation, management agreement and related documentation will include an obligation of New Propco and FG to deliver full transition services in form and substance satisfactory to the Mortgage Lenders (as to be provided in such documentation) following a default under the new credit documents.

Land Loan and Wild Wild West Property:		Land Loan: The Land Loan Borrower or the assets constituting collateral under the Land Loan will be transferred to New Propco or a subsidiary thereof at the direction of the holders of the Land Loan. Except as described on Annex 2, the Land Loan will be non-recourse to New Propco and will otherwise be restructured on the terms contained on Annex 2. Wild Wild West Property: Subject to any required consents from the Wild Wild West landlord and/or court order, the portions of the Wild Wild West assemblage held by Opco and its subsidiaries, including (a) the Wild Wild West real estate and ground leasehold and casino and other operating related assets held by Tropicana Station, Inc., the operator of the Wild Wild West Casino, and (b) the option to purchase other related property located within the boundary of or adjacent to the Wild Wild West assemblage, shall be transferred to the restructured Land Loan Borrower or a subsidiary thereof at a price mutually agreed by the Mortgage Lenders and Opco or, if no such agreement is reached, the value determined by the Bankruptcy Court, and added to the Land Loan Collateral. The Wild Wild West operating assets will be managed by FG under separate agreement with the owner thereof on the same terms and conditions as the FG Management Agreement (as defined below) but will be terminable at will without penalty by the Land Loan Borrower (or upon an event of default under the Land Loan, by the Land Loan lenders). Except as provided in the limited support agreement described on Annex 2, the Wild Wild West lease will be non-recourse to New Propco.

Headquarters Building:		The headquarters building located at 0000 Xxxxx Xxxxxxxx Xxxxxx Xxxxx is currently leased to Opco by a third party. Opco has expressed its intention to reject the lease as it is currently constituted and such lease is being re-negotiated by Opco to reduce the rent to market and potentially to reduce the amount of space rented. Subject to successful renegotiation of the lease with the landlord on terms approved by FG and the Mortgage Lenders, the lease will be consensually modified, assumed by Opco and assigned to New Propco in consideration of Opco being relieved

		of liability for rejection damages. If the re-negotiation of the lease is not successful, the headquarters building lease will not be assigned to New Propco and likely will be rejected by Opco.

[]*		[†]

[‡]		[§]

Sale and License to FG:		Sale: On the Effective Date, (i) the Mortgage Lenders will sell (pro rata in proportion to the New Propco Equity owned by each, or as otherwise agreed by the Mortgage Lenders), and FG (or the Xxxxxxxx Brothers and Xxxxxxxx Family Entities) will collectively purchase (and may subsequently reassign such New Propco Equity among themselves and other Xxxxxxxx Affiliates), 50% of the New Propco Equity and certain warrants as described on Annex 3 for a cash purchase price of $85.65 million(3) and (ii) New Propco shall, as part of the consideration for the FG Management Agreement described below, grant to FG a non-exclusive, non-assignable, non-sublicenseable fully paid perpetual license to use Propco’s IT System (as described on Annex 8) (including with respect to all non-Propco assets managed, owned, or operated by FG or a Xxxxxxxx Affiliate). Such purchase and sale will be consummated pursuant to a purchase agreement on terms customary for a transaction of this nature (including no seller reps or warranties, express or implied).

FG Management Agreement and other FG Matters:		Subject to the terms of the new loan documentation, FG will enter into a 25 year management agreement with New Propco (the “FG Management Agreement”) pursuant to which (i) FG or such affiliate will agree to manage the business and affairs of New Propco, and (ii) New Propco will pay management fees to FG equal to the sum of 2.0% of New Propco gross revenues plus 5.0% of EBITDA, all as set forth on Annex 4. It is expressly understood that FG may elect to form a new Xxxxxxxx Affiliate to act as the manager for New Propco in which event references in this Term Sheet to FG in its capacity as manager shall mean and be references to such Xxxxxxxx Affiliate as the context may require.

* Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

† Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

‡ Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

§ Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

(3) Calculated using a negotiated management discount to a $200 million POR equity value.

In a separate non-competition agreement, New Propco will agree with the Xxxxxxxx Brothers and FG that there shall be no restrictions on the ability of FG or any Xxxxxxxx Affiliate (as defined below) to enter into management agreements (where no equity contribution is being made by FG or any such Xxxxxxxx Affiliate ) in respect of other gaming and non-gaming enterprises of any kind, wherever located. If, however, such management-only agreements (i) pertain to a gaming and/or hotel management opportunity located within the Las Vegas Locals Market (as defined below) and (ii) provide all-in compensation to any Xxxxxxxx Affiliate in excess of the compensation that such Xxxxxxxx Affiliate would have received if such management agreement was compensated on the basis of the “sum of 2.0% of the management opportunity gross revenues plus 5.0% of EBITDA” compensation structure on the terms set forth in the FG Management Agreement, then such “excess” amount shall be paid over to New Propco as a consent fee if, as and when received. As used herein, “Xxxxxxxx Affiliate” shall mean (a) Xxxxx Xxxxxxxx or Xxxxxxx Xxxxxxxx, any spouse or child or Xxxxxxxx Family Entity (each, a “Specified Person”), (b) a person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, a Specified Person, (c) any person that is an officer, director, partner, manager or trustee of, or serves in a similar capacity with respect to, a Specified Person or of which a Specified Person is an officer, partner, manager or trustee, or with respect to which a Specified Person serves in a similar capacity; or (d) any person one-third or more of whose equity securities are owned by Specified Persons. Without otherwise limiting the scope of the definition of Xxxxxxxx Affiliate, it is agreed that neither Zuffa, LLC nor its subsidiaries and joint ventures shall constitute a Xxxxxxxx Affiliate unless engaged in the investment in, ownership of or management of a hotel or any activity that requires licensing as a casino gaming company.

With respect to gaming or hotel investment opportunities (other than management-only agreements and other than investments in entities not constituting hotels and holding only a “restricted license” as currently defined in the Nevada Revised Statutes) arising within the Las Vegas Locals Market (as defined below), FG shall not, and shall not allow any Xxxxxxxx Affiliate to, invest in such opportunity (including without limitation any investment in Opco) unless (i) the percentage of total equity and any equity equivalents invested in such entity (including Opco or any subsidiary thereof) by FG and the Xxxxxxxx Brothers (directly or indirectly through any Xxxxxxxx Affiliates) is not greater than the percentage of equity owned by the Xxxxxxxx Affiliates in New Propco at the time of investment ; (ii) New Propco has been given a right of first refusal with respect to all or any portion of such investment, which right of first refusal will be exercisable at the direction of the Other Holders (as defined in Annex 7) and (iii) if

the Propco Plan Recipients are willing to fund their percentage share of such bid (based on their percentage interests in New Propco) or allow New Propco to fund such bid, then any FG bid for such assets must be a joint bid involving New Propco and/or the Propco Plan Recipients as applicable. FG and the Xxxxxxxx Brothers (whether alone or as part of a group) will be entitled to pursue any such opportunity independently if the right of first refusal is not exercised. If the right of first refusal is not exercised by New Propco and FG or any Xxxxxxxx Affiliate will manage the opportunity in which the investment is being made and such management agreement together with any analogous agreements provides all-in compensation to any Xxxxxxxx Affiliate in excess of the compensation that such Xxxxxxxx Affiliate would have received if such management agreement was compensated on the basis of the “sum of 2.0% of the management opportunity gross revenues plus 5.0% of EBITDA” compensation structure on the terms set forth in the FG Management Agreement, then such “excess” amount shall be paid over to New Propco as a consent fee if, as and when received.

Cash investments in the Las Vegas Locals Market by FG, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx or any Xxxxxxxx Affiliates shall not, in any event, exceed an aggregate amount equal to their initial net cash investment in equity of New Propco of $85 million plus any additional concurrent or subsequent cash investments by FG, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx or any other Xxxxxxxx Affiliates in equity of New Propco (such aggregate amount, the “Investment Cap”).

Nothing shall restrict FG and the Xxxxxxxx Affiliates (whether alone or as part of a group) from independently pursuing any gaming or non-gaming opportunity of any kind arising anywhere outside of the Las Vegas Locals Market and New Propco’s right of first refusal shall not apply to any opportunity of any kind arising outside of the Las Vegas Local Market, provided that, with respect to gaming investment opportunities only, unless such investment opportunities are funded exclusively through the capital of FG, the Xxxxxxxx Brothers or the Xxxxxxxx Family Entities or the capital of other parties (including any Xxxxxxxx Affiliates) who committed to provide equity simultaneously to or prior to the time that Xxxxxxxx Affiliates entered into a binding agreement to make such investment, then the Propco Plan Recipients (to the extent that they still own New Propco Equity), ratably together with certain third-party assignees of FG owning New Propco Equity at closing that are not Xxxxxxxx Affiliates, shall have a right of first refusal to purchase all or any portion of the equity investment to be provided by such other parties. This right of first refusal may be exercised by each of the Propco Plan Recipients that at the time of the offer still owns at least ten percent (10%) of the outstanding New Propco Equity at such time, and must be exercised within 30 business days after the making of such offer

		to such Propco Plan Recipients. As used herein, “Las Vegas Locals Market” refers to any area within the Las Vegas, Nevada city limits or within a 50 mile radius of the intersection of Las Vegas Boulevard South and Charleston Boulevard in Las Vegas, Nevada other than (x) the area bordered by Sunset Road on the south, the I-15 freeway on the west, Charleston Boulevard on the north and Paradise Road on the east, and (y) the Las Vegas Hilton and related landholdings. The non-competition agreement will be coterminous with the FG Management Agreement. Notwithstanding the foregoing, if either Xxxxx Xxxxxxxx or Xxxxxxx Xxxxxxxx is, at the time of termination of the FG Management Agreement, and thereafter remains, chief executive officer of New Propco, the non-competition agreement shall remain in effect so long as either person holds such position. The FG Management Agreement will be on substantially the terms described on Annex 5, including provisions relating to termination, limitations on assignments as described therein. The FG Management Agreement will be subordinated to the credit facility under the terms of a subordination and attornment agreement to be included in the new credit documentation.

Cash and New Financing:		On the Effective Date, cash in the amount of $80 million, less any transition costs incurred by Propco or Propco lenders (excluding from such transition costs the Land Loan Collateral Fundings, as defined below, which shall not be deducted from the $80 million amount) prior to the Effective Date (such net amount, the “Retained Available Cash”) will be retained by and for the benefit of New Propco. Excess cash on the Propco balance sheet above the Retained Available Cash shall be applied (i) to fund any amounts used for the acquisition of the additional assets to further secure the Land Loan as described above (the “Land Loan Collateral Fundings”), and (ii) the remainder (“Excess Effective Date Cash”) shall, unless otherwise agreed by the Mortgage Lenders, be applied as additional recovery to the Propco Plan Recipients (or their assignees as determined above) upon emergence. On the Effective Date under the Plan, New Propco will enter into a revolving credit facility of $100 million, with a sub-limit of $60 million available for use in connection with acquisitions, on substantially the terms described on Annex 2, to be provided by the Mortgage Lenders proportionate to their ownership of the current Mortgage Loan. The revolver will not be used to fund acquisitions outside the Las Vegas Locals Market.

Corporate Governance:		New Propco will be governed by an amended and restated limited liability company agreement (the “LLCA”) among New Propco and the holders of the New Propco Equity. Among other things, the LLCA will contain governance mechanics, Mortgage Lender protections and liquidity provisions (including FG transfer

		limitations and tagalong/ registration rights of Mortgage Lenders as specified in Annex 7), and will specifically provide that: (i) New Propco Equity shall be subject to a prohibition on sale by any equity holder without consent of the other equity holders until the 6 month anniversary of the Effective Date (exclusive of sales to affiliates , sales at closing, sales of up to an additional 20% of equity as described above or pursuant to options or warrants granted at closing as described above), (ii) each equity holder shall have a right of first refusal on any sale of equity of New Propco that is proposed by another equity holder, (iii) no equity of New Propco may be sold by a holder to any “strategic buyer” listed on Annex 6, and (iv) the provisions outlined in Annex 7 shall be incorporated, regarding among other things the board of managers of New Propco and that certain major matters specified in Annex 7 shall require a super majority of the board of managers to be approved. The LLCA also will have such other terms as are described in Annex 7.

[*]		[†]

*Xxxxxxxx Colony Partners, LLC, FCP Holding, Inc., FCP Voteco, LLC and Xxxxxxxx Partners LLC Plan Treatment:*		Creditors of Xxxxxxxx Colony Partners, LLC, FCP Holding, Inc., FCP Voteco, LLC and Xxxxxxxx Partners LLC will not be entitled to any distributions under the Plan. On the Effective Date, Xxxxxxxx Colony Partners, LLC, FCP Holding, Inc., FCP Voteco, LLC and Xxxxxxxx Partners LLC will be dissolved and all equity issued by Xxxxxxxx Colony Partners, LLC, FCP Holding, Inc., FCP Voteco, LLC and Xxxxxxxx Partners LLC will be extinguished.

Definitive Documentation:		Timing and Documents — A plan support agreement (the “Plan Support Agreement”) to include FG, Xxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx and firm funding commitments by the Fertittas, will be executed by April 12, 2010, and a motion to amend the Compromise will be filed by April 12, 2010, as outlined in “Transition Services” above, and including extension through the Effective Date (or until the earlier termination or expiration of the plan support agreement) of the Deferral Period provided for under the Compromise, as amended (including continuing payment of Reduced Rent), all in form and substance satisfactory to Mortgage Lenders, Propco, FG, the Fertittas and Opco, and court order approving the amended Compromise. The Restructuring will be consummated pursuant to definitive documents, in form and substance satisfactory to Mortgage Lenders, Propco, FG and the Xxxxxxxx Brothers on the terms set forth in (i) this Term Sheet (including the Annexes hereto), (ii) the

* Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

† Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC.

Plan and its accompanying disclosure statement, (iii) the Co-Investment Agreement, (iv) the confirmation order approving the Plan, (v) limited liability company agreements, credit agreements, security agreements and other documents contemplated hereunder and (vi) any related plan documents, and shall otherwise be in form and substance acceptable to each of the Mortgage Lenders, New Propco and FG. Subject to mutually acceptable definitive documentation, FG and the Xxxxxxxx Brothers will indemnify the Mortgage Lenders against certain contingent liabilities in connection with the filing and implementation of the Plan. Consummation will be subject to customary closing conditions, including payment of all Mortgage Lenders’ reasonable out-of-pocket fees and expenses (including attorneys’ and advisors’ fees); receipt of closing documentation such as (x) certified organizational documents and resolutions and other documentation requested by the Mortgage Lenders, (y) legal opinions regarding authority, existence, good standing, due formation, non-contravention, enforceability and other customary matters as reasonably required by Mortgage Lenders and (z) title insurance (or updated endorsements to lender’s policies of mortgage and UCC title insurance), UCC searches and other customary searches reasonably satisfactory to Mortgage Lenders, and completion of all acts required or reasonably requested by Mortgage Lenders to perfect their interests in the collateral securing the reorganized Mortgage Loans and Land Loan, respectively.

Definitive documents and the Plan will include general releases by Opco, Propco and their respective estates and affiliates, and all persons claiming by or through them, of all claims arising prior to the Effective Date. Consideration for such releases shall be as specified in, and contemplated under, the Plan and disclosure statement.

The Plan may become effective in stages as debtors are able to satisfy conditions to effectiveness on their respective reorganization transactions.

ANNEX 1

OPCO DEBTORS

Station Casinos, Inc.

River Central, LLC

Tropicana Station, LLC

FCP Holding, Inc.

FCP Voteco, LLC

Xxxxxxxx Partners LLC

Northern NV Acquisitions, LLC

ANNEX 2

CERTAIN DEBT TERMS

MORTGAGE LOAN FACILITIES

· $1,600 million term loan (“Term Facility”) and $100 million revolving credit facility (Revolving Credit Facility”), with a sub-limit of $60 million available for use in connection with acquisitions in the Las Vegas Local Market, collectively referred to as the “Mortgage Loan Facilities”

· Cash Interest Rate: L+300bps for first three years; L+350bps for years 4 and 5; pricing increases in years 6 and 7 upon Maturity Extension described below; no LIBOR floor

· Mortgage Loan Facilities mature 5 years after date of emergence, subject to two one-year extension options (i.e., years 6 and 7) to be available subject to absence of default, payment of 1% extension fee for each year, a step-up in interest rate to L+450 (in year 6) and L+550 (in year 7) and pro forma compliance with a total leverage test to be determined (in year 7) (each, a “Maturity Extension”)

· Year 1 to commence on Effective Date, with each following year based upon related Effective Date anniversary

· Future interest rate protection for Mortgage Loan Facilities to be determined

· Excess Cash Flow Sweep of 75% to be applied as permanent repayment/amortization to the Term Facility, with step-downs tied to a leverage grid to be determined

· Any retained Excess Cash Flow will be available for permitted investments, capital expenditures and other permitted general corporate purposes and to make or reserve for tax distributions, if applicable (but in no event will dividends be permitted to be made to shareholders of New Propco or other persons outside the permitted Borrower group).

· No scheduled minimum amortization of Mortgage Loan Facilities prior to final stated maturity (i.e., only required amortization is pursuant to Excess Cash Flow Sweep as described above)

· Mortgage Loan Facilities to be secured by a pledge of New Propco equity (including equity held by Holdco and Voteco in New Propco), together with all tangible and intangible assets of New Propco and its subsidiaries (other than Land Loan Collateral), including but not limited to all real property, FF&E, IP, IT, equity interests (including any direct or indirect equity interests in Opco that may be acquired by New Propco) and cash (including retained Excess Cash Flow) owned or held by such entities.

· Priority of Revolving Credit Facility vis a vis Term Facility to be determined by Mortgage Lenders. Mortgage Lenders reserve the right to create up to 4 tranches and sub-tranches in the aggregate, including senior and subordinated sub-tranches within the Mortgage Loan Facilities, provided that no tranche may be less than $250mm. The foregoing limitation on the number of tranches shall not limit the rights of the lenders to assign or participate pari-passu interests in any tranche.

· Unused, letter of credit and other customary fees with respect to Revolving Credit Facility to be agreed

· Financial covenants TBD, with a 1.5-year holiday and covenant levels for year 2 (after holiday expiration) and thereafter to be set with a 25% cushion to a business plan acceptable to the Mortgage Lenders

· Affirmative and negative covenants TBD but in any event to include limitations on (i) liens, (ii) indebtedness, (iii) mergers and consolidations, (iv) sales and transfers of assets, (v) loans, acquisitions and other investments (including joint ventures and project developments), (vi) management contracts, material leases and renewals, modifications and extensions thereof, (vii) dividends to, and redemptions from, equity holders, (viii) transactions with affiliates, (ix) changes in nature of business, (x) restrictions on distributions, advances and asset transfers by subsidiaries and (xi) capital expenditures.

· The new loan documents will provide that, following default, New Propco and FG will provide full transition services under documentation satisfactory to Mortgage Lenders to the Mortgage Lenders and their designees.

LAND LOAN

· Approximately $250 million term loan (net outstanding after application of interest reserve to principal, addition of swap claim after conversion to principal and addition of accrued interest) to Landco

· Landco will be owned by a subsidiary of New Propco (“Landco Holdco”) that pledges its equity in Landco as security for the Land Loan; New Propco will pledge its equity in Landco Holdco as security for the Mortgage Loan Facilities

· Non-recourse to New Propco and its other subsidiaries, except as set forth below.

· PIK Interest Rate: L+350bps for initial five year term; cash pay interest and pricing increases in years 6 and 7 upon Maturity Extension described below; no LIBOR floor

· Land Loan matures 5 years after date of emergence, subject to two one-year extension options (i.e., years 6 and 7) to be available subject to absence of default, payment of 1% extension fee for each year, a step-up in interest rate to L+450 (in year 6) and L+550 (in year 7), cash pay interest (no further PIK) in years 6 and 7, and extension under (and absence of default under) Mortgage Loan Facilities (each, a “Maturity Extension”)

· Year 1 to commence on Effective Date, with each following year based upon related Effective Date anniversary

· New Propco will be responsible for and enter into a limited support agreement in respect of (i) any Landco net operating costs, provided that any agreement by New Propco to support payment of rent under the Wild Wild West ground lease or option prices under the ground lease option or other options shall be subject to the next sentence, and (ii) customary non-recourse carve-out obligations consistent with the terms of the current non-recourse guarantees relating to the Land Loan (excluding there from any direct or indirect interest payment guaranty). Any agreement by New Propco to provide limited support for obligations of Landco or any subsidiary of Landco for payment of rent and other obligations under the Wild Wild West ground lease shall exclude any liability for (i) option prices thereunder or other options, none of which options shall be exercised unless approved by the Mortgage Lenders or (ii) any accelerated rent or damages payable by reason of a default under the ground lease.

· Land Loan secured by all tangible and intangible assets of Landco, consisting of the Cactus property and Wild Wild West assemblage, and by equity pledge of all ownership interests in Landco. If acquired by the Land Loan Borrower or a subsidiary thereof, the additional Wild Wild West assets described in the Term Sheet will each be added to the collateral for the Land Loan.

· Customary affirmative and negative covenants, including no dividends by Landco without the consent of the Mortgage Lenders.

ANNEX 3

WARRANT TERMS

Percentage of Total Equity		There will be two classes of warrants as described below: the “FG Warrants” and “Lender Warrants” each permitting purchase of non-voting equity in an amount equal to up to two and one-half percent (2.5%) of total issued shares of “Propco Holdco,” the parent company that holds non-voting shares of New Propco, on a fully diluted basis for a total of 5% (or such lesser percentage as is calculated per the following paragraph).The FG Warrants and the Lender Warrants will have different strike prices as described below. The Warrants shall provide that, to the extent the Xxxxxxxx Affiliates and Mortgage Lenders purchase additional equity of Propco Holdco in connection with the Plan or if other outside investors purchase additional equity directly issued by Propco Holdco within the first six months after confirmation, then the percentage of outstanding equity that can be purchased upon exercise of such warrants shall be automatically ratably reduced to take into account the dilutive effect of the increase in total capitalization of Propco Holdco resulting from such equity sales.(4)

Warrant Terms		The warrants shall reflect the terms of this Annex 3 and shall otherwise be on customary terms and conditions for warrants of this nature. The warrants should contain customary anti-dilution adjustments for stock splits and combinations, stock dividends and similar reclassifications but shall not contain any ratchet or other adjustment for issuances of equity below any specified values. All warrants (and any shares received upon exercise thereof) shall be non-transferable except for transfers to parties-in-interest on Plan consummation as contemplated under the Term Sheet, distributions by such recipients to their investors or equity holders, transfers to affiliates, other Warrant holders or other equity holders, transfers to other persons mutually acceptable to both FG and the Propco Plan Recipients, and other exceptions to be specified in definitive documentation.

Issuance of Warrants		All the warrants shall be initially issued to the Propco Plan Participants as part of the Senior Plan Recovery.

Sale of Warrants		The Propco Plan Recipients will, concurrently with FG’s

(4) By way of example, based on a $200mm plan of reorganization value for standalone Propco, if $50mm of additional equity contributions are made, the 2.5% would be reduced to 2% for a total of 4%.

		purchase of equity in Propco Holdco, sell to FG all of the FG Warrants. The Propco Plan Recipients will be allowed to sell or assign the Lender Warrants to certain other parties-in-interest and FG will be allowed to sell or assign the FG Warrants to certain other parties-in-interest.

Exercise of Warrants		The warrants may only be exercised following the earlier of (i) the six and one-half year anniversary of the Effective Date (based upon an equity value determination to be agreed upon by FG and the Propco Plan Recipients and to be determined by an independent third-party) and (ii) the occurrence of a New Propco capital raising transaction that involves an equity value determination, and Propco Holdco may require such exercise in connection with any such transaction. Neither the holders of the warrants nor Propco Holdco may compel cash-settlement of the warrants. Any exercise of the warrants must be for cash.

Exercise Price of the Warrants		For the Lender Warrants, the exercise price during the first two years after issuance shall be 2.5 times the per share value on the Effective Date of equity issued under the Plan, with such price increasing by 15% per year in each of years 3, 4, 5, 6 and 7. For the FG Warrants, the exercise price during the first two years after issuance shall be 3.0 times the per share value on the Effective Date of equity issued under the Plan, with such price increasing by 15% per year in each of years 3, 4, 5, 6 and 7.

Termination of Warrants		Unless exercised prior to the seventh anniversary of the Effective Date, the warrants shall expire and be of no force or effect.

ANNEX 4

XXXXXXXX GAMING MANAGEMENT FEE AND EXPENSE REIMBURSEMENT

COMPENSATION OF THE MANAGER.

(1) BASE MANAGEMENT FEE. New Propco shall pay FG a “Base Management Fee” equal to two percent (2%) of New Propco’s Gross Revenues for the applicable period. The Base Management Fee for each fiscal year will be paid in monthly installments in arrears immediately following the delivery of New Propco’s financial statements for each fiscal month. After the delivery of New Propco’s audited financial statements for each fiscal year, appropriate adjustments shall be made for any overpayment or underpayment of Base Management Fees during such fiscal year on the next monthly installment of Base Management Fees due.

(2) INCENTIVE MANAGEMENT FEE. In addition to the Base Management Fee, New Propco shall pay FG an “Incentive Management Fee” in an amount equal to 5.0% of New Propco’s EBITDA for the applicable Fiscal Year (or partial fiscal year in the first year of management) to the extent such EBITDA is positive; provided that if EBITDA is negative in any Fiscal Year or partial period, such deficit shall be carried forward and no Incentive Management Fee shall be earned for any period thereafter unless and until, and only to the extent that, cumulative positive EBITDA for such subsequent periods is greater than the amount of cumulative negative EBITDA. Five percent (5%) of New Propco’s monthly EBITDA shall be paid monthly in arrears immediately following delivery of New Propco’s financial statements for each fiscal month as a partial payment on the annual Incentive Management Fee. After the delivery of New Propco’s audited financial statements for each fiscal year, appropriate adjustments shall be made for any overpayment or underpayment of the Incentive Management during such fiscal year on the next monthly installment of Incentive Management Fees due.

(3) EXPENSE REIMBURSEMENT. FG and the Mortgage Lenders will negotiate in good faith to determine and reflect in the definitive documentation for the management agreement the appropriate allocation of any expenses between FG and New Propco (and the overhead offsets referred to in (4) below); subject to and except for such FG allocations/offsets, New Propco shall be responsible for all operating costs of New Propco, if any, incurred by FG on behalf of New Propco in accordance with the terms and provisions of the management agreement, and will reimburse all such operating costs of New Propco incurred by FG on behalf of New Propco. New Propco shall not be responsible for (i) the salaries, compensation, bonuses or other employment benefits of FG executives and employees or (ii) any corporate overhead of FG.

(4) OVERHEAD ALLOCATION. FG and the Mortgage Lenders agree to negotiate in good faith to determine, and reflect in the definitive documentation for the New PropCo management agreement, the appropriate allocation of corporate overhead and expenses between FG and New PropCo, and any relevant offsets against management fees otherwise payable to FG under such management agreement. The methodology and allocations will be determined by FG and the Mortgage Lenders in the definitive documentation, subject to input from outside accountants, to be generally consistent in relative allocation (though not necessarily as to allocation categories and type) between current unallocated corporate overhead and expenses and allocated corporate overhead and expenses, and will involve, among other factors (FG allocations to be paid directly or by means of offset against management fees if paid by New PropCo):

(a) Allocation of functions and associated personnel to be the responsibility of FG, with allocation of cost and expense to FG, with specific functions and personnel types to be detailed, such as CEO, COO, VP of Operations, HR, IT, Slots, and Marketing and associated support personnel;

(b) corporate headquarters space rental and other costs and expenses for FG operations and personnel, including that necessary for the above functions and FG’s performance under the management agreement, allocated to FG;

(c) allocation during the term of the management agreement, with monitoring and approval of allocations in the budget process solely by the OH Directors contemplated under Annex 7 (as a distinct required budget approval component, modifying the otherwise applicable budget provisions contemplated under Annex 7) and monitoring to be handled by the non-FG officers referred to in Annex 7;

(d) concurrently with the delivery of the initial annual budget and for the initial two Fiscal Years under the Management Agreement, FG and the PropCo Plan Recipients will agree upon a budget setting forth the pro forma Gross Revenues (“Initial Gross Revenues Budget”) and budgeted pro forma corporate overhead and expenses to be borne by the Properties which shall be consistent with the principle set forth above (the “Initial Corporate Overhead Budget”), and in the event that for either the first or second Fiscal Year the actual corporate overhead and expenses borne by Propco (“Actual Corporate Overhead”) for the Fiscal Year exceeds (such excess, if any, the “Corporate Overhead Excess”) the product of (1) Initial Corporate Overhead Budget for the first Fiscal Year and (2) the greater of (x) 1.0, (y) a fraction the numerator of which is actual Gross Revenues for such Fiscal Year and the denominator of which is the Initial Gross Revenues Budget for the first Fiscal Year or (z) for the second Fiscal Year, the CPI increase for such year, then 35% of such Corporate Overhead Excess for such Fiscal Year shall be deducted from the management fees otherwise payable to the Manager under the Management Agreement; and

(e) if Corporate Overhead Excess occurs during the first two Fiscal Years, it is acknowledged that the initial allocations of corporate overhead between New PropCo and FG in the management agreement were incorrect and the allocation of corporate overhead will be readjusted for future Fiscal Years to increase the direct corporate overhead responsibilities and associated costs and expenses of FG and/or to offset a portion of New PropCo corporate overhead against management fees otherwise payable to FG, in each case in amount, kind and type so as to ensure the result in the intended effect of the initial allocations, the provisions for such adjustments to be determined as part of the definitive documentation with input from outside accountants.

As part of the due diligence and definitive documentation under the Term Sheet, including the Management Agreement, the staffing and structure of FG shall be adequate to ensure FG’s ability to perform its duties as described in this Term Sheet.

Capitalized terms used in this Annex 4 have the following meanings:

“EBITDA” for any period means New Propco’s net income for such period (after deduction of the Base Management Fee for such period but prior to any deduction of the Incentive Management Fee for such period), in accordance with GAAP consistently applied, with additions, subtractions and other adjustments (and the definition of EBITDA generally) to be determined in the definitive documentation, and modified in the definitive documentation, subject to input from outside accountants, to be generally consistent with Opco’s historical methods for calculating EBITDA with respect to the Properties (as defined in Annex 5) as modified to include all expenses borne by New Propco on a consolidated basis.

“FURNITURE, FIXTURES AND EQUIPMENT” means (for purposes of this compensation definition only) all furniture, fixtures and equipment reasonably required for the operation of the Properties, including but not limited to office furniture, computer and communications systems, specialized hotel equipment necessary for the operation of the Properties, food and beverage equipment, laundries and recreational facilities. Such items also shall include specialized casino equipment, including cashier, money sorting and money counting equipment, slot machines, table games, video gaming equipment, and other similar gaming equipment as well as surveillance equipment.

“GROSS REVENUES” means all cash revenues and income (excluding interest income) of any kind derived from the use or operation of the Properties determined in accordance with GAAP consistently applied, including without limitation, “gross revenues” from gaming activities as calculated pursuant to NRS 463.0161 and 463.3715 and without duplication, income from rental of guest rooms; income from food and beverage sales; income from entertainment programs and merchandise sales; telephone, telegraph and telex revenues; rental or other payments from lessees, sublessees and concessionaires and others occupying space or rendering services at the Properties (but not (A) reimbursements for utilities, taxes or similar matters, or (B) the gross receipts of such lessees, sublessees or concessionaires except to the extent the same is part of such rental payments); income from vending machines; health club fees; and the actual cash proceeds of business interruption or similar insurance and of temporary condemnation awards after deducting necessary expenses in connection with the adjustment or collection of such proceeds; excluding, however, to the extent included in cash revenues and income of any kind derived from the use or operation of the Properties and without duplication, (i) any proceeds from the sale, financing or refinancing or other disposition of the Properties or substantially all of the assets of New Propco, (ii) any proceeds from the sale, financing, refinancing or other disposition of Furniture, Fixtures and Equipment or other capital assets; (iii) proceeds of any fire, extended coverage or other insurance policies (excluding any proceeds of business interruption or similar insurance); (iv) condemnation (other than temporary) awards and other amounts received by New Propco in lieu of condemnation; (v) any refunds, rebates, discounts and credits of a similar nature given, paid or returned in the course of obtaining Gross Revenues or components thereof, other than complementaries provided to patrons of the Properties in the ordinary course of business and consistent with the annual plan and operating budget; (vi) gratuities or service charges or other similar receipts which New Propco or FG pays to employees or others; (vii) excise, sales, gross receipts, admission, entertainment, tourist, use or similar taxes or charges collected from patrons or guests or as part of the sale price for goods, services or entertainment, other than taxes imposed on gaming revenues; (viii) any sum and credits received for lost or damaged merchandise; (ix) credit card processing fees and costs; and (x) bad debts; provided, that the foregoing definition of Gross Revenues may be modified in the definitive documentation, subject to input from outside accountants.

ANNEX 5 (MANAGEMENT AGREEMENT)

STATION CASINOS, INC.

FCP PROPCO, LLC

RESTRUCTURING TERM SHEET

This Annex 5 (this “Annex”) to the Station Casinos, Inc. FCP PropCo, LLC Restructuring Term Sheet (the “Term Sheet”) outlines certain terms contemplated for the management agreement to be entered into between New Propco and FG following the proposed restructuring described in the Term Sheet. This Annex does not include a description of all of the terms, conditions and provisions that are to be contained in the definitive management agreement, or a full discussion of the terms specified below, all of which remain subject to discussion, negotiation and mutual agreement of FG and the Propco Plan Participants. Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Term Sheet. Certain provisions relating to the management agreement and FG are outlined in the Term Sheet and Annex 4 and not repeated in this Annex.

PROPOSED TERMS FOR MANAGEMENT AGREEMENT

Management:		New Propco will enter into a management agreement with FG (“Manager”) pursuant to which Manager will manage and operate (including gaming, hotel and resort operations and centralized services) the four casino/hotel properties and related assets of New Propco (i.e., the Red Rock, Sunset, Boulder and Palace properties, collectively, the “Properties”) on terms agreed by the parties (the “Management Agreement”).

Term:		The Management Agreement shall be for a term of 25 years (the “Term”) and non terminable by New Propco other than as described below.

Services:		The services provided by Manager (and the New Propco approval rights with respect to such services) shall be determined more particularly in the definitive documentation for the Management Agreement, but shall include, without limitation, (i) the management and oversight of all gaming, hotel and resort operations and other day-to-day operations of the Properties, (ii) all non-day-to-day supervision and operational and strategic planning of the Properties; (iii) customer relations management and revenue management services; (iv) reservation system operation and management; (v) sales and marketing services, promotions, promotional services and publicity, including, without limitation, rewards programs; (vi) brand and trademark development, promotion, maintenance and management; (vii) food and beverage services; (viii) human resources; (ix) personnel selection, employment policies and employee fringe benefits; (x) assistance and cooperation with the internal audit functions to be performed by the New Propco appointed representative; (xi) purchasing, contracting and leasing, including, without limitation, the procurement of inventories, supplies and services; (xii) maintenance and repairs, including, without limitation, physical plant maintenance; (xiii) security services; (xiv) books and records maintenance; (xv) real estate tax audits and challenges; (xvi) licensing and regulatory matters; (xvii) information technology services, maintenance, development and

support, including, without limitation, customer database management and development as part of the marketing, promotions and rewards programs; (xviii) providing complimentary items to guests and patrons subject to a promotional allowance approved by New Propco; (xix) determining charges for rooms and commercial space; (xx) implementing the then approved New Propco credit policy; (xxi) receipt, holding and disbursement of funds in accordance with the Management Agreement, and maintenance of the working capital accounts and any other bank accounts to be maintained under the Management Agreement (“Bank Accounts”); and (xxii) generally, all other activities necessary for or reasonably related to the operation and management of the Properties.

All supplies, inventories, services, FF&E and capital items at the Properties shall be acquired in the name of and paid for by and on behalf of New Propco, in accordance with the approved budget or otherwise as approved in advance by New Propco.

Manager Responsibilities; Standard of Operation:

Manager shall perform Manager’s services, duties and responsibilities, to be detailed and set forth in the definitive documentation for the Management Agreement. Additionally, Manager shall manage, direct, supervise, operate, service (including customer service), maintain, repair, and refurbish the Properties in accordance with operating standards to be determined as part of the documentation process, which shall include, without limitation, a standard with respect to each Property equal to or exceeding the standard that such Property has been operated to date, and not less than a set of comparable properties (to be determined in the definitive documentation and modified from time to time in accordance with the definitive documentation), and in any event not less than the standards of care and service as the operation of other comparable casino/hotel properties owned or managed by Manager (such standard, the “Operating Standard”). If (i) New Propco refuses to approve the operating budget with expenditures at the levels reasonably proposed by Manager (the “Proposed Budget”) and (ii) Manager can reasonably demonstrate that New Propco’s refusal to approve the Proposed Budget will have a material adverse effect on the Operating Standard, then Manager shall be relieved from compliance with the Operating Standard (but not the performance of Manager’s services, duties and responsibilities under the Management Agreement) but only to the extent of any differences between the expenditures in the Proposed Budget and the expenditures permitted under the approved budget, provided, under no circumstances shall Manager be relieved from the Operating Standard on account of capital expenditures in the Proposed Budget if the approved budget provides for at least 5% (subject to review of historical capital expenditures) of Gross Revenues for capital expenditures.

Without limiting the above-contemplated provisions, the Manager shall, at its sole cost and expense, maintain sufficient operating capacity, functionality and senior management personnel of Manager devoted to the operation of the Properties to enable Manager to perform its services

		and responsibilities under the Management Agreement. Additionally, as part of Manager’s services and responsibilities, Manager will recruit, hire and train all Property level and corporate level employees for and on behalf of New Propco, and shall on New Propco’s behalf maintain sufficient Property level and corporate level personnel, and maintain sufficient FG personnel, necessary to conduct operations in accordance with the standards of operation under the Management Agreement.

		At all times during the term of the Management Agreement, (i) Manager shall be and remain controlled by the Xxxxxxxx Brothers, (ii) Manager shall be and remain at least 51% owned by the Xxxxxxxx Brothers and Xxxxxxxx Family Entities, and (iii) one of the Xxxxxxxx Brothers shall be the chief executive officer of Manager (and of New Propco) and shall (under the terms of the Management Agreement and also under the terms of the New Propco organizational documents) dedicate the preponderance of his time and attention to the business and affairs of FG, and devote reasonable time and attention to the Manager’s performance of its duties under the Management Agreement and to the business and affairs of the Properties and New Propco, and in all events shall use his best efforts, skills and abilities (and Manager shall use its best efforts, skills and abilities) to promote the interests of New Propco, and if FG is managing properties other than the Properties, FG shall conduct its affairs so as not to prefer the interests and management of such other properties and their management to the interests and management of the Properties (the requirements of the foregoing clauses (i), (ii) and (iii), collectively the “Xxxxxxxx Manager Control Requirement”). Neither the Management Agreement nor the Management Fees shall be assignable by the Manager to any third party or pledged by Manager as security for debt (although New Propco may assign its interest in the Management Agreement as security for the Mortgage Loan or any successor secured loan), provided, Manager may request in connection with an internal organizational restructuring of Manager that New Propco consent to an assignment and assumption of the Management Agreement by the successor to FG’s business, and such consent shall not be unreasonably withheld provided that satisfactory assignment and assumption documentation is completed, all licensing requirements are satisfied and, in all events, the Xxxxxxxx Manager Control Requirement shall be and continue to be satisfied.

Funding Obligations:		Other than for emergency expenditures, including expenditures to remedy life/safety threats and violations of law, for which sufficient funds are not available in the Bank Accounts (and without giving effect to any obligation of New Propco for purposes of determining whether Manager shall be relieved from the Operating Standards), New Propco shall have no obligation to advance any additional funds, for the operation and maintenance of the Properties, whether pursuant to the approved budget or otherwise and Manager shall not be relieved from its obligations or duties under the Management Agreement as a result of New Propco’s determination not to advance any such funds. Notwithstanding, Manager shall not have an obligation to advance any funds necessary for the operation or maintenance of the Properties if New Propco refuses to fund such required amounts.

IT/IP/Customer Database:		In connection with the operation and management of the Properties, Manager shall use the existing IT Systems (as referred to in the Term Sheet) and customer database referred to in the Term Sheet, and certain brands and trademarks and other intellectual property, and develop and make use of certain necessary and desirable improvements, enhancements, upgrades and additions to the information technology systems, source codes, player databases, brands and trademarks for the Properties (collectively, the “Property Database/IT/IP”). Manager shall have no right, title or interest in or to the Property Database/IT/IP, except as necessary for its use as Manager under the Management Agreements (and for such purpose shall be permitted to use such Property Database/IP/IT), with the exception of the IT System licensed to FG contemplated by the Term Sheet, provided that such IT System license shall not extend to any brands, trademarks, customer database or other intellectual property developed for the Properties, and any improvements or enhancements or other development of the IT System, regardless of whether made by FG, New Propco or an entity controlled by either of them, and regardless of whether implemented under the IT System license to FG, shall be made available to and constitute the property of New Propco. . The credit documents will include provisions for monthly downloads of such database to a monitoring escrowee who will be obligated to give access to the full customer data base to the Mortgage Lenders upon the occurrence of each event of default under the New Propco credit facility.

		All the Property Database/IT/IP, including all improvements, upgrades, enhancements and additions thereto shall be and remain the property of New Propco, and, subject to the license to FG for the IT System (which shall not be assignable, pledged or encumbered, or sublicenseable by FG, although it is understood such IT System as licensed to FG may be used at properties managed by FG, including by employees at such properties, during the period that FG is managing such other properties ) shall be treated in all respects as a trade secret and proprietary information to be used by Manager for no purpose other than the operation of and marketing of the Properties, and shall be subject to confidentiality use restrictions as to be set forth in the definitive documentation.

		In addition to but without limiting the foregoing, Manager shall maintain and keep continuously updated as part of the books and records of the Properties (although this does not mean a continuous downloading of hard copies—rather, the electronic database will be part of the books and records of New Propco maintained by Manager) a customer database with customer and guest profiles, contact information (e.g., addresses, phone numbers, facsimile numbers and email addresses), player transaction and other customer histories, preferences and other information initially available at the time of transition of management to Manager and thereafter obtained by Manager, which customer database shall be and remain the property of New Propco and shall be treated in all respects as a trade secret and proprietary information to be used by

		Manager for no purpose other than the operation of and marketing of the Properties.

		It is understood that FG may, in connection with its management and operation of properties other than the Properties, at FG’s sole cost and expense (and outside of the ambit of the Management Agreement and the performance of its services, duties and responsibilities thereunder) create brands and trademarks and other intellectual property that are separate from, and not used in connection with, the Properties (the “Manager IP”). Such Manager IP shall be FG’s property and not the property of New Propco. In the event FG makes a good faith determination that such Manager IP may be used or useful in connection with the operation of the Properties (such as, for example, a branding and operational template for a restaurant concept), FG may propose to use such Manager IP for such purpose, and, subject to New Propco’s consent and satisfactory licensing arrangements (which shall in any event permit the use of the Manager IP for its specified purpose during the term of the Management Agreement and following termination during a transition period that protects the continuation of such use for a period that avoids transition costs or other economic detriment), such Manager IP may be used at the Properties.

Staffing Matters:		All employees of the Properties (including all general managers and below for each Property and corporate staff engaged for operations) will be employees of New Propco, paid by New Propco, and not at the Manager’s expense (subject to the expense allocation provisions to be determined as part of the definitive documents to account for customary managerial overhead costs being paid by New Propco), provided that the Manager shall set employee compensation levels so as not to exceed budgeted levels under the annual approved budget and operating plan (beyond any permitted variances that are provided for in such budget). Manager shall implement all labor policies, including with respect to wage and salary rates and terms, fringe benefits, pension, retirement, bonus and employee benefit plans and collective bargaining agreements, subject to the annual budget (and any permitted variances that are provided for in such budget). Manager shall take or cause to be taken all reasonable necessary actions to comply with all applicable laws in supervising, dealing with and terminating employees on behalf of New Propco. Manager shall keep New Propco informed of all negotiations with labor unions representing any employees at the Properties, and shall not sign any union contracts covering any employees at the Properties which have not been previously approved in writing by New Propco.

		Manager shall obtain New Propco’s consent to the hiring and termination and replacement of the general managers for each of the Properties (both hotel and casino elements as applicable), which consent shall not be unreasonably withheld, conditioned or delayed.

		FG is anticipated to provide New Propco officers as provided in Annex 7, and such officers shall be compensated by FG and shall serve without payment of salaries by New Propco.

Management Fees:		Annex 4 of the Term Sheet set forth the management fees New Propco will pay to Manager during the Term of the Management agreement, including for reference purposes herein: (a) 2.0% of Gross Revenues (the “Base Management Fee”); plus (b) 5.0% of EBITDA (the “Incentive Management Fee”). See Annex 4 for additional information regarding Management Fees and Manager expense reimbursements and management fee offsets.
CapEx Reserve:		There will be no capital expenditures reserve during the term of the Mortgage Loan so long as New PropCo has access to funds as part of a revolving credit facility. Thereafter, Manager shall, on behalf of New PropCo, cause each Property to maintain an annual reserve (the “CapEx Reserve”) for replacements of and additions to furnishings, fixtures and equipment and routine capital expenditures in an amount equal to 3.00% of annual gross revenue for each year with respect to each Property, which shall be pledged as security for the mortgage loan financing on the Properties and in connection therewith shall be held in lender-controlled pledged accounts subject to disbursement mechanisms as to be set forth in the mortgage credit documentation, all on a basis as to be determined by FG and the Propco Plan Recipients in the development of the Management Agreement.
Capital Expenditures:		All capital expenditures and capital expenditure programs shall require the prior approval of New Propco as part of the annual budgeting process.
Termination by Reorganized Propco:		New Propco may terminate the Management Agreement without penalty in the event that: (a) a material event of default under the Mortgage Loans or any future replacement secured loans (the language with respect to what constitutes a material default will be determined as part of the documentation process, but would include monetary defaults, financial covenant and other material covenant defaults (unless in each case amended or waived), and acceleration or maturity defaults); (b) the bankruptcy, insolvency or similar proceeding involving New Propco (or its direct or indirect subsidiaries, other than immaterial subsidiaries to be determined) or Manager (or its subsidiaries, other than immaterial subsidiaries or non-recourse single-purpose subsidiaries, in each case unrelated to the Manager’s activities at the Properties; Manager shall maintain customary separateness of itself from its subsidiaries so as to avoid liabilities or bankruptcy of such subsidiaries imputing to the Manager), or any of their Property or certain New Propco-related affiliates to be determined in the definitive documentation (such as Voteco and Propco Holdco, but excluding Land Loan Borrower or LandCo Holdco, as such entities are referred to in the Term Sheet and other Annexes);

		(c) a Performance Test failure (see below);

		(d) Manager’s or New Propco’s Nevada gaming license, or any other material licenses (the suspension or revocation of which would have a material adverse effect on New Propco or the Properties) shall be revoked or suspended, or any action by the applicable regulatory agency(ies) seeking such a revocation or suspension shall be commenced which, if adversely determined, would result in such loss or suspension, or Manager’s loss, revocation or suspension of its gaming license in any other jurisdiction or with respect to properties other than the Properties as a result of the misconduct or other “bad acts” of Manager or its principals or affiliates (the provisions with respect thereto to be determined in the definitive documentation);

		(e) material breach of the Management Agreement, or in the event Manager has engaged in an act or omission that was grossly negligent or constitutes recklessness or intentional misconduct, and such action or omission had a material adverse effect on a Property or New Propco (FG and Propco Plan Recipients would as part of the documentation process determine upon a mutually agreeable procedure whereby such termination may be avoided for breaches or acts that are cured prior to or within prescribed time periods after arbitration or similar proceeding to be determined);

		(f) Manager is no longer controlled by Xxxxx Xxxxxxxx and/or Xxxxxxx Xxxxxxxx, or the Xxxxxxxx Manager Control Requirement is otherwise no longer satisfied;

		(g) (i) Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx or their estate planning affiliates collectively beneficially own less than 51% of the split-adjusted membership interests in New Propco that they were originally issued pursuant to the Plan, on a fully diluted basis and (ii) Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx or their estate planning affiliates collectively do not beneficially own the single largest block of equity of New Propco; or

		(h) a material casualty, unless the Property is restored, or material condemnation (provisions relating to restoration upon casualty or condemnation will be determined and reflected in the Management Agreement and related documents; it is acknowledged that restoration will be dependent upon availability of insurance proceeds and that the mortgage loan documentation will contain provisions respecting the same which will be determined by FG and the Mortgage Lenders as part of the documentation process); provided, that in such event the Management Agreement would be terminated only with respect to the Property that is the subject of such casualty or condemnation.

		For the avoidance of doubt, an initial public offering of New Propco, in the absence of any of the termination events set forth in this Annex, will not terminate the Management Agreement.

		The Mortgage Lenders shall have a separate right under the credit documentation, acknowledged and agreed by New Propco and Manager

		under the credit documentation (which rights shall also be made available to any successor holders of secured debt on the Properties), to terminate the Management Agreement upon material default or the other termination events outlined above, and upon any foreclosure or deed in lieu of foreclosure, without fee or penalty.

		In the event that New Propco terminates the Management Agreement as the result of any of the termination events set forth in the foregoing clauses (c), (f) (if Xxxxx or Xxxxxxx Xxxxxxxx involuntarily relinquish the required control due to death, disability, etc.—the language to be agreed upon in the definitive documentation), (g) or (h), such termination shall be without fault or penalty to Manager (although, for purposes of clarification, if other breaches exist Manager would not be released from liability on account thereof).

Termination Upon Sale:		In addition to the foregoing termination rights, the Management Agreement will terminate (i) as to a particular Property upon the voluntary sale of such Property to a third party or (ii) in full upon a voluntary sale of New Propco, whether by the sale of assets or equity (each, a “Termination Upon Sale”).

		In the event that New Propco terminates the Management Agreement as the result of Termination Upon Sale with respect to all the Properties (or New Propco as a whole), New Propco will, unless Manager continues to manage the Properties after such sale as indicated below, pay to Manager a termination fee (the “Early Termination Fee”) with respect to all four (4) Properties, in an amount equal to the sum of the Management Fees for the trailing twelve (12)-month period prior to the Termination (“TTMF”) if the Termination occurs prior to the expiration of the fifth (5th) Full Fiscal Year of the Term, which Early Termination Fee shall decline at a rate of 0.55% of the TTMF per month commencing on the first month of the sixth (6th) Full Fiscal Year of the Term; provided that the Early Termination Fee shall be zero (i.e., there shall be no Termination Fee) from and after the end of the twentieth (20th) fiscal year of the Term. The Early Termination Fee will be pro-rated among the four (4) Properties on the basis of the percentage of Management Fees attributable to each Property in the TTMF such that if there is an amendment or other modification of the Management Fee to reflect the removal of one or more (but not all four (4)) Properties due to the transfer of such Properties, then the Early Termination Fee for such terminated Properties shall be such pro-rated amount (and not the full Early Termination Fee).

		If a Property sale occurs (or a sale of all the Properties or of New Propco) and the purchaser retains the Manager for such Property or Properties, no Early Termination Fee will be due and payable (although any purchaser’s determination as to whether to offer to retain Manager and the proposed terms of any offered retention shall be at purchaser’s sole discretion, and Manager’s determination of whether to accept retention by a purchaser and the terms of such retention shall be at Manager’s sole discretion).

Performance Test:		Commencing on the sixth (6th) full fiscal year following the closing (“Test Trigger Date”), New Propco may terminate the Management Agreement for a Property without payment of any termination fee if the Property has for two (2) consecutive fiscal years following the Test Trigger Date (a “Testing Period”):

		(i) failed to achieve EBITDA of at least 85% of , as applicable, (A) Budgeted EBITDA or (B) Deemed Budgeted EBITDA (the “Budget Test”); and

		(ii) failed to achieve 85% of the Indexed EBITDA (or comparable performance measure) achieved by the Performance Competitive Set (the “Market Test”).

		Budgeted EBITDA will be determined by FG and New Propco as part of the budget approval process set forth in the Management Agreement. Provided, if the Properties fail the Performance Test in the first (1st) year of any Testing Period, then Budgeted EBITDA (for the second (2nd) year of the Testing Period and each subsequent one year Testing Period thereafter until such time as the Properties have passed the Performance Test for two (2) consecutive full fiscal years) shall be replaced with an amount equal to one hundred percent (100%) of the prior fiscal year’s Budgeted EBITDA (“Deemed Budgeted EBITDA”). Deemed Budgeted EBITDA, if applicable, shall also be increased in any fiscal year in which amounts expended on capital expenditures are in excess of 6% (subject to review of historical capital expenditures) of Gross Revenues by an amount equal to an assumed rate of return of ten percent (10%) on all amounts in excess of 6% of Gross Revenues in any Fiscal Year expended on any Capital Improvements and Replacements to the extent completed and incorporated into the operations of the applicable Properties during such Fiscal Year.

		The Performance Competitive Set shall initially mean those properties in the local market which publicly report the results of their operations (and shall be adjusted from time to time as set forth in the definitive documentation) and Indexed EBITDA shall initially be determined based upon the ratio of the EBITDA of the Properties to EBITDA of the Performance Competitive Set, each for the four (4) fiscal quarters prior to the Effective Date, which ratio shall be adjusted from time to time in accordance with the definitive documentation.

		If there is a Performance Test failure, Manager will have the right to cure by paying to New Propco, for the Testing Period, and (without duplication of the payment for the Testing Period) on an annual basis continuing for each period thereafter until the Performance Test is again achieved for two consecutive fiscal years (the Testing Period and each such fiscal year thereafter, the “Termination Avoidance Period”), an amount for each fiscal year in the Termination Avoidance Period equal to the difference between (x) EBITDA for such fiscal year, and (y) (1)85% of Budgeted EBITDA for the first year of the Termination Avoidance Period and (2) 85% of Deemed Budgeted EBITDA for the

		second year of the Termination Avoidance Period and for each successive one (1) year Termination Avoidance Period thereafter based on the then Deemed Budgeted EBITDA for such Testing Period, until such time as the Properties have passed the Performance Test for two successive fiscal years(for example, if there is a Performance Test failure, the initial cure payment shall be for the Testing Period, and additional cure payments would be required, if applicable, for any annual Performance Text failure thereafter (with the Performance Test being determined annually for this purpose) until the Performance Test is satisfied for two consecutive years).
		Additionally, the Performance Test will be modified (in accordance with a methodology to be determined) to account for the impact on EBITDA for any fiscal year of any of the following: (a) a force majeure event (an appropriate objective definition will be determined and incorporated into the definitive documentation), (b) a material default by New Propco under the applicable Management Agreement that has a demonstrated impact on EBITDA (FG and Propco Plan Recipients as part of the documentation process would determine upon a mutually agreeable procedure whereby the existence of such default and its impact on EBITDA will be determined by arbitration or similar proceeding to be determined), or (c) with respect to the Market Test only and not the Budget Test,a major renovation of the Property, if Manager has notified New Propco at the time the budget (or revised budget) approving a major renovation is approved that the major renovation will have an impact in EBITDA and the Performance Test is modified at the time of such approval to account for such impact.

Non-Compete/ROFR/Governance:		The Management Agreement will address the requirements of the governing documents for New Propco such that the approvals of the applicable thresholds of non-FG equity owners in New Propco will have to be obtained for the related matters under the Management Agreement (such as budgets, etc.) and the rights and remedies of New Propco under the Management Agreement will be acknowledged and agreed by the Manager to be exercised on behalf of New Propco by the non-FG equity owners or their designated officer on their behalf. The FG obligations under the agreements contemplated by the Term Sheet with respect to non-competition and gaming and hotel opportunities and the New Propco governance documents will be cross-defaulted with the Management Agreement, subject to cure and related provisions with respect to immaterial and inadvertent defaults to be determined in the definitive documentation.

Subordination:		The Management Agreement shall be subordinate to the Mortgage Loans and to any refinancing thereof or other secured loans from time to time, and Manager shall execute and deliver a subordination and attornment agreement to each holder of secured financing satisfactory to Mortgage Lenders (which will be the form for future secured loans, subject to such reasonable revisions as such future lenders may require); without limiting the foregoing, the provisions of the Management Agreement

		respecting application of casualty and condemnation proceeds shall be subject to the application provisions of the secured loan credit documents.

Transition Assistance:		The Management Agreement and related documents will contain provisions to be determined as part of the documentation process for full transition assistance by the Manager in order to seamlessly transition, without interruption of operations, the management and operation of the Properties upon termination of the Management Agreement and/or change of ownership of the Properties and to provide separate similar transition agreements to the holder of the Mortgage Loan and any successor loan after the Mortgage Loan has been paid in full. During the term of the Management Agreement and after termination thereof, Manager shall make the Property Database/IP/IT and the other books, records, contracts, licenses, permits and other documentation relating to the Properties and New Propco available in a useable manner and format to New Propco and the Other Holders (as defined in Annex 7).

Non-Solicitation:		During the term of the Management Agreement and for a period of 18 months after the expiration or termination thereof, FG and its affiliates will not solicit or hire any employee of the Properties unless such individual voluntarily resigns without inducement.

Shared Services; Group Purchasing:		The Management Agreement shall contain provisions wherein Manager may provide certain shared services to the Properties (such services and the allocation of such expense to be determined in the definitive documentation). Notwithstanding, Manager may not provide any such shared services to other properties owned or managed by Manager or its affiliates (i.e. the Properties will not have a shared reservation system with other properties owned or managed by Manager or its affiliates).

		Manager may utilize purchasing procurement services of affiliates of Manager and/or other group buying techniques involving other properties managed by Manager, provided that the cost thereof shall be competitive with that which would be charged by non-affiliated third party vendors in an arms length transaction, and Manager shall afford the Properties the benefit of and any savings (without xxxx-up or fees), rebates, reimbursements or other payments resulting from any purchasing procurement services and/or group buying techniques.

Technical Services:		Manager shall not be separately compensated for any technical services in connection with renovation projects and shall provide such services, if applicable, as part of Manager’s services under the Management Agreement, it being the intent that the Management Fees are intended to cover any such technical services; however, Manager’s duties under the Management Agreement shall not extend to architectural, construction management and similar technical services for capital improvements for new buildings (including expansions to the existing buildings) and any major renovations to accomplish a comprehensive repositioning of a property approved by Owner.

Dispute Resolution:		The Management Agreement will provide for a binding arbitration process with respect to all disputes under the Management Agreement other than certain disputes which will not be subject to binding arbitration, such as budget approvals and disputes over termination of the Management Agreement (except that disputes over whether a Performance Test failure has occurred would be subject to binding arbitration) and certain other disputes to be determined as part of the definitive documentation.

Other Terms:		The Management Agreement and related documents will contain other material provisions not outlined in this Annex, including without limitation those addressing Manager’s responsibilities for, and New Propco’s rights and approvals with respect to, insurance, licensing, contracts, leases, litigation, maintenance and repairs, capital expenditures, compliance with laws, governmental requirements and contracts, budgets and budget process, financial and other reports, books and records and inspection and auditing of the same by New Propco and the Other Holders, account management, disbursements of cash flow and other matters.

Land and Other Management Agreements:		The management fee structure of the management agreements for the Land Loan Collateral shall be similar to that of the Management Agreement for the Properties, and the terms of the management agreements for the Land Loan Collateral shall be based upon the Management Agreement for the Properties, except (among other differences to be determined in the documentation process) that (i) employees would be employees of the Land Loan Borrower rather than employees of New Propco, (ii) in the case of the Land Loan Collateral management agreement, such agreement shall be a short term management contract, terminable at will or renewed from time to time at the Land Loan Borrower’s option (and terminable by the Land Loan lenders upon default under the Land Loan) and (iii) the revenues upon which the management fees for the Land Loan Collateral are determined will be the Wild Wild West hotel/casino revenues, and exclude the rental revenues from the warehouse and leases at the Land Loan Collateral.

ANNEX 6

STRATEGIC BUYERS

The following is the list of “strategic buyers” (each herein referred to as a “Strategic Buyer” and collectively as “Strategic Buyers”):

Wynn Resorts, Limited;

Las Vegas Sands Corporation;

MGM Mirage, Inc.;

Harrah’s Entertainment, Inc.;

Xxxx Gaming Corporation;

Penn National Gaming Inc.;

Pinnacle Entertainment, Inc.;

Ameristar Casinos, Inc.;

Isle of Capri Casinos, Inc.;

Cannery Casino Resorts , LLC;

Peninsula Gaming, LLC;

Tropicana Las Vegas Hotel and Casino, Inc.;

Tropicana Entertainment Inc.;

American Casino & Entertainment Properties, LLC;

Midwest Gaming and Entertainment, LLC;

Each successor by merger or by acquisition of all or substantially all the assets of any of the entities identified above;

Each entity that, at the time of the proposed transfer of equity to such entity, owns a locals casino/hotel property with at least 100 slot machines located within the Las Vegas Locals Market (as defined in the Term Sheet to which this Annex is attached);

Each wholly-owned subsidiary of any of the entities identified above;

provided, however, for the avoidance of doubt, that no investor or stockholder in or member of any of the entities identified above (regardless of the control or percentage held) shall constitute a Strategic Buyer unless specifically identified as a Strategic Buyer in the list above (by way of example, but not by way of limitation of the foregoing, Apollo, TPG, Xxxxxxx Xxxxx, Oaktree, Xxxx Xxxxx, Xxxx Xxxxx and Xxxxxxxxx shall not constitute Strategic Buyers).

ANNEX 7

GOVERNANCE ISSUES OUTLINE

The following outlines certain governance provisions with respect to a New Propco structure (for purposes of this Annex 7 and Exhibit A hereto, the term “Propco” shall mean New Propco).

Propco to Hold Licenses. Propco would obtain a gaming license and hold the other licenses necessary to operate the properties. FG would obtain a gaming license and other licenses necessary to manage the properties.

Unit Classes; Holdco Registered under the ‘34 Act. The equity of Propco would be held by a holding company (“Holdco”). Each of Propco and Holdco will have two classes of units (“Units”). In the case of PropCo, voting Units with minimal economic rights would be held through a limited liability company (“Voteco”) owned 50% by persons designated by FG (the “FG Voteco Equityholders”) and 50% by persons designated by DB (33.3%) and its assigns and JPMorgan (16.7%) and its assigns (“Other Voteco Equityholders”) and nonvoting Units with virtually all of the economic rights would be held by Holdco. Holdco would also have voting Units, to be held by FG and the Propco Plan Recipients, and nonvoting Units to be held by other equityholders of Holdco, to be issued upon exercise of the warrants and/or to be issued in the event of a 20% equity offering within six months of confirmation as contemplated in the Term Sheet. FG and the Propco Plan Recipients may elect to hold a portion of their interest as non-voting interest. The voting interests in Propco would be registered under the Securities Exchange Act of 1934 (the “’34 Act”), so that Propco will be subject to the reporting requirements of the ‘34 Act.

Holdco Equity Holdings The equitized Mortgage Lenders shall hold a 50% interest (together with their successors and assigns, other than FG or its affiliates, the “Other Holders”) in the Holdco equity, less any portion sold to third parties in settlement of disputes, and Xxxxxxxx Gaming (together with its affiliates, “FG”) shall hold a 50% interest in the Holdco equity less the portion, if any, of such equity sold by FG at closing in potential settlement of disputes, (as adjusted if necessary to reflect additional equity contributions in Holdco or New Propco) as described in the Term Sheet under “Assignments by Propco Plan Recipients”. For the avoidance of doubt, persons that acquire Units from FG or any of its affiliates in connection with the settlement of disputes as described above or otherwise (other than the Propco Plan Recipients) are not considered Other Holders with respect to such Units.

Board of Directors. Propco and Holdco would each have a board of directors (“Board”) with eight votes and up to eight members, each to be elected annually, consisting of the following: (a)

up to three directors (the “FG Directors”) designated by FG (in the case of Holdco) and the FG Voteco Equityholders (in the case of Propco) (with three votes in the aggregate for all FG Directors, divided in a manner specified by FG or the FG Voteco Equityholders as applicable), (b) up to two directors named by DB and any assigns of DB’s voting Units (in the case of Holdco) and by the Other Voteco Equityholder(s) designated by DB and any such assigns (in the case of Propco) (in each case with an aggregate of two votes divided in a manner specified by DB or the Other Voteco Equityholders designated by DB, as applicable) and one director designated by JPMorgan and any assigns of its voting Units (in the case of Holdco) and the Other Voteco Equityholder designated by JPMorgan and such assigns (in the case of Propco) (having one vote); (such directors, together with any subsequent directors designated by the Other Holders and/or the Other Voteco Equityholders, as determined in accordance with the definitive documentation, collectively, the “OH Directors,”(5) having an aggregate of three votes), and (c) two independent directors (with one vote each) nominated by the FG Directors subject to (i) meeting the requirements of being independent directors with respect to Holdco, Propco and FG within the independence rules of the New York Stock Exchange (“Independent Directors”) and (ii) being approved by the OH Directors, which approval will not be unreasonably withheld. The directors of each Board will be the same. The board of directors of Voteco will be constituted the same as each of the Boards. The board of directors of each subsidiary of Propco would have the same members as the Board of Propco. The definitive documents will specify the rights and obligations of the Other Holders with respect to the designation of Other Voteco Equityholders in the event that JPMorgan and/or DB assign their equity interests subsequent to closing and the manner in which the votes to designate Other Voteco Equityholders will be calculated.

Major Decisions. Certain Major Decisions (as described in Exhibit A hereto) would require the affirmative vote of both a majority of the FG Directors and a majority of the OH Directors, except as otherwise provided in Exhibit A, and except that the actions contemplated by clause (xiv) of Exhibit A (i.e., those relating to bankruptcy, insolvency, etc.) would require the consent of all such directors and each of the Other Voteco Equityholders.

Management Agreement. Any decision by Holdco or Propco to amend, extend, renew or terminate the Management Agreement or any noncompetition agreement or other agreement between Holdco or Propco, on the one hand, and FG, on the other hand, contemplated under the Term Sheet (or to grant any waiver or consent or to take any enforcement action by Holdco or Propco with respect to any such agreement) or to select any replacement management company (and terms of any replacement management agreement and any amendments thereto) may only be made by a majority vote of the OH Directors; provided, that with respect to the selection of a replacement management company (and terms of any replacement management agreement and any amendments thereto): (i) from and after the date the Management Agreement is terminated until a new replacement manager is selected, FG must continue to provide management services

(5) Only the holders of Holdco or Voteco voting Units would have the rights to designate Directors, so that any issuance of additional non-voting Units up to 20% of Holdco total equity, as described in the Term Sheet, would have no impact on the right to appoint Directors.

at no cost to Propco or Holdco (other than the continued reimbursement of expenses to FG as previously provided under the management agreement); (ii) a majority of the FG Directors and a majority of the OH Directors would each have the right to propose a replacement management company within 90 days of the date that Holdco or Propco decides to terminate the Management Agreement, provided, that (A) no such proposed replacement management company of the FG Directors may be an affiliate of FG and (B) no such proposed replacement management company of the OH Directors may be an affiliate of any Other Holder owning 10% or more of Holdco, (iii) if the FG Directors have not proposed an alternative replacement manager in that time period, then the replacement will be as selected by the OH Directors; (iv) if the FG Directors have proposed an alternative within the 90-day period and do not approve the replacement management company proposed by the OH Directors (it being understood that such approval may not be unreasonably withheld) and the OH Directors do not approve the replacement management company proposed by the FG Directors (which approval also may not be unreasonably withheld), the choice of replacement management company would be made through “baseball-type” arbitration in which the arbitrators would choose from between the two companies proposed by the OH Directors and the FG Directors, respectively; provided further that if the gaming licenses held by FG and its Affiliates are revoked, suspended or otherwise terminated so that FG cannot continue to operate the Propco casinos, then a majority of the OH Directors will have a unilateral right to appoint an interim manager pending the selection of a replacement management company as per the above procedure.

Officers. Officers will be elected annually by the Board with an initial slate to be agreed by FG and the Other Holders. It is contemplated that all or substantially all of the officers would be FG employees so long as a Xxxxxxxx Affiliate remains the management company. Notwithstanding the foregoing, a majority of the non-FG directors shall have the right to elect, remove and determine the compensation and staffing support of at least one officer with responsibility over internal audit and monitoring and administration of the Management Agreement.

Registration Rights. The Other Holders and FG would have pro rata demand and piggyback registration rights. The piggyback rights would apply in the case of the initial public offering and any subsequent offering, and the demand rights would not apply until 4.5 years following the Effective Date. The support of FG, the holders of a majority of the voting Units held by the Other Holders or a majority of the OH Directors would be required for a demand registration in connection with the initial public offering. The initial public offering would need to be for at least 15% of Holdco, after giving effect to the offering. In connection with the initial public offering, FG, the holders of a majority of the voting Units held by the Other Holders or a majority of the OH Directors would have the right to require Holdco to sell up to 15% of the Units to be outstanding giving effect to the offering (the “Primary Shares”), and the shares sought to be sold by selling shareholders would be reduced to the extent deemed necessary by the managing underwriters so that Holdco could sell such Primary Shares up to the level so required.

Transfer of Equity; First Refusal, Tag-Along and Drag-Along Rights. Except in the case of transfers pursuant to bona fide public offerings, certain transfers to Xxxxxxxx Family Entities for estate planning purposes, grants or similar transfers by FG to officers, directors or employees for compensation purposes or transfers by Other Holders to affiliates (affiliate status being measured by a more than 50%

test), transfers of equity would be subject to (a) a restriction on transfer expiring six months after the Effective Date, (b) rights of first refusal (as outlined in the Term Sheet) and (c) tag-along rights of the holders of Units. Holdco or Propco, as applicable, would cooperate in connection with sales by providing the opportunity for purchasers in private transactions who enter into a confidentiality agreement with Holdco or Propco in a form reasonably acceptable to Holdco or Propco, as applicable and for underwriters in public sales, in each case, to conduct customary and reasonable due diligence, including reasonable access to personnel, accountants, auditors, counsel, properties and information of Holdco and its subsidiaries. In addition, all holders of Units would be required to participate on a pro rata basis in a sale transaction of Units approved by the holders of at least two-thirds of the outstanding voting Units (including the approval of the holders of a majority of the Units held by FG and a majority of the voting Units held by the Other Holders). The procedures for the right of first refusal will be set forth in the definitive agreements and will provide that each holder of at least 2% of the outstanding equity of New Propco (“Non-Transferring Holder”) would, except as described above, have a right to purchase any New Propco equity proposed to be sold by a holder of New Propco equity (the “Selling Holder”). The purchase price per Unit would be the same as the price per Unit of such proposed sale. Any holder exercising such right must provide notice of such exercise no later than 30 days after receipt of notice from the Selling Holder of such proposed sale. Any purchase will be subject to pro ration if more than one holder exercises the right and the aggregate number of Units to be purchased exceeds the number of Units proposed to be sold. The Selling Holder may, at the end of such thirty day period, sell all (but not less than all) of the Units proposed to be so sold with respect to which the right of first of first refusal was not exercised. Such sale must be at a price per Unit no less than 95% of the price per Unit set forth in the notice of proposed sale from the Selling Holder.

Access; Compliance. Each Other Holder that, together with its affiliates, holds 10% or more of the outstanding Units (or 5% or more of such units if for some reason Holdco does not remain a public reporting company) and enters into a confidentiality agreement with Holdco in a form reasonably acceptable to Holdco, and its representatives, auditors and regulators, will have access to personnel, accountants, auditors, counsel, properties and information of Holdco and its subsidiaries, including the right to inspect (or, in the case of Deutsche Bank and its affiliates, to audit) their books, records, business operations, internal controls and policies and the right to receive requested information from them. Holdco and its subsidiaries will institute compliance procedures satisfactory to the Other Holders relating to gaming and other regulations relating to their business as well as such bank holding company or other regulations that may be applicable to them as a result of the ownership interests held by the Other Holders. Other Holders owning specified percentages of equity also shall have the right to participate in material regulatory proceedings relating to Holdco and its subsidiaries.

Termination of Rights. Upon a bona fide initial public offering of at least 15% of the Units in Holdco (giving effect to the offering), the special rights of the members (including rights relating to Board appointment, major decision approvals and transfer restrictions), other than registration rights, would terminate, and Holdco would have corporate governance provisions customary for public companies as further specified in the definitive documentation (including compliance with applicable stock exchange requirements without giving effect to an “Controlled Company” or similar exceptions), subject to applicable gaming requirements. As part of such an initial public offering, the Board would be reconstituted to consist of eight members, the initial members of which would be two FG Directors, two OH Directors elected by majority vote of the Other Voteco Equityholders, two Independent Directors nominated by the FG Directors, subject to

approval of the OH Directors (which approval shall not be unreasonably withheld), and two Independent Directors nominated by the OH Directors (subject to approval of the FG Directors (such approval not to be unreasonably withheld)).

Notwithstanding the foregoing:

(i) on and following the time at which FG and its affiliates collectively own more than 90% of the equity of Holdco (85% if none of Deutsche Bank and JPMorgan then own equity in Holdco), then (A) the Other Voteco Equityholders and the Other Holders shall no longer have rights to appoint members of the board of directors of Voteco, Holdco, Propco or any of their subsidiaries, (B) the Other Voteco Equityholders shall forfeit their equity in Voteco and the Other Holders will no longer have the right to appoint equityholders of Voteco, (C) the OH Directors shall cease to have approval rights over Major Decisions, and (D) unless otherwise agreed to by the FG Voteco Equityholders, the Other Holders and the Other Voteco Equityholders shall cause each OH Director to resign as director from Voteco, Holdco, Propco and each of their subsidiaries; and

(ii) on and following the time at which the holders of Units (excluding any Xxxxxxxx Affiliates) collectively own more than 90% of the equity of Holdco (85% if neither FG or any Affiliate of FG then owns equity in Holdco) then (A) FG and the FG Voteco Equityholders shall no longer have rights to appoint members of the board of directors of Voteco, Holdco, Propco or any of their subsidiaries, (B) the FG Voteco Equityholders shall forfeit their equity in Voteco and FG will no longer have the right to appoint equityholders of Voteco, (C) the FG Directors shall cease to have approval rights over Major Decisions, and (D) unless otherwise agreed to by the Other Voteco Equityholders, FG and the FG Voteco Equityholders shall cause each FG Director to resign as director from Voteco, Holdco, Propco and each of their subsidiaries.

Preemptive Rights. FG and the Other Holders would have customary preemptive rights with respect to issuances of equity, or warrants, convertible or exchangeable securities or other rights to acquire, equity.

Amendments and Waivers. Amending, repealing, altering or waiving any of the organizational documents of Holdco or Propco shall require the approval of FG and the holders of a majority of the voting Units held by the Other Holders; provided, that any such action that could reasonably be expected to materially and adversely affect the rights of the Other Holders shall require the approval of the holders of at least two-thirds of the Units held by the Other Holders; provided, further, however, that any such action that could reasonably be expected to have a disproportionate material adverse effect on any Other Holder shall require the written consent of the Other Holder so affected.

Colony Proxy Holder. The FG Directors shall deliver a proxy (the “Colony Proxy”) to an employee or member of Colony Capital licensed by all applicable regulatory authorities (a “Colony Proxy Holder”) which Colony Proxy will have the following terms:

(i) the Colony Proxy will be irrevocable until the date on which Colony Capital, together with its affiliates, ceases to own at least a number of Units in Holdco equal to 2% of the outstanding equity of Holdco as of the Effective Date (subject to adjustment for stock splits, reverse stock splits, stock dividends and similar events) (the “Proxy Termination Date”);

(ii) pursuant to the Colony Proxy, the Colony Proxy Holder will have the right to one vote of the FG Directors at meetings of the Voteco Board of Directors and the Holdco Board of Directors (it being understood that the Holdco Board of Directors will only have approval rights over Holdco matters) on each of the following matters to the extent such matters would require stockholder approval under the Delaware General Corporation Law if New Propco were a corporation organized under the Delaware General Corporation Law (each, a “Covered Matter”): (A) the incurrence of indebtedness for borrowed money by Holdco, New Propco or any of its subsidiaries, or the issuance of equity interests by Holdco or New Propco other than pursuant to an initial public offering, in each case with net proceeds of $100 million or more; (B) the sale of all or substantially all of the equity interests in Holdco or New Propco, the sale of all or substantially all of the assets of Holdco or New Propco and its subsidiaries, taken as a whole; or (C) the dissolution of Holdco, New Propco or Voteco; and

(iii) the Colony Proxy will automatically terminate on the earliest to occur of the following: (A) the Proxy Termination Date, or (B) the date on which the Colony Proxy Holder ceases to be permitted to vote at a meeting of the Voteco Board of Directors pursuant to applicable law or by applicable regulatory authorities.

Voteco and Holdco will acknowledge the Colony Proxy and, while the Colony Proxy remains in effect, will agree to (1) invite the Colony Proxy Holder to meetings of the Board of Directors at which Covered Matters are to be considered and (2) accept the vote of the Colony Proxy Holder on each Covered Matter.

Rights of Additional Non-Voting Equity. The additional non-voting Units of up to 20% of Holdco total equity that may be issued as described in the Term Sheet would have rights similar to those of the Other Holders with respect to the following matters: (a) piggyback and demand registration rights (not including the right to cause a demand registration in connection with an initial public offering), (b) access rights as described under “Access; Compliance,” (c) preemptive rights as described under “Preemptive Rights” and (d) rights of first refusal and tag-along rights. The definitive documentation would set forth the terms and conditions of these rights.

EXHIBIT A TO GOVERNANCE DRAFT ISSUES OUTLINE

MAJOR DECISIONS

Major Decisions include:

(i) entry into, modification, waiver, or renewal of any agreement or transaction between Propco (6) or any Propco subsidiary (each a “Subsidiary”), on the one hand, and FG, a member holding at least 5% of the Units or any Affiliate of FG or such member, on the other, if the cost of such agreement or transaction, individually or in the aggregate, exceeds $100,000 in any year, other than (x) the IT license expressly contemplated by the Term Sheet and (y) items purchased in the ordinary course of business by the purchasing department of Propco or any Subsidiary which are purchased on behalf of an executive officer of FG and for which Propco or such Subsidiary is promptly reimbursed by such executive officer;

(ii) the establishment or modification of the annual operating and capital budgets, business plan and interest rate hedging policy of Propco or any Subsidiary, subject to variances of up to 10% with respect to any line item (or 20% for any line item constituting maintenance capital expenditures or growth capital expenditures on projects previously approved by a majority of the OH Directors and a majority of the FG Directors), but not aggregating more than 5% for all variances in the aggregate (which budgets will address, among other things, sales and advertising expenditures, staffing levels, maintenance and repair programs and insurance programs);

(iii) any material change in the business of Propco or any of the Subsidiaries, taken as a whole, or material restriction on the business activities of Propco or any of the Subsidiaries, taken as a whole;

(iv) the initiation of material litigation or similar proceedings, or the compromise or settlement of any lawsuit or administrative matter where there the amount that Propco or any of the Subsidiaries could be required to pay individually or in the aggregate pursuant to such compromise or settlement is in excess of $1,000,000, or that could have a material adverse effect on Propco and its Subsidiaries, taken as a whole, or any Property;

(v) the setting of compensation for the general manager of any Property or any of the five most highly compensated individuals (other than a general manager) of Propco and the Subsidiaries;

(vi) the approval of the appointment or termination of the general manager of any Property or, after the termination of the Management Agreement with FG, any of the executive officers of Propco;

(6) For purposes of this Exhibit A, the term “Propco” shall also be deemed to include Holdco.

(vii) the authorization of any contribution of additional capital to Propco by any of the Propco owners (e.g., FG or the Other Holders, herein referred to as “Propco Equityholders”) other than as part of a Permitted Raise (as defined below); the form, amount and timing of any additional capital contributions; and the value of any capital contribution made in property other than money;

(viii) the authorization of any offering of equity (including any warrants, convertible or exchangeable securities or other rights to acquire equity) by Propco or any Subsidiary (other than a sale of additional equity in a Subsidiary to Propco); or any other issuance, redemption repurchase, combination split or reclassification of equity interests in Propco or any Subsidiary or any redemption or repurchase of any debt securities, commitments or contingencies of Propco or any Subsidiary; provided, that the issuance of equity for cash to a person not affiliated with FG or any holder of at least 5% of the Units and any resulting exercise by the Propco Equityholders of preemptive rights triggered by such issuance shall not constitute a Major Decision if (x) the amount of equity so sold does not exceed 25% of the company’s outstanding equity; (y) such issuance is required to prevent or cure any event of default or event which, with notice of lapse of time, would constitute an event of default under any material indebtedness of Propco or a Subsidiary or is necessary to avoid Propco or its Subsidiaries not having sufficient funds to meet their obligations as they come due; and (z) the shares acquired by any existing Propco Equityholder or group of affiliated Propco Equityholders through any exercise of preemptive rights in connection with such issuance must be, as a percentage of the total shares so issued in such transaction, no greater than the percentage of Propco equity owned by such holders before the issuance less 10% (any such issuance, a “Permitted Raise”);

(ix) the authorization of any dividend or distribution to any Propco Equityholder or any repurchase of Propco equity, provided that any such dividend, distribution or repurchase of Propco equity that is not pro-rata with respect to all Propco Equityholders shall require the consent of all of the FG Directors and all of the OH Directors;

(x) the establishment and composition of committees of the Board of Directors of Propco (it being understood that the composition of any such committee must include each director who desires to serve thereon);

(xi) acquisition involving more than $5,000,000 of value (including assumption, incurrence or repayment of debt) in the aggregate in any fiscal year or divestitures, spin-offs, sales, transfers or other dispositions, mergers, consolidations or similar transactions involving more than $10,000,000 of value (including assumption, incurrence or repayment of debt) in the aggregate in any fiscal year relating to Propco or any of the Subsidiaries;

(xii) any sale, lease or other conveyance of assets of Propco or any of the Subsidiaries in any transaction or series of related transactions, other than sales of obsolete inventory or inventory sold in the ordinary course of business, except for sales, leases or other conveyances of immaterial assets in a single transaction or series of related transactions with an aggregate fair market value of less than $10,000,000;

(xiii) any guarantee, assumption or incurrence of indebtedness for, or grant of any security interests to secure, indebtedness (a “Financing”), other than unsecured trade indebtedness

incurred in the ordinary course of business, other than (I) the restructured Mortgage Loans, revolving credit facility and restructured Land Loan as contemplated on Annex 2 to the Term Sheet (the “Existing Financing”), (II) equipment financings in the ordinary course of business for equipment used in the Properties aggregating not more than $5,000,000 at any one time outstanding (provided that this limit shall not apply to financing of gaming equipment which takes the form of participating interests in revenues generated by such gaming equipment and without downpayments), and (III) unsecured indebtedness aggregating not more than $2,000,000 at any time outstanding, and any decision (A) to amend or waive any material provisions of documents executed in connection with the Existing Financing or any other Financing (the “Financing Documents”), or (B) that is reasonably likely to cause an event of default under the Financing Documents, or (C) that is reasonably likely to materially expand the liability of, or materially diminish the rights of, Propco or any of its Subsidiaries or any guarantor under the Financing Documents, or (D) that would expose any Propco Stockholder to any liability or obligations under or with respect to any Financing or Financing Documents; or (E) to acquire any portion of the loans (whether revolving or term) under the Financing Documents, whether by assignment, purchase, participation or otherwise, or (F) that has the effect of extending the maturity of any of the obligations under any Financing Documents, (G) to increase the aggregate amount of the Financing beyond the amount determined at the time of approval of such Financing, or (H) permanently reduce any portion of any Financing more quickly than the required payment and amortization schedule stated in the Financing Documents.

(xiv) the commencement of any liquidation, dissolution or voluntary bankruptcy, administration, recapitalization or reorganization of Propco or any Subsidiary in any form of transaction, any arrangement with creditors, or the consent to entry of an order for relief in an involuntary case, or the conversion of an involuntary case to a voluntary case, or the consent to any plan of reorganization in any involuntary or voluntary case, or the consent to the appointment or taking possession by a receiver, trustee or other custodian for all or any portion of its property, or otherwise seek the protection of any applicable bankruptcy or insolvency law;

(xv) the making of any material tax election and certain other tax matters;

(xvi) the approval of any tenant, licensee or concessionaire and the terms of the leases, licenses or other occupancy agreements with respect thereto, the amendment, modification or termination of any of the foregoing or acquisition of any tenant, licensee or concessionaire’s business, where the payments thereunder are expected to exceed $5,000,000 over the life of the lease, license or other agreement;

(xvii) any agreement, contract, engagement, understanding, undertaking, license, program or arrangement whether written or oral pursuant to which Propco or its Subsidiaries is obligated to make or receive payments in excess of $5,000,000 in any given year or the amendment, modification, renewal or termination any such contract;

(xviii) the retention of, or change in, the accounting firm to perform the audits of Propco’s annual financial statements (other than the initial retention of Ernst & Young LLP);

(xix) any encumbrances that materially affect Propco, any Subsidiary or any Property;

(xx) any change to the name of Propco or any Property;

(xxi) the making of any loans, advances outside the ordinary course of business or capital contributions to, or investments in, any person or the formation or participation in any joint venture or partnership by Propco or its Subsidiaries, other than such loans, advances, joint ventures or partnerships that do not involve the payment, or investment in cash or assets by Propco or its Subsidiaries aggregating more than $2,000,000 in any fiscal year;

(xxii) except as required by law or legal or other compulsory process, entry into, or material amendment, of any union agreement or any employment agreement providing for compensation of more than $500,000 in any fiscal year;

(xxiii) the payment of any investment banking, capital raising, finder’s or related fees, whether fixed or contingent on behalf of, or through Propco or any Subsidiary;

(xxiv) making any material change in accounting methods or making any accounting change for tax accounting purposes, unless required by law or GAAP;

(xxv) the use of brands or trademarks by Propco or any Subsidiary (other than brands or trademarks owned by Propco or a Subsidiary) or the use of any other intellectual property by Propco or a Subsidiary (other than computer software or other intellectual property owned by Propco or a Subsidiary or licensed to them on customary terms by a party not affiliated with Propco and any Xxxxxxxx Affiliate); and

(xxvi) taking any action, including entering into any agreement for the purpose of effecting any of the foregoing.

ANNEX 8

[*]

* Material has been omitted pursuant to a request for confidential treatment and has been filed separately with the SEC (15 pages).

Attachment 2

WARRANT TERMS

Percentage of Total Equity

There will be two classes of warrants as described below: the “FG Warrants” and “Lender Warrants” each permitting purchase of non-voting equity in an amount up to two and one-half percent (2.5%) (or such lesser percentage as is set forth in the following paragraph) of the total outstanding shares of Propco Holdco on a fully diluted basis as of the Effective Date for a total of 5% of the outstanding equity, in all cases on the Effective Date and prior to giving effect to any New Propco related acquisition of Opco assets or equity.

The Warrants shall provide that, to the extent the Xxxxxxxx Affiliates and Mortgage Lenders purchase additional equity of Propco Holdco in connection with the Plan or if other outside investors purchase additional equity within the first six months after confirmation, then the percentage of outstanding equity that can be purchased upon exercise of such warrants shall be automatically ratably reduced to take into account the dilutive effect of the increase in total capitalization of Propco Holdco resulting from such equity sales.(4)

Warrant Terms

The warrants shall reflect the terms of this Attachment 2 and shall otherwise be on customary terms and conditions for warrants of this nature. The warrants shall contain customary anti-dilution adjustments for stock splits and combinations, stock dividends and similar reclassifications but shall not contain any ratchet or other adjustment for issuances of equity below any specified values. All warrants (and any shares received upon exercise thereof) shall be non-transferable except for transfers to parties-in-interest under the MOU (including to the Colony Designees), distributions by such recipients to their investors or equity holders, transfers to other persons mutually acceptable to both FG and the Propco Plan Recipients (as defined in the Propco Plan Term Sheet), and other exceptions (e.g., affiliate transfers) to be specified in definitive documentation.

(4) By way of example, based on a $200mm plan of reorganization value for standalone Propco, if $50mm of additional equity contributions are made, the 2.5% would be reduced to 2% for a total of 4%.

Issuance of Warrants		All the warrants shall be initially issued to the Propco Plan Participants as part of the Senior Plan Recovery.

Sale of Warrants		The Propco Plan Recipients will, concurrently with the Xxxxxxxx Affiliates’ purchase of equity in Propco Holdco, sell to the Xxxxxxxx Affiliates all of the FG Warrants. The Xxxxxxxx Affiliates will assign the FG Warrants to Colony and/or the Colony Designees (who shall hold initially as a group) for no further consideration.

Exercise of Warrants		The warrants may only be exercised following the earlier of (i) the six and one-half year anniversary of the Effective Date (based upon an equity value determination to be agreed upon by FG and the Propco Plan Recipients and to be determined by an independent third-party) and (ii) the occurrence of a New Propco capital raising transaction that involves an equity value determination, and Propco Holdco may require such exercise in connection with any such transaction. Neither the holders of the warrants nor Propco Holdco may compel cash-settlement of the warrants. Any exercise of the warrants must be for cash.

Exercise Price of the Warrants		For the FG Warrants, the exercise price during the first two years after issuance shall be 3.0 times the per share value on the Effective Date of the equity of Propco Holdco, with such pricing increasing by 15% per year in each of years 3, 4, 5, 6 and 7.

Termination of Warrants		Unless exercised prior to the seventh (7th) anniversary of the Effective Date, the warrants shall expire and be of no force or effect.

Attachment 3

PARTICIPATION RIGHTS TERMS

Colony Purchase of Equity of Propco Holdco Issued on Plan Effective Date

On the Effective Date, Xxxxxxxx Affiliates shall sell to Colony 4.375% (or such lesser amount provided for under the MOU due to the issuance of additional equity) of the total equity of Propco Holdco (such purchased equity, the “Colony Propco Holdco Equity”) issued on the Effective Date. The price of the Colony Propco Holdco Equity shall be $8,750,000.

In the event, but only in the event, that New Propco directly or indirectly acquires any equity of reorganized SCI then, to the extent that the Xxxxxxxx Affiliates are offered the opportunity to purchase additional equity of Propco Holdco (“Propco SCI Equity”) issued to raise a portion of the funds used by New Propco to make such acquisition of equity of reorganized SCI, the percentage set forth in the prior paragraph will be automatically reduced to take into account the dilutive effect of the resulting increase in total capitalization), unless Colony, at the time of purchase, increases the equity purchase and purchase price to account for such increase in total capitalization and maintain the related 4.375% equity interest, it being understood that the purchases by Colony would reduce the equity to be held by Xxxxxxxx Affiliates rather than the Mortgage Lenders.(5) Colony shall commit to and consummate its purchase, if any, of Propco SCI Equity at the same time as other Propco Holdco equityholders.

Colony (and/or the Colony Designees) shall hold directly (and not though any common holder with Xxxxxxxx Affiliates) any equity of Propco Holdco.

Colony Option to Purchase Equity of Propco Holdco Issued on Plan Effective Date

On the Effective Date, Colony shall enter into an option agreement whereby the Xxxxxxxx Affiliates shall grant to Colony (and/or any Colony Designee) the right to purchase from the Xxxxxxxx Affiliates, at any time prior to or on the first anniversary of the Effective Date, 5.625% (or such lesser amount to be determined in Colony’s sole discretion) of the outstanding equity of Propco Holdco (such option, the “Colony Equity Option” and such equity the “Propco Option Equity”). The price of the Propco Option Equity shall be the product of the percentage of equity of Reorganized Propco constituted by the Propco Option Equity (i.e.

(5) By way of example, based on a $200 million plan of reorganization value for standalone Propco, if $50 million of additional equity contributions are used to acquire Opco, the 4.375% would be reduced to 3.5%, unless Colony increased its purchase price by 4.375% of the additional $50 million.

5.625% or such lesser amount to be determined in Colony’s sole discretion) times the greater of per unit fair market value of such equity of Propco Holdco or the price per unit paid for the original purchase of Colony Propco Holdco Equity provided above on the Effective Date (provided that if the Xxxxxxxx Affiliates consent to issuance of additional equity of Propco Holdco for less than the per unit reorganization equity value on the Effective Date, then such minimum amount shall be the lower subsequent issuance price). The per unit fair market value of the equity of Propco Holdco subject to the Colony Equity Option shall be determined by a reasonable and customary valuation process to be agreed and specified in definitive documentation.

The Colony Propco Option shall be exercisable during the period commencing on the first business day following the Effective Date and ending on the one year anniversary of the Effective Date. The Colony Propco Option must be exercised by written notice to the Xxxxxxxx Affiliates (in accordance with the notice provisions of the MOU). Such notice of exercise shall initiate the valuation process to be specified in definitive documentation and must be accompanied by a firm funding commitment letter from Colony with respect to payment of the purchase price of the Colony Propco Option as increased, if applicable, by the addition of the Propco SCI Equity to the Colony Propco Option.

Colony Participation in Acquisition of Additional Mortgage Lender Equity of Propco Holdco under Right of First Refusal

If the Xxxxxxxx Affiliates are offered additional equity of Propco Holdco pursuant to their right of first refusal under the Propco Plan Term Sheet to purchase additional equity of Propco Holdco owned by a Mortgage Lender and offered to the Xxxxxxxx Affiliates (the “ML ROFR “ and such offered equity the “ROFR Propco Equity”), then promptly following such offer and in consideration of Colony’s or any Colony Designee’s ratable assumption of the Xxxxxxxx Affiliates’ payment obligation on a per share basis of the same consideration that the Xxxxxxxx Affiliates will pay to the selling Mortgage Lender (including monetary consideration), the Xxxxxxxx Affiliates will offer to assign to Colony (and/or any Colony Designee) their right to purchase a portion of such equity of Propco Holdco in an amount not to exceed the Maximum Colony Holdings (defined below).

If Colony (and/or any Colony Designee) elects to purchase such ROFR Propco Equity and directly pay to the selling Mortgage Lender its ratable portion of the requisite consideration, Colony and/or the applicable Colony Designee will deliver to the Xxxxxxxx Affiliates a firm funding commitment at least ten (10) days prior to the last day to exercise such right (or if the Xxxxxxxx Affiliates have less than 20 days to exercise such right, one half of such

time period) and advise the Xxxxxxxx Affiliates of the name of the Colony Designee (and/or Colony Designees) and its (and/or their) relationship to Colony prior to the consummation of the purchase.

In the event that Colony and/or any Colony Designee sell any equity of Propco Holdco (for avoidance of doubt even one unit of equity, and for further avoidance of doubt even to the Xxxxxxxx Affiliates or the Mortgage Lenders) then the right of Colony and/or any Colony Designee to exercise the ML ROFR as provided herein shall permanently terminate; provided that notwithstanding the foregoing, intra-group transfers and distributions as provided below shall not result in termination of the ML ROFR.

Subject to the conditions that (i) the applicable ML ROFR is made within one year of the Effective Date, (ii) the Colony Equity Option is exercised in full (which may occur after the making of an ML ROFR within such one year period) and (iii) Colony and/or the Colony Designees subscribe for the maximum amount of the purchase of equity offered under the applicable ML ROFR, then, in the event that the Colony Designees are prevented due to pro rata participation of other equity holders of Propco Holdco from acquiring the full amount of the equity subject to the ML ROFR, the Xxxxxxxx Affiliates shall pay an “Oversubscription Fee” equal to 10% of the amount by which Colony and/or the Colony Designees were cut back from their maximum potential purchase, payable at the later of the determination of such Oversubscription Fee and the exercise of the Colony Exercise Option, and further provided that the aggregate amount of Oversubscription Fees shall not exceed $500,000. By way of example, if $10 million of equity is offered and subscribed to by Colony, but Colony is cut back to $8 million of such equity, then the Oversubscription Fee shall be $200,000, based on the $2 million cut back.

Colony Participation in Acquisition of Additional Equity of Propco Holdco under Additional Issuance Tag Along Right

If Propco Holdco elects to issue additional equity as provided in the Propco Plan Term Sheet, then promptly following such determination and in consideration of Colony’s ratable assumption of the Xxxxxxxx Affiliates’ payment obligation on a per share basis of the same consideration that the Xxxxxxxx Affiliates will pay to Propco Holdco (including monetary consideration), the Xxxxxxxx Affiliates will offer to assign to Colony (and/or any Colony Designee) their right to purchase a portion of such additional newly issued equity of Propco Holdco in an amount not to exceed the lesser of (i) the amount that causes Colony (and/or the Colony Designees) to hold more than the Maximum Colony Holdings (defined below) and (ii) the amount of such

		additional newly issued equity of Propco Holdco that Colony (and/or the Colony Designees) need to purchase to avoid dilution as a result of such sale of additional newly issued equity of Propco Holdco (assuming for this purpose the full exercise of the Colony Equity Option unless the Colony Equity Option has expired unexercised or exercised for less than the full amount, in which event, no such assumption shall apply). Colony may exercise this purchase opportunity whether or not Colony has exercised the Colony Equity Option. If Colony (and/or any Colony Designee) elects to purchase such additional newly issued equity of Propco Holdco and directly pay to Propco Holdco its ratable portion of the requisite consideration, Colony will deliver to the Xxxxxxxx Affiliates a firm funding commitment at least ten business days prior to the last day to exercise such right (or if the Xxxxxxxx Affiliates have less than 20 days to exercise such right, one half of such time period) and advise the Xxxxxxxx Affiliates of the name of the Colony Designee (and/or Colony Designees) and its (and/or their) relationship to Colony prior to the consummation of the purchase.

Aggregate Limitation of First Right to Exercise ML ROFR		Until Colony and/or the Colony Designees own a percentage of equity of Propco Holdco that is equal (after giving effect to all unexpired options and warrants held by each of the Xxxxxxxx Affiliates, Colony and/or the Colony Designees) to the percentage of equity of Propco Holdco then owned by the Xxxxxxxx Affiliates, Colony and/or the Colony Designees shall have a right of first refusal (the “Colony ML ROFR”) to exercise the ML ROFR as provided above. The Colony ML ROFR shall terminate at such time as the Xxxxxxxx Affiliates and Colony and/or the Colony Designees own an equal percentage of equity of Propco Holdco (the “Maximum Colony Holdings”). From and after the date that Colony and/or the Colony Designees have accumulated the maximum Colony Holdings, Colony and/or the Colony Designees and the Xxxxxxxx Affiliates shall each be entitled to purchase up to fifty percent of any subsequent offering under the ML ROFR, provided that if either party declines to participate in any such subsequent ML ROFR, the other party shall be entitled to purchase up to all of the equity available for purchase thereunder.

Colony Participation in New Propco Right of First Refusal Regarding Xxxxxxxx Opportunities outside of the Las Vegas Locals Market		The Propco Plan Term Sheet provides that nothing shall restrict FG and the Xxxxxxxx Affiliates (whether alone or as part of a group) from independently pursuing any gaming or non-gaming opportunity of any kind arising anywhere outside of the Relevant Competitive Market (defined below), and New Propco’s right of first refusal within the Las Vegas Locals Market shall not apply to

any opportunity of any kind arising outside of the Las Vegas Local Market. With respect to gaming investment opportunities outside of the Las Vegas Locals Market, if such gaming investment opportunities are to be funded in part by equity to be raised after the time that Xxxxxxxx Affiliates entered into a binding agreement to make such gaming investment, then FG and the Xxxxxxxx Affiliates shall offer to each Mortgage Lender and Colony (and/or the Colony Designees) (provided that the Propco Plan Recipients who receive such offer still own at the time of the offer at least ten percent (10%) of the outstanding equity of Propco Holdco and the Colony (and/or the Colony Designees) holders who receive such offer still collectively hold at least two and one-half percent 2.5% of the equity of Propco Holdco) a right of first refusal to purchase up to 100% of the equity investment being sought by the Xxxxxxxx Affiliates. In the event that such offered equity investment is oversubscribed by such Mortgage Lender(s) and/or Colony, then such Mortgage Lenders and/or Colony (and/or the Colony Designees) shall be offered ratable portions of such gaming investment opportunity based upon their ratable holdings of Propco Holdco, computed without regard to the Propco Holdco equity held by Xxxxxxxx Affiliates. The option to purchase such investment equity must be exercised by each such Mortgage Lender and/or Colony (and/or the Colony Designees) as to its ratable share within 30 business days after the making of such offer by the Xxxxxxxx Affiliates. The form of consideration paid to the Xxxxxxxx Affiliates shall be cash.

As used in this Attachment, “Las Vegas Locals Market” refers to any area within the Las Vegas, Nevada city limits or within a 50 mile radius of the intersection of Las Vegas Boulevard South and Charleston Boulevard in Las Vegas, Nevada other than (x) the area bordered by Sunset Road on the south, the I-15 freeway on the west, Charleston Boulevard on the north and Paradise Road on the east, and (y) the Las Vegas Hilton and related landholdings.

Colony Participation through the Xxxxxxxx Affiliates in Acquisition of SCI Assets and in Las Vegas Locals Market Investment Opportunities

Opco Assets:

If any Xxxxxxxx Affiliate acquires an interest in Opco other than through its ownership of equity of Propco Holdco, whether pursuant to a confirmed plan of reorganization or sale of Opco assets, as a direct bidder or purchaser or as a direct or indirect investor in a bidder (such Xxxxxxxx Affiliate(s), the “Participating Xxxxxxxx Party” and such bidder, the “Opco Purchaser”) for Opco’s assets, and such Participating Xxxxxxxx Party is the successful bidder for or purchaser of assets owned by Opco or its subsidiaries, then, promptly following the acceptance of such bid,

the Participating Xxxxxxxx Party shall enter into an option agreement with Colony whereby the Participating Xxxxxxxx Party shall grant to Colony (and/or the Colony Designees) the right to purchase up to twenty percent (20%) of the amount of equity of Opco Purchaser held in the aggregate by the Participating Xxxxxxxx Party up to amount equal to ten percent (10%) of the total amount of outstanding equity of the Opco Purchaser (such option, the “Colony Opco Purchaser Option” and such equity, the “Opco Purchaser Option Equity”). The Colony Opco Purchaser Option shall be exercisable no earlier than the first anniversary of the Effective Date. The Colony Opco Purchaser Option must be exercised by written notice to the Xxxxxxxx Affiliates (in accordance with the notice provisions of the MOU) within 30 days following the first anniversary of the Effective Date and such notice of exercise must be accompanied by a firm funding commitment letter from Colony with respect to payment of the purchase price of the Opco Purchaser Option Equity. The exercise price of the Opco Purchaser Option Equity shall be on a per share basis cash in the same amount that the Participating Xxxxxxxx Party shall pay for its equity interest in the Opco Purchaser plus 10%. This provision shall not apply to any acquisition of Opco that is completed through New Propco.

Other Las Vegas Locals Market Assets:

New Propco and Colony will agree with the Xxxxxxxx Affiliates that there shall be no restrictions on the ability of FG or any Xxxxxxxx Affiliate to enter into management agreements (where no equity contribution is being made by FG or any such Xxxxxxxx Affiliate) in respect of other gaming and non-gaming enterprises of any kind, wherever located. With respect to gaming or hotel investment opportunities (other than management-only agreements and other than investments in entities not constituting hotels and holding only a “restricted license” as currently defined in the Nevada Revised Statutes) arising within the Las Vegas Locals Market, FG has agreed in the Propco Plan Term Sheet that FG shall not, and shall not allow any Xxxxxxxx Affiliate to, invest in such opportunity unless, among other things, New Propco has been given a right of first refusal with respect to all or any portion of such investment. FG and the Xxxxxxxx Affiliates (whether alone or as part of a group) will be entitled to pursue any such opportunity independently if the right of first refusal is not exercised.

If New Propco declines to or otherwise fails to exercise any such right of first refusal in respect of such an opportunity that is presented to New Propco within two years of the Effective Date, then, with respect to such investment opportunities, Colony

		(and/or the Colony Designees) shall have the option, exercisable for a period of 10 calendar days after FG or any Xxxxxxxx Affiliate enters into a definitive agreement to acquire such investment opportunity, to elect, evidenced by delivery of a written notice and a firm funding commitment from Colony to provide funding for such investment, to invest in up to twenty percent (20%) of the Xxxxxxxx Affiliates’ share of the equity issued by the investment opportunity, provided that such share shall in no event represent more than ten percent (10%) of the total amount of equity issued by such investment opportunity. The form of consideration paid to the Xxxxxxxx Affiliates shall be cash. The Participating Xxxxxxxx Party’s share of the equity issued by the purchaser vehicle is referred to herein as the “Locals Investment Equity.” The Locals Investment Equity assigned by the Xxxxxxxx Affiliates to Colony and/or the Colony Designees shall be, or shall upon sale to Colony and/or the Colony Designees be converted to, voting equity of such non-Propco related investment vehicle.

Minority Rights and Transferability		In addition to the voting rights provided to Colony under the Propco Plan Term Sheet, Colony shall have the rights to information provided in the Propco Plan Term Sheet for 10% holders so long as Colony holds equity and the following minority rights: (i) piggyback registration rights described in the Propco Plan Term Sheet, (ii) restriction on amending applicable definitive agreements and/or organizational documents in a manner that would alter or change the powers, preferences, or special rights of Colony (and/or the Colony Designees) so as to materially or disproportionately adversely affect the protections granted only to Colony and/or the Colony Designees in accordance with the terms hereof without their consent (iii) access and information rights required to be a qualifying investment for ERISA purposes, (iv) appropriate provisions in ancillary documents to protect Colony’s rights granted thereunder, and (v) appropriate antidilution protection with respect to stock splits, reverse splits and the like, for the all equity comprising the Colony Equity Consideration. The foregoing rights do not apply, however, to any equity acquired through exercise of the FG Warrants except to the extent that such rights are otherwise included in the rights given to holders of the Lender Warrants.

Equity of Propco Holdco; Voting Rights; No Waiver of Purchase Rights by		All equity assigned to or purchased by Colony (and/or the Colony Designees) pursuant to any provision of this Attachment 3 shall consist of equity of Propco Holdco and shall be, except as

Xxxxxxxx Affiliates		provided in the section entitled “Minority Rights and Transferability” and except as otherwise provided through the proxies received by Colony under Annex 7 to the Propco Plan Term Sheet, passive in all respects. Colony (and/or the Colony Designees) shall have the voting/proxy rights provided for in Annex 7 of the Propco Plan Term Sheet. To the extent that Colony (and/or the Colony Designees) is granted herein a right to participate in any in any purchase opportunity provided by another party to the Xxxxxxxx Affiliates, the Xxxxxxxx Affiliates shall not waive such purchase opportunity without the prior consent of Colony (and/or the Colony Designees).

Non-Voting Equity		All equity of Propco Holdco purchased by or assigned to Colony or any Colony Designee pursuant to this MOU shall be non-voting equity or, if voting equity as of the date of such purchase or assignment, shall immediately convert into non-voting equity.

Regulatory Requirements		The Participation Rights will be subject to all regulatory requirements, including gaming regulations. The gaming regulatory approach will be agreed by the Mortgage Lenders, the Xxxxxxxx Affiliates, and Colony prior to Plan filing.

Holding Requirements for Colony Designees; Limitation on transfers of Participation Rights Sales to Strategic Buyers		The Colony Designees shall initially hold all equity acquired pursuant to this Attachment 3 as a group, provided. The group shall have intra-group transfer rights and, after 6 months and with regulatory approval, shall have distribution/dissolution rights. Unless and until Propco Holdco otherwise becomes an Investment Company or a public company, the number of Colony Designees shall not be large enough to cause Propco Holdco to be required to register as an Investment Company. Colony agrees that neither Colony nor the Colony Designees shall transfer any equity acquired by exercise of a Participation Right pursuant to this Attachment 3 to any strategic buyer described on Annex 6 of the Propco Plan Term Sheet.

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MEMORANDUM OF UNDERSTANDING

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