10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 2006

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from ______________ to ______________.

Commission file number 000-21640

STATION CASINOS, INC.

(Exact name of registrant as specified in its charter)

Nevada	88-0136443
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2411 West Sahara Avenue, Las Vegas, Nevada 89102

(Address of principal executive offices, Zip Code)

Registrant’s telephone number, including area code: (702) 367-2411

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.01 Par Value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x  No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated file. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer x  Accelerated filer o  Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o No x

The aggregate market value of the voting stock held by non-affiliates (all persons other than executive officers or directors) of the registrant as of June 30, 2006, based on the closing price per share of $68.08 as reported on the New York Stock Exchange was $3,163,811,105.

As of January 31, 2007, the registrant has 57,260,989 shares of common stock outstanding.

Documents Incorporated by Reference

Portions of the Proxy Statement for the Registrant’s 2007 Annual Meeting of Stockholders (which has not been made publicly available as of the date of this filing) are incorporated by reference into Part III.

PART I

ITEM 1. BUSINESS

Unless the context indicates otherwise, all references to the “Company”, “Station”, “we”, “our”, “ours” and “us” refer to Station Casinos, Inc. and its consolidated subsidiaries.

Forward-looking Statements

When used in this report and elsewhere by management from time to time, the words “believes”, “anticipates”, “expects” and similar expressions are intended to identify forward-looking statements with respect to our financial condition, results of operations and our business including our expansions, development and acquisition projects, legal proceedings and employee matters. Certain important factors, including but not limited to, financial market risks, could cause our actual results to differ materially from those expressed in our forward-looking statements. Further information on potential factors which could affect our financial condition, results of operations and business including, without limitation, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Fertitta Colony Partners LLC, the outcome of any legal proceedings that have been, or will be, instituted against us related to the merger agreement, the inability to complete the merger due to the failure to obtain stockholder approval for the merger or the failure to satisfy other conditions to complete the merger, including the receipt of all regulatory approvals related to the merger, the failure to obtain the necessary financing arrangements set forth in the debt and equity commitment letters delivered pursuant to the merger agreement, risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger, the ability to recognize the benefits of the merger, the amount of the costs, fees, expenses and charges related to the merger and the actual terms of certain financings that will be obtained for the merger, the impact of the substantial indebtedness to be incurred to finance the consummation of the merger, the ability to maintain existing management, integration of acquisitions, competition within the gaming industry, the cyclical nature of the hotel business and gaming business, economic conditions, development and construction risks, regulatory matters and litigation are included in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date thereof. We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date hereof.

General

We are a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) under the Station and Fiesta brand names and seven smaller casino properties (two of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Our growth strategy includes the master-planned expansions of our existing gaming facilities in Nevada, the development of gaming facilities on certain real estate we own or are under contract to acquire in the Las Vegas valley and Reno, Nevada, the evaluation and pursuit of additional acquisition or development opportunities in Nevada and other gaming markets and the pursuit of additional management agreements with Native American tribes.

We own and operate Palace Station Hotel & Casino (“Palace Station”), Boulder Station Hotel & Casino (“Boulder Station”), Texas Station Gambling Hall & Hotel (“Texas Station”), Sunset Station Hotel & Casino (“Sunset Station”), Santa Fe Station Hotel & Casino (“Santa Fe Station”), Red Rock Casino Resort Spa (“Red Rock”), Fiesta Rancho Casino Hotel (“Fiesta Rancho”), Fiesta Henderson Casino Hotel (“Fiesta Henderson”), Wild Wild West Gambling Hall & Hotel (“Wild Wild West”), Wildfire Casino (“Wildfire”), Magic Star Casino (“Magic Star”), Gold Rush Casino (“Gold Rush”) and Lake Mead Casino (“Lake Mead”). We also own a 50% interest in Green Valley Ranch Resort Spa Casino

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(“Green Valley Ranch”), Barley’s Casino & Brewing Company (“Barley’s”) and The Greens Gaming and Dining (“The Greens”). Each of our casinos caters primarily to local Las Vegas area residents. We market the seven “Station” casinos (including Green Valley Ranch and Red Rock) together under the Station Casinos’ brand and the two “Fiesta” casinos under the Fiesta brand, offering convenience and choices to residents throughout the Las Vegas valley with our strategically located properties. In addition, we manage Thunder Valley Casino (“Thunder Valley”) in Sacramento, California on behalf of the United Auburn Indian Community (“UAIC”).

As further described in Note 16 to the Consolidated Financial Statements in this Annual Report on Form 10-K, on February 23, 2007, we entered into a definitive merger agreement (the “Merger Agreement”) with Fertitta Colony Partners LLC (“FCP”), which has agreed to acquire all of our outstanding common stock for $90 per share in cash (the “Merger”). FCP is a new company formed by Frank J. Fertitta, III, our Chairman and Chief Executive Officer, Lorenzo J. Fertitta, our Vice Chairman and President, and Colony Capital Acquisitions, LLC, an affiliate of Colony Capital, LLC.  Our board of directors, on the unanimous recommendation of a special committee composed entirely of independent directors (the “Special Committee”), approved the Merger Agreement and has recommended that our stockholders approve the Merger. The Merger is expected to be completed by the fourth quarter of 2007, and is subject to stockholder approval, regulatory approvals and customary closing conditions.

Operating Strategy

We believe that the following key principles have been integral to our success as a gaming operator and we intend to continue to employ these strategies at each of our properties.

Targeted Customer Base

Our operating strategy emphasizes attracting and retaining customers primarily from the local and repeat visitor markets. Our casino properties attract customers through;

·innovative, frequent and high-profile promotional programs directed towards the local market;

·focused marketing efforts and convenient locations;

·aggressive marketing to the repeat visitor market;

·and the development of strong relationships with specifically targeted travel wholesalers in addition to convention business at both Green Valley Ranch and Red Rock.

Although perceived value initially attracts a customer to our casino properties, actual value generates customer satisfaction and loyalty. We believe that actual value becomes apparent during the customer’s visit through an enjoyable, affordable and high-quality entertainment experience. Las Vegas, which is and has been one of the fastest growing cities in the United States, is characterized by a historically strong economy and demographics, which include an increasing number of retirees and other active gaming customers. We believe that our out-of-town patrons are also discerning customers who enjoy our value-oriented, high-quality approach. We believe that our patrons view our hotel and casino product as a preferable alternative to attractions located on the Las Vegas Strip and downtown Las Vegas. In markets outside of Las Vegas we believe customers come from farther distances, a radius in some cases of more than 150 miles; however, the business model for local customers remains the same.

Provide a High-Value Experience

Because we target the repeat customer, we are committed to providing a high-value entertainment experience for our customers in our restaurants, hotels, casinos and other entertainment amenities. We develop regional entertainment destinations for locals that include other amenities such as spas, movie

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theaters, bowling centers, ice skating, live entertainment venues and child care facilities. In addition, we believe the value offered by restaurants at each of our casino properties is a major factor in attracting local gaming customers, as dining is a primary motivation for casino visits by many locals. Through their restaurants, each of which has a distinct style of cuisine, our casino properties offer generous portions of high-quality food at reasonable prices. In addition, our operating strategy focuses on slot and video poker machine play. Our target market consists of frequent gaming patrons who seek not only a friendly atmosphere and convenience, but also higher than average payout rates. Because locals and repeat visitors demand variety and quality in their slot and video poker machine play, our casino properties offer the latest in slot and video poker technology.

As part of our commitment to providing a quality entertainment experience for our patrons, we are dedicated to ensuring a high level of customer satisfaction and loyalty by providing attentive customer service in a friendly, casual atmosphere. We recognize that consistent quality and a comfortable atmosphere stem from the collective care and friendliness of each employee. We began as a family-run business, and have maintained close-knit relationships among our management and we endeavor to instill among our employees this same sense of loyalty. Toward this end, we take a hands-on approach through active and direct involvement with employees at all levels.

Marketing and Promotion

We employ an innovative marketing strategy that utilizes frequent high profile promotional programs in order to attract customers and establish a high level of name recognition. In addition to aggressive marketing through television, radio and newspaper advertising, we have created and sponsored promotions that have become a tradition in the locals’ market.

In 1999, we introduced a unified Boarding Pass player rewards program at our Station properties. The Boarding Pass program allows guests to earn points based on their level of gaming activity. The Fiesta properties offer a similar player rewards program called the Amigo Club. Members of the Boarding Pass and the Amigo Club can redeem points at any of our properties for meals in any of the restaurants, hotel rooms, movie passes, show tickets or merchandise from our gift shops. We believe that this “single card”, for which the technology was developed in-house, sets us apart from our competition in the Las Vegas locals’ market.

We are heavily focused on using cutting edge technology to drive customer traffic with products such as our Jumbo Brand products, which include “Jumbo Jackpot”, “Jumbo Penny”, “Jumbo Bingo” and “Jumbo Poker”. Jumbo Jackpot, which was introduced in April 2003, is an exclusive progressive slot jackpot that allows customers using a Boarding Pass or Amigo Card the opportunity to win between $100,000 and $150,000 just for playing slot machines. Other products include “Xtra Play Cash” and “Sports Connection”, among others. We believe that these products create sustainable competitive advantages and distinguish us from our competitive set.

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Properties

Set forth below is certain information as of December 31, 2006 concerning our properties, all of which we own and/or operate except as otherwise indicated. The properties are more fully described following the table.

	Hotel Rooms		Slots(1)		Gaming Tables(2)		Parking Spaces(3)		Acreage
Casino Properties
Palace Station		1,007		1,806		55		2,600		30
Boulder Station		300		2,992		42		4,800		54
Texas Station		200		2,390		35		5,900		47
Sunset Station		457		2,637		51		5,500		82
Santa Fe Station		200		2,965		39		5,200		38
Red Rock		815		3,282		64		5,000		68
Green Valley Ranch (50% owned)		490		2,721		55		3,800		40
Fiesta Rancho		100		1,603		14		2,700		25
Fiesta Henderson		224		1,839		18		2,900		46
Other Properties
Wild Wild West		262		232		6		600		19
Wildfire		—		239		—		275		5
Magic Star		—		168		—		250		—
Gold Rush		—		154		—		150		—
Lake Mead		—		105		—		64		3
Barley’s (50% owned)		—		199		—		—		—
The Greens (50% owned)		—		36		—		—		—
Managed Properties
Thunder Valley (4)		—		2,786		100		4,500		49

(1)Includes slot and video poker machines and other coin-operated devices.

(2)Generally includes blackjack (“21”), craps, roulette, pai gow poker, mini baccarat, let it ride, three-card poker, Texas hold’em and wild hold’em. The Casino Properties, with the exception of Green Valley Ranch, also offer a keno lounge and bingo parlor. The Casino Properties also offer a race and sports book and the Other Properties offer a sports book with the exception of The Greens and Lake Mead.

(3)Includes covered parking spaces of 1,900 for Palace Station, 1,900 for Boulder Station, 3,500 for Texas Station, 2,900 for Sunset Station, 4,500 for Santa Fe Station, 2,300 for Red Rock, 2,700 for Green Valley Ranch, 1,000 for Fiesta Rancho and 1,000 for Fiesta Henderson.

(4)We manage Thunder Valley, on behalf of the UAIC.

Casino Properties

Palace Station

Palace Station is strategically located at the intersection of Sahara Avenue and Interstate 15, one of Las Vegas’ most heavily traveled areas. Palace Station is a short distance from McCarran International Airport and from major attractions on the Las Vegas Strip and downtown Las Vegas. Palace Station features a turn-of-the-20th-century railroad station theme with non-gaming amenities including eight full-service restaurants, several fast-food outlets, a 275-seat entertainment lounge, four additional bars, two swimming pools, an approximately 20,000-square-foot banquet and convention center, a 24-hour gift shop and a non-gaming video arcade.

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Palace Station’s eight full-service restaurants have a total of approximately 1,300 seats. These restaurants offer a variety of high-quality food at reasonable prices, including the Grand Café (featuring American and Chinese fare), Feast Gourmet Buffet, The Broiler Steaks and Seafood, Pasta Palace (an Italian restaurant), Cabo Mexican Restaurant, Jack’s Irish Pub, an 18-seat Oyster Bar and Chang’s (gourmet Hong Kong cuisine). In addition to these restaurants, Palace Station offers various fast-food outlets and the Sound Trax Club, an entertainment club.

Boulder Station

Boulder Station, which opened in August 1994, is strategically located on Boulder Highway, immediately adjacent to the Interstate 515 interchange. We believe that this highly visible location at this well-traveled intersection offers a competitive advantage relative to existing hotels and casinos located on Boulder Highway. Boulder Station is located approximately four miles east of the Las Vegas Strip and approximately four miles southeast of downtown Las Vegas. Boulder Station features a turn-of-the-20th-century railroad station theme with non-gaming amenities including five full-service restaurants, several fast-food outlets, a 750-seat entertainment lounge, six additional bars, an 11-screen movie theater complex, a Kid’s Quest child care facility, a swimming pool, a non-gaming video arcade and a gift shop.

Boulder Station’s five full-service restaurants have a total of over 1,400 seats. These restaurants offer a variety of high-quality meals at reasonable prices, including, the 24-hour Boulder Café (featuring American and Chinese fare), Feast Gourmet Buffet, The Broiler Steaks and Seafood, Pasta Palace (an Italian restaurant) and Guadalajara Bar & Grille (a Mexican restaurant). In addition to these restaurants, Boulder Station offers various fast-food outlets.

Texas Station

Texas Station, which opened in July 1995, is strategically located at the corner of Lake Mead Boulevard and Rancho Drive in North Las Vegas. Texas Station features a friendly Texas atmosphere, highlighted by distinctive early Texas architecture with non-gaming amenities including five full-service restaurants, several fast-food outlets, a Kid’s Quest child care facility, a 300-seat entertainment lounge, a 1,700-seat event center, eight additional bars, an 18-screen movie theater complex, a swimming pool, a non-gaming video arcade, a gift shop, a 60-lane bowling center and approximately 40,000 square feet of meeting and banquet space.

Texas Station’s five full-service restaurants have a total of approximately 1,200 seats. These restaurants offer a variety of high-quality food at reasonable prices, including the 24-hour Texas Café, Austins Steakhouse, San Lorenzo (an Italian restaurant), Feast Around the World Buffet (featuring seven different food stations) and Texas Star Oyster Bar, which has 110 seats. In addition to the Texas Station-themed restaurants, guests may also enjoy the unique features of several bars and lounges including Martini Ranch, Whiskey Bar, Garage Bar, A Bar, or Armadillo Honky Tonk. Texas Station also offers a variety of fast-food outlets to enhance the customers’ dining selection.

Sunset Station

Sunset Station, which opened in June 1997, is strategically located at the intersection of Interstate 515 and Sunset Road. Multiple access points provide customers convenient access to the gaming complex and parking areas. Situated in a highly concentrated commercial corridor along Interstate 515, Sunset Station has prominent visibility from the freeway and the Sunset commercial corridor. Sunset Station is located approximately nine miles east of McCarran International Airport and approximately seven miles southeast of Boulder Station. Sunset Station features a Spanish/Mediterranean-style theme with non-gaming amenities including eight full-service restaurants themed to capitalize on the familiarity of the restaurants at our other properties, a 520-seat entertainment lounge, a 4,000-seat outdoor amphitheater, eight

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additional bars, a gift shop, a non-gaming video arcade, a 13-screen movie theater complex, a 72-lane bowling center, a Kid’s Quest child care facility and a swimming pool.

Sunset Station’s eight full-service restaurants have a total of approximately 2,300 seats featuring “live-action” cooking and simulated patio dining. These restaurant facilities offer a variety of high-quality food at reasonable prices, including the 24-hour Sunset Café (featuring American fare), Sonoma Cellar Steakhouse, Costa Del Sol (a seafood restaurant), Capri Italian Ristorante, Guadalajara Bar & Grille (a Mexican restaurant), Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine, Hooter’s and a 65-seat Oyster Bar. Guests may also enjoy the Gaudi Bar, a centerpiece of the casino featuring over 8,000 square feet of stained glass. Sunset Station also offers a variety of fast-food outlets to enhance the customers’ dining selection.

Santa Fe Station

In October 2000, we purchased Santa Fe Station which is strategically located at the intersection of Highway 95 and Rancho Drive, approximately five miles northwest of Texas Station. Santa Fe Station features a Southwestern theme with non-gaming amenities including five full-service restaurants, a gift shop, a non-gaming video arcade, a swimming pool, a 500-seat entertainment lounge, six additional bars, a 60-lane bowling center, a 16-screen movie theater complex, a Kid’s Quest child care facility and over 20,000 square feet of meeting and banquet facilities.

Santa Fe Station’s five full-service restaurants have a total of approximately 1,200 seats, which include the Grand Café, The Charcoal Room (a steakhouse), Cabo Mexican Restaurant, Turf Grill and the Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine. Santa Fe Station also offers a variety of fast-food outlets to enhance the customers’ dining selection. Santa Fe Station was recently expanded; see “Expansion Strategy” for details of the expansion.

Red Rock

Red Rock, which opened on April 18, 2006, is located on Charleston Boulevard at the Interstate 215/Charleston interchange in the Summerlin master-planned community in Las Vegas, Nevada. Red Rock features an elegant desert oasis theme with a contemporary design, offering 815 hotel rooms featuring ultra-modern design filled with the most up-to-date luxury amenities. In addition to its standard guestrooms, the hotel offers six styles of suites, including one-of-a-kind custom villas and penthouse suites. Additional non-gaming amenities include nine full-service restaurants, a 16-screen movie theater complex, 94,000 square feet of meeting and convention space, a night club, a full-service spa and a Kid’s Quest child care facility.

Red Rock’s nine full-service restaurants have a total of over 1,900 seats and include T-bones Chophouse, Terra Rossa (an Italian restaurant), Cabo Mexican Restaurant, the Grand Café, The Salt Lick Bar B-Q, Tides Oyster Bar, Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine, Turf Grill (featuring blue plate specials and your favorite comfort foods) and Sand Bar. Red Rock also offers a variety of fast-food outlets to enhance the customers’ dining selection. Red Rock is currently being expanded; see “Expansion Strategy” for details of the expansion.

Green Valley Ranch

Green Valley Ranch, which opened in December 2001, is strategically located at the intersection of Interstate 215 and Green Valley Parkway in Henderson, Nevada. Green Valley Ranch is approximately five minutes from McCarran International Airport and seven minutes from the Las Vegas Strip. We jointly developed the project on 40 acres of a 170-acre multi-use commercial development with GCR Gaming. In addition to our 50% ownership, we are also the managing partner of Green Valley Ranch and receive a management fee equal to 2% of the property’s revenues and approximately 5% of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”).

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Green Valley Ranch was designed to complement the Green Valley master-planned community. The AAA Four Diamond resort features a Mediterranean-style villa theme with non-gaming amenities including ten full-service restaurants, a 4,200-square-foot non-gaming arcade, a state-of-the-art spa with outdoor pools, a 10-screen movie theater complex, a gift shop and approximately 60,000 square feet of meeting and convention space. Green Valley Ranch also offers “Whiskey Beach”, an 8-acre complex featuring private poolside cabanas, a contemporary poolside bar and grill, three acres of vineyards and an outdoor performance venue. Green Valley Ranch is currently being expanded; see “Expansion Strategy” for details of the expansion.

Green Valley Ranch’s ten full-service restaurants include the Grand Café, China Spice (a Chinese restaurant), Sushi+Sake, Il Fornaio (an Italian restaurant), Hank’s Fine Steaks and Martinis, Fado Irish Pub, The Original Pancake House, Feast Around the World Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine, Tides Oyster Bar and Turf Grill. Green Valley Ranch also offers a variety of fast-food outlets to enhance the customers’ dining selection. Guests may also enjoy the Drop Bar, a centerpiece of the casino, and Whiskey Bar, a 5,300-square-foot nightclub.

Fiesta Rancho

Fiesta Rancho was purchased in January 2001 and is strategically located at the intersection of Lake Mead Boulevard and Rancho Drive in North Las Vegas across from Texas Station. Fiesta Rancho features a Southwestern theme with non-gaming amenities including four full-service restaurants, a gift shop, a non-gaming video arcade, a swimming pool, a 700-seat entertainment lounge, a regulation-size ice skating rink and four additional bars.

Fiesta Rancho’s four full-service restaurants have a total of over 700 seats, and include the 24-hour Baja Beach Café (featuring American fare), Garduno’s (a Mexican restaurant), Blue Agave Steakhouse, and Festival Buffet. Fiesta Rancho also offers a variety of fast-food outlets to enhance the customers’ dining selection.

Fiesta Henderson

Fiesta Henderson was purchased in January 2001 and is strategically located at the intersection of Interstate 215 and Interstate 515 in Henderson, Nevada. The property features four full-service restaurants, a gift shop, a swimming pool, three bars and lounges and meeting space.

Fiesta Henderson’s four full-service restaurants have a total of approximately 1,100 seats, and include the 24-hour Baja Beach Café (featuring American and Chinese fare), Fuego Steakhouse, Amigo’s Mexican Cantina and Festival Buffet. Fiesta Henderson was recently expanded; see “Expansion Strategy” for details of the expansion.

Other Properties

Wild Wild West

Wild Wild West, which we acquired in July 1998, is strategically located on Tropicana Avenue and immediately adjacent to Interstate 15. Wild Wild West’s non-gaming amenities include a full-service restaurant, a bar, a gift shop and a truck plaza.

Barley’s & The Greens

Barley’s, which opened in January 1996, is a casino and brew pub located in Henderson, Nevada. We own a 50% interest in Barley’s and are also the managing partner receiving a management fee equal to 2% of revenues and approximately 10% of EBITDA. Barley’s non-gaming amenities include a full-service restaurant, a pizza kitchen and a bar.

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In November 2005, we purchased a 50% interest in The Greens, a restaurant and lounge, located in Henderson, Nevada. We are also the managing partner and receive a management fee equal to 2% of revenues and approximately 10% of EBITDA. The Greens non-gaming amenities include a full-service restaurant and bar.

Wildfire

In January 2003, we purchased Wildfire located on Rancho Drive across from Texas Station. Wildfire’s non-gaming amenities include a lounge, outdoor patio and a full-service restaurant.

Magic Star & Gold Rush

In August 2004, we purchased Magic Star and Gold Rush. Magic Star is located on Boulder Highway in Henderson, Nevada. Gold Rush is located at the intersection of Interstate 515 and Sunset Road, adjacent to Sunset Station in Henderson, Nevada. Both properties offer non-gaming amenities which include a full service restaurant and a bar.

Lake Mead

In September 2006, we purchased Lake Mead located in Henderson, Nevada. Lake Mead’s non-gaming amenities include a full-service restaurant and bar.

Managed Properties

Thunder Valley

We have entered into a Development Services Agreement and a Management Agreement with the UAIC. Our seven-year Management Agreement was approved by the National Indian Gaming Commission (the “NIGC”) and expires in June 2010. Pursuant to those agreements, and in compliance with a Memorandum of Understanding entered into by the UAIC and Placer County, California, we developed, with the UAIC, Thunder Valley, a gaming and entertainment facility located approximately seven miles north of Interstate 80, in Placer County, California, near Sacramento, which opened on June 9, 2003. We receive a management fee equal to 24% of the facility’s net income (as defined in the management agreement). Thunder Valley’s non-gaming amenities include three specialty restaurants, a 500-seat buffet, a food court and a center pit bar.

Expansion Strategy

Selection Criteria

We believe that a highly visible location, convenient access and ample parking are critical factors in attracting local patronage and repeat visitors. Additionally, sites must be large enough to support multi-phased master-planned growth to capitalize on growing demand in incremental stages. We select sites that are located within a dense population base so that the facility cannot be cut-off from its primary market. These sites generally have been adjacent to high-traffic surface streets and interstate highways. We believe that each of our Casino Properties’ locations has provided us with a significant competitive advantage to attract our targeted customer base. In the Las Vegas metropolitan area, as a result of Senate Bill 208, there are a limited number of sites available for development off of “The Strip” or downtown and we control a number of these sites.

Master-Planned Development

Our expansion strategy includes the master-planned expansion of our existing and future gaming locations. In designing project sites, we plan and engineer for multi-phased facility expansions to accommodate future growth and to allow us to develop dominant properties. A project’s master-planned

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design typically allows the option of adding hotel rooms, casino space, parking structures and non-gaming entertainment such as movie theaters, additional restaurants, retail shops and various other entertainment venues.

We continually evaluate the timing and scope of our master-planned developments at each of our properties and may determine from time to time to expand the scope of, improve on or suspend the implementation of our master plans. These decisions are dependent upon the availability of financing, competition and future economic and gaming regulatory environments, many of which are beyond our control. We recently completed portions of phase III master-planned expansions at Green Valley Ranch and Santa Fe Station and phase II master-planned expansions at Red Rock and Fiesta Henderson as well as have a phase III master-planned expansion underway at Red Rock.

In October 2005, we began a $130 million phase III master-planned expansion at Santa Fe Station which included an additional parking garage, a buffet, additional slot machines, a remodeled and expanded race and sports book, a meeting and banquet facility and a new center bar. The entire project included approximately 125,000 square-feet of additional space and was completed during the fourth quarter 2006, with the exception of the center bar which is expected to be completed by the summer of 2007.

In October 2005, we began a $75 million phase II master-planned expansion at Fiesta Henderson which included a parking garage, additional slot machines, a remodeled and expanded race and sports book and a multi-screen movie theater complex. Construction of the project was completed in August 2006, with the exception of the movie theater complex which is expected to be completed in the fall of 2007.

In October 2006, we opened an additional parking garage, a new race and sports book, a new poker room and two new restaurants as part of the $115 million phase III master-planned expansion at Green Valley Ranch. An entertainment lounge is still under construction and is expected to open in the summer of 2007.

In December 2006, we completed phase II master-planned expansion at Red Rock which included an additional hotel tower containing over 400 rooms and an expanded spa area. In August 2006, we began a $60 million to $65 million phase III master-planned expansion of Red Rock, which includes a 72-lane bowling center and an expansion of the west parking garage. Construction of the bowling center is expected to be completed in the second quarter of 2007, while the parking garage expansion is expected to be completed in the third quarter of 2007.

Development and Acquisition Opportunities

We have acquired several parcels of land in the Las Vegas valley, Sacramento, California area near Thunder Valley and Reno, Nevada, which can be used for new casino development or other associated development. In addition, we have an agreement to acquire an additional parcel of land in Reno, Nevada. We also evaluate other development and acquisition opportunities in current and emerging gaming markets, including land-based, dockside, riverboat and Native American gaming. Our decision whether to proceed with any new gaming development or acquisition opportunity is dependent upon future economic and regulatory factors, the availability of financing and competitive and strategic considerations, many of which are beyond our control.

In December 2005, we entered into an agreement with the Greenspun Corporation to develop Aliante Station, a hotel and casino in the Aliante master-planned community located in North Las Vegas, Nevada. We will develop and manage the facility, to be located on a gaming-entitled 40-acre site on the northeast corner of Interstate 215 and Aliante Parkway, which was contributed by the Greenspun Corporation for their 50% ownership in the joint venture. We will receive a management fee equal to 2% of the property’s revenues and approximately 5% of EBITDA. The first phase of Aliante Station is expected to include 200 hotel rooms, approximately 3,000 slot machines, multiple full-service restaurants and a multi-screen movie

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theater complex. Construction on Aliante Station began in February 2007 and is expected to be completed by the end of 2008 at a cost of approximately $650 million to $675 million. Pursuant to the terms of the agreement, in January 2006, we contributed a 54 acre site located on Losee Road in North Las Vegas, Nevada, as well as approximately $2.2 million, for our 50% ownership in the joint venture.

In December 2006, we entered into an amended and restated operating agreement with FBLV Holding Company LLC (“FBLV”). Pursuant to the amended and restated operating agreement, the parties contributed approximately 52 acres (with approximately 20 acres contributed by us for our 50% ownership and approximately 32 acres contributed by FBLV for their 50% ownership) of improved and unimproved real property located along Rancho Road located behind Palace Station in Las Vegas, Nevada into a joint venture. It is anticipated that the joint venture will develop, construct and manage, pursuant to a master development plan, a mixed-use residential, retail and entertainment (excluding non-restricted gaming) project on all or a portion of such property. The timing, cost and scope of the project have yet to be determined.

Native American Development

The Federated Indians of Graton Rancheria

We have entered into Development and Management Agreements with the Federated Indians of Graton Rancheria (the “FIGR”), a federally recognized Native American tribe. Pursuant to those agreements, we will assist the FIGR in developing and operating a gaming and entertainment project to be located in Sonoma County, California. The FIGR selected us to assist them in designing, developing and financing their project and, upon opening; we will manage the facility on behalf of the FIGR. The Management Agreement has a term of seven years from the opening of the facility and we will receive a management fee equal to 24% of the facility’s net income. We will also receive a development fee equal to 2% of the cost of the project upon the opening of the facility.

In August 2003, we entered into an option to purchase 360 acres of land just west of the Rohnert Park city limits in Sonoma County, California. In August 2005, we purchased 180 acres of the optioned property and an additional 90 acres. In March 2006, we purchased an additional 4.7 acres adjacent to the previously acquired property. The property purchased is approximately one-quarter mile from Highway 101 and approximately 43 miles from downtown San Francisco. In October 2003, the FIGR entered into a Memorandum of Understanding with the City of Rohnert Park. Development of the gaming and entertainment project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the United States Department of the Interior (“DOI”) accepting the land into trust on behalf of the FIGR and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. As of December 31, 2006, we have advanced approximately $132.3 million toward the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included on our consolidated balance sheets. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from the FIGR’s gaming revenues. In addition, we have agreed to pay approximately $11.3 million upon achieving certain milestones, which will not be reimbursed. As of December 31, 2006, approximately $2.0 million of these payments had been made and expensed in development expense as incurred. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

Gun Lake Tribe

On November 13, 2003, we agreed to purchase a 50% interest in MPM Enterprises, LLC, a Michigan limited liability company (“MPM”). Concurrently with our agreement to purchase that interest, MPM and the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, a federally recognized Native American

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tribe commonly referred to as the Gun Lake Tribe (“Gun Lake”), entered into amended Development and Management Agreements, pursuant to which MPM agreed to assist Gun Lake in developing and operating a gaming and entertainment project to be located in Allegan County, Michigan. On July 29, 2005, MPM and Gun Lake entered into amended and restated Development and Management Agreements. We have agreed to pay $6.0 million for our 50% interest in MPM, which is payable upon achieving certain milestones and is not reimbursable. As of December 31, 2006, approximately $2.0 million of these payments had been made and expensed in development expense as incurred. An additional $12.0 million in total may be paid by us in years six and seven of the amended and restated Management Agreement, subject to certain contingencies. Under the terms of the amended and restated Development Agreement, we have agreed to arrange financing for the ongoing development costs and construction of the project. As of December 31, 2006, we have advanced approximately $34.0 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is included on our consolidated balance sheets. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from Gun Lake’s gaming revenues. The amended and restated Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 30% of the project’s net income to be paid to MPM. Pursuant to the terms of the MPM Operating Agreement, our portion of the management fee is 50% of the first $24 million of management fees earned, 83% of the next $24 million of management fees and 93% of any management fees in excess of $48 million.

The proposed project will be located on approximately 146 acres on Highway 131 near 129th Avenue, approximately 25 miles north of Kalamazoo, Michigan. As currently contemplated, the project will include up to 2,500 slot machines, 75 table games, a buffet and specialty restaurants. Construction of the project includes the conversion of an existing 192,000 square-foot building into the casino and entertainment facility. Development of the gaming and entertainment project and operation of Class III gaming is subject to certain governmental and regulatory approvals, including, but not limited to, the signing of a gaming compact by the Governor of the State of Michigan, the DOI taking the land into trust on behalf of Gun Lake and approval of the Management Agreement by the NIGC. On February 27, 2004, the DOI issued a Finding Of No Significant Impact with respect to the proposed project. On May 13, 2005, the DOI published in the Federal Register a Notice of Final Agency Determination (the “Determination”) to take certain land into trust for the benefit of Gun Lake. The publication commenced a thirty-day period in which interested parties could seek judicial review of the Determination. On June 13, 2005, Michigan Gambling Opposition filed a complaint (the “Complaint”) in the United States District Court, District of Columbia, seeking declaratory and injunctive relief against the DOI and officials of the DOI. The Complaint seeks judicial review of the Determination. On July 27, 2005, Gun Lake filed a motion to intervene in that lawsuit. On September 1, 2005, the District Court granted Gun Lake’s motion to intervene. On January 6, 2006, Gun Lake filed a motion for judgment on the pleadings or, in the alternative, for summary judgment. Also on January 6, 2006, the DOI filed a motion to dismiss or, in the alternative, for summary judgment. By May 2006, all responsive pleadings had been filed and the case was ready for consideration by the District Court. On October 27, 2006, the Department of Justice filed a Notice with the District Court indicating that the DOI planned to take the 146-acre site into trust on January 5, 2007, if the plaintiffs did not seek injunctive relief or failed to persuade the court to issue any relief precluding the DOI from doing so. The DOI subsequently amended that date to March 5, 2007, in order to provide the Court sufficient time to render its decision. The Court set oral arguments on the parties’ motions to dismiss or, in the alternative, for summary judgment for November 29, 2006. Oral arguments were heard on that date. On February 23, 2007, the District Court issued its decision in favor of the DOI and Gun Lake, finding that there were no facts which would entitle plaintiffs to any relief on the four issues raised in the Complaint, and granted the parties’ motion to dismiss or, in the alternative for summary judgement. As with all litigation, no assurances can be provided as to the outcome of that lawsuit. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The

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timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

Mechoopda Indian Tribe

We have entered into Development and Management Agreements with the Mechoopda Indian Tribe of Chico Rancheria, California (the “MITCR”), a federally recognized Native American tribe. Pursuant to those agreements, we will assist the MITCR in developing and operating a gaming and entertainment facility to be located on approximately 650 acres in Butte County, California, at the intersection of State Route 149 and Highway 99, approximately 10 miles southeast of Chico, California and 80 miles north of Sacramento, California. Under the terms of the Development Agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by us are expected to be repaid from the proceeds of the facility financing or from the MITCR’s gaming revenues. As of December 31, 2006, we have advanced approximately $8.6 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is included on our consolidated balance sheets. In addition, we have agreed to pay approximately $2.2 million of payments upon achieving certain milestones, which will not be reimbursed. As of December 31, 2006, $50,000 of these payments had been made and expensed in development expense as incurred. The Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 24% of the facility’s net income. As currently contemplated, the facility will include approximately 700 slot machines, 12 table games and dining and entertainment amenities. Development of the facility is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the DOI accepting land into trust on behalf of the MITCR and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

North Fork Rancheria of Mono Indian Tribe

We have entered into Development and Management Agreements with the North Fork Rancheria of Mono Indians (the “Mono”), a federally recognized Native American tribe located near Fresno, California. Pursuant to those agreements, we will assist the Mono in developing and operating a gaming and entertainment facility to be located in Madera County, California. We have purchased, for the benefit of the Mono, a 305-acre parcel of land located on Highway 99 north of the city of Madera. Under the terms of the Development Agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from the Mono’s gaming revenues. As of December 31, 2006, we have advanced approximately $6.3 million toward the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included on our consolidated balance sheets. In addition, we have agreed to pay approximately $1.3 million of payments upon achieving certain milestones, which will not be reimbursed and will be expensed as incurred. As of December 31, 2006, none of these payments had been made. The Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 24% of the facility’s net income. As currently contemplated, the facility will include approximately 2,000 slot machines, 60 table games, restaurants, a hotel and entertainment amenities. Development of the gaming and entertainment project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the DOI accepting the land into trust on behalf of the Mono and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict, and is dependant upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

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Employees

As of January 31, 2007, we had approximately 14,600 employees in Nevada, which includes Green Valley Ranch, Barley’s and The Greens. From time to time, certain of our employees are contacted by unions and we engage in discussions with such employees regarding establishment of collective bargaining agreements. While we are faced with such movements by employees from time to time, we do not believe that such movements will have any broad-based impact on our employees; however, there can be no assurances to that effect. Additionally, we believe that we have good relationships with our employees which has been demonstrated by being named one of FORTUNE magazine’s 100 best companies to work for the past three years.

Available Information

We are a reporting company under the Securities Exchange Act of 1934, as amended, and file annual reports, quarterly reports, proxy statements and other documents with the SEC. You may also read and copy any of our filings at the SEC’s public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Because we submit filings to the SEC electronically, access to this information is available at the SEC’s Internet website (www.sec.gov). This site contains reports and other information regarding issuers that file electronically with the SEC. We also make available, free of charge, on our website (www.stationcasinos.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

ITEM 1A. RISK FACTORS

Failure to complete the Merger would likely have an adverse effect on us. 

There can be no assurance that our stockholders will approve the Merger Agreement or that the other conditions to the completion of the Merger will be satisfied. In connection with the Merger, we are subject to several risks, including the following:

·On December 1, 2006, the last trading day prior to the announcement of management’s proposal of the Merger, our common stock closed at $69.10 per share. After that announcement, the stock price rose to trade at $84.90, exceeding the $82 per share proposal price. Since the Merger Agreement was signed on February 23, 2007, our common stock has traded between $86 and $87 per share. The current price of our common stock may reflect a market assumption that the Merger will close. If the Merger is not consummated, the stock price would likely retreat from its current trading range.

·Certain costs relating to the Merger, including legal, accounting and financial advisory fees, are payable by us whether or not the Merger is completed.

·Under circumstances set out in the Merger Agreement, upon termination under specified circumstances related to a competing acquisition proposal, we may be required to pay FCP a termination fee of $160 million, except in the case of a termination resulting from a superior proposal received within 30 business days following the execution of the Merger Agreement, in which case the termination fee payable to FCP will be $106 million.

·If our stockholders do not approve the Merger under certain circumstances, we must reimburse FCP for reasonable out-of-pocket fees and expenses (including reasonable legal fees and expenses) incurred by FCP and its affiliates in connection with the transactions contemplated by the Merger Agreement, which will be credited against the termination fee if it becomes payable. 

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·Our management’s and our employees’ attention will have been diverted from our day-to-day operations, we may experience unusually high employee attrition and our business and customer relationships may be disrupted.

·Current and prospective employees may experience uncertainty about their future as employees of Station if the Merger fails to be consummated. This may adversely affect our ability to attract and retain, and may affect the performance during the transition period of, key management, sales, marketing and technical personnel.

·Any delay in the consummation of the Merger or any uncertainty about the consummation of the Merger may adversely affect our future businesses, growth, revenue and results of operations.

Speculation about the Merger could have an adverse effect on us, such as a downgrade of the ratings of our debt securities and that downgrade could be significant.

In response to the December 4, 2006 announcement of the proposal to acquire all of our outstanding common stock, Moody’s Investor Services placed both our long-term and short-term debt ratings under review for possible downgrade. Standard & Poor’s put our long-term and short-term debt ratings on credit watch with negative implications. Additionally, speculation about the Merger could have other adverse effects.

We face substantial competition in the gaming industry.

Our Nevada casino properties face competition from all other casinos and hotels in the Las Vegas area, including to some degree, from each other. In addition, our casino properties face competition from all smaller non-restricted gaming locations and restricted gaming locations (locations with 15 or fewer slot machines) in the greater Las Vegas area. As of December 31, 2006, there were over 1,400 restricted gaming locations with over 15,000 slot machines. We compete with other hotel/casinos and restricted gaming locations by focusing on repeat customers and attracting these customers through innovative marketing programs. Our value-oriented, high-quality approach is designed to generate repeat business. Additionally, our casino properties are strategically located and designed to permit convenient access and ample parking, which are critical factors in attracting local visitors and repeat patrons. Currently, there are approximately 35 major gaming properties located on or near the Las Vegas Strip, 14 located in the downtown area and several located in other areas of Las Vegas. Major additions, expansions or enhancements of existing properties or the construction of new properties by competitors, could also have a material adverse effect on the business of our casino properties. While past additions to capacity have had little, if any, impact on our casino properties’ hotel occupancy or casino volume to date, there can be no assurance that hotel occupancy or casino volume will not be adversely affected in the future.

Our Nevada casino properties also face competition from 86 non-restricted gaming locations in the Las Vegas area primarily targeted to the local and the repeat visitor markets. Some of these competitors have completed expansions and existing competitors and new entrants into these markets are in the planning stages or under construction on other projects. Although we have competed strongly in these marketplaces, there can be no assurance that additional capacity will not have a negative impact on our business.

In 1997, the Nevada legislature enacted Senate Bill 208. This legislation identified certain gaming enterprise districts wherein casino gaming development would be permitted throughout the Las Vegas valley and established more restrictive criteria for the establishment of new gaming enterprise districts. We believe the growth in gaming supply in the Las Vegas locals’ market has been, and will continue to be, limited by the provisions of Senate Bill 208.

To a lesser extent, our Nevada operations compete with gaming operations in other parts of the state of Nevada, such as Reno, Laughlin and Lake Tahoe, riverboat gaming markets in the Midwest and South,

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facilities in Atlantic City, New Jersey, casinos located on Native American land and in other parts of the world, with state-sponsored lotteries, on-and-off-track pari-mutuel wagering, card rooms and other forms of legalized gambling.

Native American gaming in California, as it currently exists, has had little, if any impact on our Nevada operations to date, although there are no assurances as to future impact. 61 Native American tribes entered into Tribal-State Gaming Compacts (“Compacts”) with the State of California in 1999 and 2000 that are currently in effect. Each of these Native American tribes may operate up to two gaming facilities. Seven of these Native American tribes are presently not operating a casino. During 2003 through 2005, nine Native American tribes entered into new Compacts with the State of California, of which five Compacts have been ratified by the California Legislature and are currently in effect. Three of these nine Native American tribes may operate two gaming facilities and the remaining six Native American tribes may operate one gaming facility, respectively; however, only two of these Native American tribes are presently operating casinos. Currently there are 56 Native American casinos in operation in the State of California. These Native American tribes are allowed to operate slot machines, lottery games, and banking and percentage games (including “21”) on Native American lands. Additionally, during 2004 through 2006, twelve tribes with existing casinos re-negotiated their compacts, of which five have been ratified by the California Legislature and are currently in effect. These re-negotiated compacts allow for the expansion of the respective tribe’s current facilities. It is not certain how this or any expansion of Native American gaming in California will affect our Nevada operations given that visitors from California make up Nevada’s largest visitor market. Moreover, it is uncertain how soon expansion will affect our interests in Native American gaming in California. Increased competition from Native American gaming may result in a decline in our revenues and may have a material adverse effect on our business.

The gaming industry also includes land-based casinos, dockside casinos, riverboat casinos, racetracks with slots, casinos located on Native American land and other forms of legalized gaming. There is intense competition among companies in the gaming industry, some of which have significantly greater resources than we do. Several states are currently considering legalizing casino gaming in designated areas. Legalized casino gaming in such states and on Native American land will provide strong competition to us and could adversely affect our operations, particularly to the extent that such gaming is conducted in areas close to our operations.

Certain construction risks may arise during the building of any new property.

We are currently expanding Red Rock, Santa Fe Station, Fiesta Henderson and Green Valley Ranch and providing or may have to provide, as the case may be, funding for the construction of Aliante Station and gaming facilities for the Federated Indians of Graton Rancheria, the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, the Mechoopda Indian Tribe of Chico Rancheria, California and the North Fork Rancheria of Mono Indians (collectively the “Native American Tribes”). We evaluate expansion opportunities as they become available, and we may in the future develop projects in addition to the above listed projects.

Construction projects, such as those mentioned above and the proposed gaming facilities for the Native American Tribes entail significant risks, including the following:

·shortages of material or skilled labor;

·unforeseen engineering, environmental or geological problems;

·work stoppages;

·weather interference;

·floods; and

·unanticipated cost increases;

any of which can give rise to delays or cost overruns.

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The anticipated costs and construction periods are based upon budgets, conceptual design documents and construction schedule estimates prepared by us in consultation with our architects and contractors. Construction, equipment, staffing requirements, problems or difficulties in obtaining any of the requisite licenses, permits, allocations or authorizations from regulatory authorities can increase the cost or delay the construction or opening of each of the proposed facilities or otherwise affect the project’s planned design and features. We cannot be sure that we will not exceed the budgeted costs of these projects or that the projects will commence operations within the contemplated time frame, if at all. Budget overruns and delays with respect to expansion and development projects could have a material adverse impact on our results of operations.

We may experience difficulty integrating operations of our acquired companies and developed properties and managing our overall growth which could have a material adverse effect on our operating results.

We may not be able to manage the combined operations of Station Casinos, Inc., including, the projects with the Native American Tribes and Aliante Station and future acquired companies or acquired or developed properties effectively, or realize any of the anticipated benefits of the acquisitions, including streamlining operations or gaining efficiencies from the elimination of duplicative functions. The integration of other companies as assets will require continued dedication of management resources and may temporarily detract attention from our day-to-day business.

In addition, because we plan to continue to pursue expansion and acquisition opportunities, we face significant challenges not only in managing and integrating the projects with the Native American Tribes and Aliante Station, but also managing our expansion projects and any other gaming operations we may acquire in the future. Management of these new projects will require increased managerial resources, and we intend to continue our efforts to enhance our gaming management team. However, there can be no assurances that we will succeed in doing so. Failure to manage our growth effectively could have a material adverse effect on our operating results.

We rely on key personnel, the loss of the services of whom could materially and adversely affect our results of operations.

Our ability to operate successfully and competitively is dependent, in part, upon the continued services of certain of our officers and key employees. In the event that these officers and/or employees were to leave us, we might not be able to find suitable replacements. We believe that the loss of the services of these officers and/or employees could have a material adverse effect on our results of operations.

We regularly pursue new gaming acquisition and development opportunities and may not be able to recover our investment or successfully expand to additional locations.

We regularly evaluate and pursue new gaming acquisition and development opportunities in existing and emerging jurisdictions. These opportunities have in the past, and may in the future, take the form of joint ventures. To the extent that we decide to pursue any new gaming acquisition or development opportunities, our ability to benefit from such investments will depend upon a number of factors including:

·our ability to identify and acquire attractive acquisition opportunities and development sites;

·our ability to secure required federal, state and local licenses, permits and approvals, which in some jurisdictions are limited in number;

·certain political factors;

·the availability of adequate financing on acceptable terms (including waivers of restrictions in existing credit arrangements); and

·our ability to identify and develop satisfactory relationships with joint venture partners.

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Most of these factors are beyond our control. Therefore, we cannot be sure that we will be able to recover our investment in any new gaming development opportunities or acquired facilities, or successfully expand to additional locations.

We have invested, and will likely continue to invest, in real property in connection with the pursuit of expansion opportunities. These investments are subject to the risks generally incident to the ownership of real property, including:

·changes in economic conditions;

·environmental risks;

·governmental rules and fiscal policies; and

·other circumstances over which we may have little or no control.

The development of such properties is also subject to restrictions under our revolving credit facility. We cannot be sure that we will be able to recover our investment in any such properties or be able to prevent incurring investment losses.

We are subject to extensive state and local regulation and licensing and gaming authorities have significant control over our operations which could have an adverse effect on our business.

Nevada Gaming Regulations

The ownership and operation of casino gaming facilities and the manufacture and distribution of gaming devices in Nevada are subject to: (i) the Nevada Gaming Control Act and the rules and regulations promulgated thereunder (collectively, the “Nevada Act”); and (ii) various local ordinances and regulations. Our gaming operations in Nevada are subject to the licensing and regulatory control of the Nevada Gaming Commission (the “Nevada Commission”), the Nevada State Gaming Control Board (the “Nevada Board”), the City of Las Vegas, the Clark County Liquor and Gaming Licensing Board (the “Clark County Board”), the City of North Las Vegas, the City of Henderson and certain other local regulatory agencies. The Nevada Commission, Nevada Board, City of Las Vegas, Clark County Board, City of North Las Vegas, City of Henderson, and certain other local regulatory agencies are collectively referred to as the “Nevada Gaming Authorities”.

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal controls and the safeguarding of assets and revenues, providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) providing a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on our gaming operations.

Our direct and indirect subsidiaries that conduct gaming operations in Nevada are required to be licensed by the Nevada Gaming Authorities. The gaming licenses require the periodic payment of fees and taxes and are not transferable. Palace Station Hotel & Casino, Inc. (“PSHC”), Boulder Station, Inc. (“BSI”), Texas Station, LLC (“TSL”), Sunset Station, Inc. (“SSI”), Tropicana Station, Inc. (“TRSI”), Santa Fe Station, Inc. (“SFSI”), Charleston Station, LLC. (“CSL”), Fiesta Station, Inc. (“FSI”), Rancho Station, LLC (“RSL”), Lake Mead Station, Inc. (“LMSI”), Gold Rush Station, LLC (“GRS”), Magic Star Station, LLC (“MSS”) and LML Station, LLC (“LML”) have received licenses to conduct non-restricted gaming operations. In addition, Green Valley Ranch Gaming, LLC (“GVRG”) has received licenses to conduct non-restricted gaming operations at Green Valley Ranch Resort Spa Casino. Our ownership in

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GVRG is held through an intermediary company known as GV Ranch Station, Inc. (“GVRS”), which is licensed as a member and manager of GVRG. Town Center Amusements, Inc. (“TCAI”) has been licensed to conduct non-restricted gaming operations at Barley’s Casino & Brewing Company (“Barley’s”), a micro brewery and casino located in Henderson, Nevada and Greens Café, LLC (“GC’) has been licensed to conduct nonrestricted gaming operations at The Greens, a restaurant and bar located in Henderson. Station Casinos’ ownership in TCAI and GC is held through an intermediary company known as Green Valley Station, Inc. (“GVSI”), which is licensed as a member and manager of TCAI and GC. We also own a minority interest in Fiesta Palms, LLC, d.b.a. Palms Casino Resort, which we hold through our subsidiary, Palms Station, LLC (“PSL”). Station Casinos is registered by the Nevada Commission as a publicly traded corporation (a “Registered Corporation”) and has been found suitable to own the stock of PSHC, BSI, TSL, SSI, TRSI, GVSI, SFSI, CSL, GVRS, FSI, RSL, LMSI, GRS, MSS and LML. We are also licensed as a manufacturer and distributor of gaming devices. PSHC, BSI, SSI, TRSI, GVSI, SFSI, CSL, GVRG, FSI and LMSI are each a corporate gaming licensee and TCAI, TSL, GVRG, RSL, GRS, MSS, GC, PSL and LML are each a limited liability company licensee (individually a “Gaming Subsidiary” and collectively the “Gaming Subsidiaries”) under the terms of the Nevada Act. As a Registered Corporation, Station Casinos is required periodically to submit detailed financial and operating reports to the Nevada Commission and the Nevada Board and furnish any other information, which the Nevada Commission or the Nevada Board may require. No person may become a stockholder or holder of an interest of, or receive any percentage of profits from the Gaming Subsidiaries without first obtaining licenses and approvals from the Nevada Gaming Authorities. Station Casinos and the Gaming Subsidiaries have obtained from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses (individually, a “Gaming License” and collectively, the “Gaming Licenses”) required in order to engage in gaming activities in Nevada.

The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, a Registered Corporation, such as Station or the Gaming Subsidiaries, which hold licenses, in order to determine whether such individual is suitable or should be licensed as a business associate of a Registered Corporation or a gaming licensee. Officers, directors and certain key employees of the Gaming Subsidiaries must file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. Our officers, directors and key employees who are actively and directly involved in gaming activities of the Gaming Subsidiaries may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause, which they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in corporate position.

If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue to have a relationship with Station or the Gaming Subsidiaries, the companies involved would have to sever all relationships with such person. In addition, the Nevada Commission may require Station or the Gaming Subsidiaries to terminate the employment of any person who refuses to file the appropriate applications. Determinations of suitability or questions pertaining to licensing are not subject to judicial review in Nevada.

Station and the Gaming Subsidiaries are required to submit detailed financial and operating reports to the Nevada Commission. Substantially all material loans, leases, sales of securities and similar financing transactions by us and our Gaming Subsidiaries must be reported to or approved by the Nevada Commission and/or the Nevada Board.

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If it were determined that the Nevada Act was violated by a Gaming Subsidiary, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, Station, the Gaming Subsidiaries and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Red Rock, Green Valley Ranch, Fiesta Rancho, Fiesta Henderson, Wild Wild West, Wildfire, Barley’s, Gold Rush, Magic Star, The Greens and Lake Mead and, under certain circumstances, earnings generated during the supervisor’s appointment (except for the reasonable rental value of the premises) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of the Gaming Licenses of the Gaming Subsidiaries or the appointment of a supervisor could (and revocation of any Gaming License would) have a material adverse affect on our gaming operations.

Any beneficial owner of our voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and have their suitability as a beneficial owner of our voting securities determined if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the state of Nevada. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.

The Nevada Act provides that persons who acquire beneficial ownership of more than 5% of the voting securities of a Registered Corporation must report the acquisition to the Nevada Commission. The Nevada Act also requires that beneficial owners of more than 10% of the voting securities of a Registered Corporation must apply to the Nevada Commission for a finding of suitability within thirty days after the Chairman of the Nevada Board mails the written notice requiring such filing. An “institutional investor,” as defined in the Nevada Commission’s regulations, which acquires beneficial ownership of more than 10%, but not more than 15% of our voting securities may apply to the Nevada Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor that has obtained a waiver may, in certain circumstances, hold up to 19% of our voting securities and maintain its waiver for a limited period of time. An institutional investor shall not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of our Board of Directors, any change in our corporate charter, bylaws, management policies or our operations, or any of our gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding our voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in our management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information including a list of beneficial owners. The applicant is required to pay all costs of the investigation.

Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Commission or the Chairman of the Nevada Board may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder who is found unsuitable and who holds, directly or indirectly, any beneficial ownership of the common stock of a Registered Corporation beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. We are subject to disciplinary action if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us or our Gaming Subsidiaries, we (i) pay that person any dividend or

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interest upon our voting securities, (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pay remuneration in any form to that person for services rendered or otherwise, or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities including, if necessary, the immediate purchase of said voting securities for cash at fair market value. Additionally, the Clark County Board has the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming licensee.

The Nevada Commission may, in its discretion, require the holder of any debt security of a Registered Corporation to file applications, be investigated and be found suitable to own the debt security of a Registered Corporation if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the Nevada Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Registered Corporation can be sanctioned, including the loss of its approvals, if without the prior approval of the Nevada Commission, it: (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by such unsuitable person in connection with such securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.

We are required to maintain a current stock ledger in Nevada, which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. Failure to make such disclosure may be grounds for finding the record holder unsuitable. We are also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require our stock certificates to bear a legend indicating that the securities are subject to the Nevada Act. However, to date, the Nevada Commission has not imposed such a requirement on us.

We may not make a public offering of our securities without the prior approval of the Nevada Commission if the securities or proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. On May 19, 2005, the Nevada Commission granted us prior approval to make public offerings for a period of two years, subject to certain conditions (“Shelf Approval”). The Shelf Approval may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board and must be renewed at the end of the two-year approval period. The Shelf Approval also applies to any affiliated company wholly owned by Station (an “Affiliate”), which is a publicly traded corporation or would thereby become a publicly traded corporation pursuant to a public offering. The Shelf Approval includes approval for us to place restrictions upon the transfer of, and to enter into agreements not to encumber the equity securities of the Gaming Subsidiaries, as applicable, in conjunction with public offerings made under the Shelf Approval, and also includes approval for the Gaming Subsidiaries to guarantee any security issued by, or to hypothecate their assets to secure the payment or performance of any obligations evidenced by a security issued by, Station or an Affiliate in a public offering under the Shelf Approval. The Shelf Approval does not constitute a finding, recommendation or approval by the Nevada Commission or the Nevada Board as to the accuracy or adequacy of the prospectus or the investment merits of the securities offered. Any representation to the contrary is unlawful. On December 12, 2006, we filed the requisite applications seeking approval for a new Shelf Approval.

Changes in control of the Company through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or any act or conduct by a person whereby such person obtains control, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control of a Registered Corporation must satisfy the Nevada Board and the Nevada Commission that they meet a variety of stringent standards prior to assuming control of such Registered Corporation. The Nevada Commission may also require controlling stockholders, officers, directors and other persons having

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a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada corporate gaming licensees, and Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada’s gaming industry and to further Nevada’s policy to: (i) assure the financial stability of corporate gaming licensees and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Commission before a Registered Corporation can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of re-capitalization proposed by the Registered Corporation’s Board of Directors in response to a tender offer made directly to the Registered Corporation’s stockholders for the purpose of acquiring control of the Registered Corporation.

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the Nevada licensee’s respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid by casino operations where entertainment is furnished in connection with admission charges, the serving or selling of food or refreshments or the selling of any merchandise. Nevada licensees that hold a license as an operator of a slot route, or manufacturer’s or distributor’s license also pay certain fees and taxes to the state of Nevada.

Any person who is licensed, required to be licensed, registered, required to be registered, or is under common control with such persons (collectively, “Licensees”), and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation by the Nevada Board of their participation in such foreign gaming. The revolving fund is subject to increase or decrease at the discretion of the Nevada Commission. Thereafter, licensees are required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are also subject to disciplinary action by the Nevada Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities or enter into associations that are harmful to the state of Nevada or its ability to collect gaming taxes and fees, or employ, contract with or associate with a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the grounds of unsuitability or whom a court in the state of Nevada has found guilty of cheating. The loss or restriction of our gaming licenses in Nevada would have a material adverse effect on our business and could require us to cease gaming operations in Nevada.

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Nevada Liquor Regulations

The sale of alcoholic beverages at Palace Station, Wildfire and Santa Fe Station is subject to licensing control and regulation by the City of Las Vegas. Red Rock, Boulder Station and Wild Wild West are subject to liquor licensing control and regulation by the Clark County Board. Texas Station and Fiesta Rancho are subject to liquor licensing control and regulation by the City of North Las Vegas. Sunset Station, Green Valley Ranch, Fiesta Henderson, Barley’s, Gold Rush, Magic Star, The Greens and Lake Mead are subject to liquor licensing control and regulation by the City of Henderson. All liquor licenses are revocable and are not transferable. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action could (and revocation would) have a material adverse effect on the operations of the Gaming Subsidiaries.

We are subject to Native American gaming regulations which could have an adverse effect on our business.

The terms and conditions of management contracts and the operation of casinos and all gaming on land held in trust for Native American tribes in the United States are subject to the Indian Gaming Regulatory Act of 1988 (“IGRA”), which is administered by the National Indian Gaming Commission (“NIGC”) and the gaming regulatory agencies of tribal governments. IGRA is subject to interpretation by the NIGC and may be subject to judicial and legislative clarification or amendment.

IGRA established three separate classes of tribal gaming-Class I, Class II and Class III. Class I includes all traditional or social games solely for prizes of minimal value played by a tribe in connection with celebrations or ceremonies. Class II gaming includes games such as bingo, pull-tabs, punchboards, instant bingo and non-banked card games (those that are not played against the house), such as poker. Class III gaming is casino-style gaming and includes banked table games such as blackjack, craps and roulette, and gaming machines such as slots, video poker, lotteries and pari-mutuel wagering. Thunder Valley may provide Class II gaming and, as limited by the tribal-state compact, Class III gaming.

IGRA requires NIGC approval of management contracts for Class II and Class III gaming as well as the review of all agreements collateral to the management contracts. The management agreement relating to our management of the casino owned by the UAIC was approved by the NIGC with respect to Thunder Valley in December 2002. The NIGC will not approve a management contract if a director or a 10% shareholder of the management company: (i) is an elected member of the governing body of the Native American tribe which is the party to the management contract; (ii) has been or subsequently is convicted of a felony or gaming offense; (iii) has knowingly and willfully provided materially important false information to the NIGC or the tribe; (iv) has refused to respond to questions from the NIGC; or (v) is a person whose prior history, reputation and associations pose a threat to the public interest or to effective gaming regulation and control, or create or enhance the chance of unsuitable activities in gaming or the business and financial arrangements incidental thereto. In addition, the NIGC will not approve a management contract if the management company or any of its agents have attempted to unduly influence any decision or process of tribal government relating to gaming, or if the management company has materially breached the terms of the management contract or the tribe’s gaming ordinance or resolution, or a trustee, exercising the skill due diligence that a trustee is commonly held to, would not approve the management contract. A management contract can be approved only after the NIGC determines that the contract provides, among other things, for: (i) adequate accounting procedures and verifiable financial reports, which must be furnished to the tribe; (ii) tribal access to the daily operations of the gaming enterprise, including the right to verify daily gross revenues and income; (iii) minimum guaranteed payments to the tribe, which must have priority over the retirement of development and construction costs; (iv) a ceiling on the repayment of such development and construction costs and (v) a contract term not exceeding five years and a management fee not exceeding 30% of net revenues (as determined by the NIGC); provided that the NIGC may approve up to a seven year term and a management fee not to exceed 40% of net revenues if the NIGC is satisfied that the capital investment required, and the income projections for the particular gaming activity require the larger fee and longer term. There is no periodic or ongoing review of approved contracts by the NIGC. The only post-approval action that could result in

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possible modification or cancellation of a contract would be as the result of an enforcement action taken by the NIGC based on a violation of the law or an issue affecting suitability.

IGRA prohibits all forms of Class III gaming unless the tribe has entered into a written agreement with the state that specifically authorizes the types of Class III gaming the tribe may offer (a “tribal-state compact”). These tribal-state compacts provide, among other things, the manner and extent to which each state will conduct background investigations and certify the suitability of the manager, its officers, directors, and key employees to conduct gaming on Native American lands. We have been licensed by the UAIC’s tribal gaming agency to manage Thunder Valley.

Title 25, Section 81 of the United States Code states that “no agreement shall be made by any person with any tribe of Indians, or individual Indians not citizens of the United States, for the payment or delivery of any money or other thing of value... in consideration of services for said Indians relative to their lands... unless such contract or agreement be executed and approved” by the Secretary or his or her designee. An agreement or contract for services relative to Native American lands which fails to conform with the requirements of Section 81 is void and unenforceable. All money or other things of value paid to any person by any Native American or tribe for or on his or their behalf, on account of such services, in excess of any amount approved by the Secretary or his or her authorized representative will be subject to forfeiture. We believe that we have complied with the requirements of Section 81 with respect to our management contract for Thunder Valley and intend to comply with Section 81 with respect to any other contract to manage casinos located on Native American land in the United States.

Native American tribes are sovereign nations with their own governmental systems, which have primary regulatory authority over gaming on land within the tribes’ jurisdiction. Therefore, persons engaged in gaming activities, including Station, are subject to the provisions of tribal ordinances and regulations on gaming. These ordinances are subject to review by the NIGC under certain standards established by IGRA. The NIGC may determine that some or all of the ordinances require amendment, and those additional requirements, including additional licensing requirements, may be imposed on us. We have received no such notification regarding Thunder Valley. The possessions of valid licenses from the UAIC are ongoing conditions of our management agreement with that tribe.

Several bills have been introduced in Congress that would amend IGRA. While there have been a number of technical amendments to IGRA, to date there have been no material changes. Any amendment of IGRA could change the governmental structure and requirements within which Thunder Valley could conduct gaming, and may have an adverse effect on our results of operations or impose additional regulatory or operational burdens.

California Gaming Regulations

In California, licensing and registration requirements for tribal financing sources are governed by the compact, amended compact and by regulations adopted by the California Gambling Control Commission and the Tribal Gaming Agency (the “TGA”).

The UAIC’s compact was set to expire on December 31, 2020. The Amended Compact extended the term until December 31, 2030. UAIC’s compact and amended compact require that any person who directly or indirectly extend financing to the UAIC’s gaming facility or gaming operation must be licensed as a “financial source” by the TGA. However, as permitted by the compact and amended compact, the TGA has the discretion to exempt federally and state regulated banks, savings and loan associations and other federal and state regulated lending institutions, entities identified by Regulation CGCC-2, subdivision (f) of the California Gambling Control Commission, as well as persons who hold less than 10% of notes issued by the UAIC or a related entity. The Amended Compact further specifies that entities identified by Regulation CGCC-2, subdivision (h) of the California Gambling Control Commission, and persons or entities whose sole connection with extending financing to the UAIC is to provide loan brokerage or debt servicing for a financial source at no cost to the UAIC or the Gaming Operation are not considered financial sources. For an applicant who is a non-exempted business entity, these licensing provisions also apply to the entity’s officers, directors, principal management employees, owners (if an unincorporated entity), partners and greater than 10% shareholders. Under the compact and amended

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compact, a permanent license cannot be issued unless the TGA has conducted an investigation as to the suitability of the applicant. Any application for a gaming license may be denied, and any license issued may be revoked, if the TGA determines the applicant to be unsuitable or otherwise unqualified for a gaming license. Each license is subject to review for compliance at least every two years.

Prior to receiving a license, an applicant must apply to the California Gambling Control Commission for a determination of suitability. The California Department of Justice, Division of Gambling Control will then conduct an investigation of the applicant following the guidelines set forth in the California Gambling Control Act and will provide its suitability recommendation to the California Gambling Control Commission. If the TGA receives notice that the Commission has determined that a person is unsuitable, the compact requires that the TGA revoke any license it has issued to such person.

The compact and amended compact state that any agreement between the UAIC and a financial source terminates upon revocation or non-renewal of the financial source’s license because of a determination of unsuitability by the California Gambling Control Commission. Upon such a termination, UAIC’s only liability is for a bona fide repayment of all outstanding sums (exclusive of interest) owed as of the termination date, exclusive of unpaid accrued interest.

Further, the UAIC is not permitted to enter into, or continue to make payments under, any financing agreement with anyone whose application to the California Gambling Control Commission for a determination of suitability has been denied or has expired without renewal. Station California, LLC, our wholly owned subsidiary, has been found suitable as a Gaming Resource Supplier and Financial Source by the California Gambling Control Commission. This finding of suitability is subject to review for compliance annually.

General Gaming Regulations in Other Jurisdictions

If we become involved in gaming operations in any other jurisdictions, such gaming operations will subject us and certain of our officers, directors, key employees, stockholders and other affiliates (“Regulated Persons”) to strict legal and regulatory requirements, including mandatory licensing and approval requirements, suitability requirements, and ongoing regulatory oversight with respect to such gaming operations. Such legal and regulatory requirements and oversight will be administered and exercised by the relevant regulatory agency or agencies in each jurisdiction (the “Regulatory Authorities”). We and the Regulated Persons will need to satisfy the licensing, approval and suitability requirements of each jurisdiction in which we seek to become involved in gaming operations. These requirements vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. In general, the procedures for gaming licensing, approval and finding of suitability require Station and each Regulated Person to submit detailed personal history information and financial information to demonstrate that the proposed gaming operation has adequate financial resources generated from suitable sources and adequate procedures to comply with the operating controls and requirements imposed by law and regulation in each jurisdiction, followed by a thorough investigation by such Regulatory Authorities. In general, Station and each Regulated Person must pay the costs of such investigation. An application for any gaming license, approval or finding of suitability may be denied for any cause that the Regulatory Authorities deem reasonable. Once obtained, licenses and approvals may be subject to periodic renewal and generally are not transferable. The Regulatory Authorities may at any time revoke, suspend, condition, limit or restrict a license, approval or finding of suitability for any cause that they deem reasonable. Fines for violations may be levied against the holder of a license or approval and in certain jurisdictions, gaming operation revenues can be forfeited to the state under certain circumstances. There can be no assurance that we will obtain all of the necessary licenses, approvals and findings of suitability or that our officers, directors, key employees, other affiliates and certain other stockholders will satisfy the suitability requirements in one or more jurisdictions, or that such licenses, approvals and findings of suitability, if obtained, will not be revoked, limited, suspended or not renewed in the future.

Failure by us to obtain, or the loss or suspension of, any necessary licenses, approval or findings of suitability would prevent us from conducting gaming operations in such jurisdiction and possibly in other

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jurisdictions. We may be required to submit detailed financial and operating reports to Regulatory Authorities.

Factors affecting the economy and consumer confidence may harm our operating results.

Our properties draw a substantial number of customers from the Las Vegas valley, as well as certain geographic areas, including Southern California, Arizona and Utah. Adverse economic conditions in any of these regions could have a significant adverse effect on our business, financial condition and results of operations. Since all of our properties are located in the Las Vegas valley or Northern California, any terrorist activities or disasters in or around Southern Nevada or Northern California could have a significant adverse effect on our business, financial condition and results of operations.

Our properties use significant amounts of electricity, natural gas and other forms of energy. While no shortages of energy have been experienced, the substantial increases in the cost of electricity, natural gas and gasoline in the United States may negatively affect our operating results. In addition, energy price increases in the regions that constitute a significant source of customers for our properties could result in a decline in disposable income of potential customers and a corresponding decrease in visitation and spending at our properties, which could negatively impact revenues.

We depend on key markets and may not be able to continue to attract a sufficient number of guests and gaming customers in Nevada to make our operations profitable.

Our operating strategies emphasize attracting and retaining customers from the Las Vegas local and repeat visitor market. All of our owned casino properties are dependent upon attracting Las Vegas residents. We cannot be sure that we will be able to continue to attract a sufficient number of guests, gaming customers and other visitors in Nevada to make our operations profitable. In addition, our operating strategy, including the master-planning of our casinos for future expansion, has been developed, in part, based on expected population growth in Las Vegas. There can be no assurance that growth will continue in Las Vegas or that we will be able to successfully adapt to any downturn.

We may incur losses that are not adequately covered by insurance which may harm our results of operations.

Although we maintain insurance customary and appropriate for our business, we cannot assure you that insurance will be available or adequate to cover all loss and damage to which our business or our assets might be subjected. The lack of adequate insurance for certain types or levels of risk could expose us to significant losses in the event that a catastrophe occurred for which we are underinsured. Any losses we incur that are not adequately covered by insurance may decrease our future operating income, require us to find replacements or repairs for destroyed property and reduce the funds available for payments of our obligations.

Factors affecting tax laws could have an adverse effect on our business.

The gaming industry represents a significant source of tax revenue, particularly to the State of Nevada and its counties and municipalities. From time to time, various state and federal legislators and officials have proposed changes in tax law, or in the administration of such law, affecting the gaming industry. The Nevada Legislature is presently in session and there is currently no proposed legislation to raise gaming taxes.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Substantially all of the property that we own and lease is subject to a lien to secure borrowings under our Revolving Facility.

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Palace Station is situated on approximately 30 acres that we own located on the west side of Las Vegas, Nevada.

Boulder Station is situated on approximately 54 acres located on the east side of Las Vegas, Nevada. We own 27 acres and lease the remaining 27 acres from KB Enterprises, a company owned by Frank J. Fertitta, Jr. and Victoria K. Fertitta (the “Related Lessor”), the parents of Frank J. Fertitta III, Chairman of the Board and Chief Executive Officer of Station and Lorenzo J. Fertitta, Vice Chairman and President of Station. The lease has a maximum term of 65 years, ending in June 2058. The lease provides for monthly payments of $183,333 through June 2008. In July 2008, and every ten years thereafter, the rent will be adjusted by a cost of living factor. In July 2013, and every ten years thereafter, the rent will be adjusted to the product of the fair market value of the land and the greater of (i) the then prevailing annual rate of return for comparably situated property or (ii) 8% per year. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, we have an option, exercisable at five-year intervals with the next option in June 2008, to purchase the land at fair market value. We believe that the terms of the ground lease are as fair to us as could be obtained from an independent third party.

Texas Station is situated on approximately 47 acres located in North Las Vegas, Nevada. We lease this land from Texas Gambling Hall & Hotel, Inc., a company owned by the Related Lessor. The lease has a maximum term of 65 years, ending in July 2060. The lease provides for monthly rental payments of $337,417 through June 2010. In July 2010, and every ten years thereafter, the rent will be adjusted to the product of the fair market value of the land and the greater of (i) the then prevailing annual rate of return being realized for owners of comparable land in Clark County or (ii) 8% per year. In July 2015, and every ten years thereafter, the rent will be adjusted by a cost of living factor. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, we have an option, exercisable at five-year intervals with the next option in May 2010, to purchase the land at fair market value. We believe that the terms of the ground lease are as fair to us as could be obtained from an independent third party.

Sunset Station is situated on approximately 82 acres that we own located in Henderson, Nevada.

Santa Fe Station is situated on approximately 38 acres that we own located on the northwest side of Las Vegas, Nevada.

Red Rock is situated on approximately 68 acres that we own located on the northwest side of Las Vegas, Nevada.

Green Valley Ranch, a 50% owned joint venture, is situated on approximately 40 acres in Henderson, Nevada that is owned by the joint venture.

Fiesta Rancho is situated on approximately 25 acres that we own in North Las Vegas, Nevada.

Fiesta Henderson is situated on approximately 46 acres that we own in Henderson, Nevada.

We also have acquired or are under contract to acquire approximately 69 acres of land on which Wild Wild West is located and the surrounding area of which, approximately 50 acres have been acquired as of December 31, 2006. In 2003, we exercised our option to purchase the 19-acre parcel of leased land on which Wild Wild West is located which was to occur in July 2005 at a purchase price of  approximately $36 million. We have extended the date for the close of escrow to no later than January 2009.

We currently own or lease six sites, which have been acquired for potential gaming projects, consisting of 220 acres in the Las Vegas valley, 188 acres in Sacramento, California near Thunder Valley and 112 acres in Reno, Nevada.

ITEM 3. LEGAL PROCEEDINGS

Station and our subsidiaries are defendants in various lawsuits relating to routine matters incidental to our business. As with all litigation, no assurance can be provided as to the outcome of the following matters and litigation inherently involves significant costs. Following is a summary of key litigation impacting us and our subsidiaries.

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Litigation Relating to the Merger

On December 4, 2006, we announced that we had received a proposal from Fertitta Colony Partners, LLC, (“FCP”) to acquire all of our outstanding common stock for $82 per share in cash.  As described in Note 16 to the Consolidated Financial Statements in this Annual Report on Form 10-K, on February 23, 2007, we entered into a definitive merger agreement with FCP, pursuant to which FCP agreed to purchase all of the Company’s outstanding common stock for $90 per share in cash. FCP is a company formed by Frank J. Fertitta III, Chairman and Chief Executive Officer of Station, Lorenzo J. Fertitta, Vice Chairman and President of Station, and Colony Capital Acquisitions, LLC, an affiliate of Colony Capital, LLC.

On December 4, 2006, Helen Roessler filed a purported class action complaint in the District Court of Clark County, Nevada (the “District Court”), Case No. A532367, against the Company, our Board of Directors and Fertitta Colony Partners LLC (“FCP”).  The complaint alleges that the defendants breached their fiduciary duties and challenges the proposed transaction as inadequate and unfair to the Company’s public stockholders.  The complaint seeks, among other relief, class certification of the lawsuit and an injunction against the proposed transaction.  Three similar putative class actions were subsequently filed in the District Court:  Goldman v. Station Casinos, Inc., et al., Case No. A532395, filed on December 4, 2006; Traynor v. Station Casinos, Inc., et al., Case No. A532407, filed on December 4, 2006; and Filhaber v. Station Casinos, Inc., et al., Case No. A532499, filed on December 5, 2006.  (The four above-referenced actions are collectively referred to as the “Initial Lawsuits.”)

On January 2, 2007, David Griffiths filed a purported class action complaint in the District Court against the Company, our Board of Directors, Delise F. Sartini, Blake L. Sartini, Colony Capital, LLC (“Colony Capital”), Colony Capital Acquisitions, LLC (“Colony Acquisitions”) and FCP.  The complaint alleges that the Company’s Board of Directors breached their fiduciary duties and the remaining defendants aided and abetted the alleged breaches of fiduciary duties in connection with the proposed transaction.  The complaint seeks, among other relief, class certification of the lawsuit, an injunction against the proposed transaction, declaratory relief, the imposition of a constructive trust upon the defendants, and an award of attorneys’ fees and expenses to plaintiffs.

On January 4, 2007, the District Court consolidated the Initial Lawsuits under the heading In Re Station Casino’s Shareholder Litigation and appointed lead counsel and liason counsel in connection therewith.  On January 29, 2007, plaintiff Griffiths filed a motion to vacate the District Court’s order appointing lead counsel and to establish a briefing schedule on motions to appoint lead plaintiff and lead counsel.  A hearing on that motion has been scheduled for March 5, 2007.

On February 14, 2007, the West Palm Beach Firefighters’ Pension Fund filed a purported class and derivative action complaint in District Court against the Company’s Board of Directors, Thomas J. Barrack, Jr., Delise Sartini, Blake Sartini, Colony Capital, Colony Acquisitions, FCP, Deutsche Bank Trust Company Americas and German American Capital Corporation.  The complaint alleges, among other things, that the Company breached its fiduciary duties and the remaining defendants aided and abetted the alleged breaches of fiduciary duty in connection with the proposed transaction.  The complaint seeks, among other relief, class certification of the lawsuit, an injunction against the proposed transaction unless and until the Company adopts and implements a fair sale process, the disclosure of all material information to the Company’s stockholders, the imposition of a constructive trust upon the defendants, and an award of attorneys’ fees and expenses to plaintiffs.

The Company believes that all of the above-referenced actions are without merit and intends to vigorously defend such actions.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the fourth quarter of 2006.

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PART II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock trades on the New York Stock Exchange under the symbol “STN”. The following table sets forth, for the periods indicated, the high and low sale price per share of our common stock as reported on the New York Stock Exchange.

	High		Low
Year Ending December 31, 2006
First Quarter	$	80.72	$	64.51
Second Quarter	81.46		65.64
Third Quarter	68.30		53.45
Fourth Quarter	85.19		56.80
Year Ending December 31, 2005
First Quarter	$	71.22	$	53.10
Second Quarter	70.75		58.99
Third Quarter	75.07		60.68
Fourth Quarter	70.95		61.43

Holders

As of January 31, 2007, there were 527 holders of record of our common stock and the closing price of our common stock was $83.20.

Dividends

During the year ended December 31, 2006, we paid a quarterly cash dividend of $0.25 per share to shareholders of record on February 10, 2006 and May 12, 2006 and $0.2875 per share to shareholders of record on August 11, 2006 and November 13, 2006. The total amount paid in dividends for 2006 was $65.4 million.

During the year ended December 31, 2005, we paid a quarterly cash dividend of $0.21 per share to shareholders of record on February 11, 2005 and May 13, 2005 and $0.25 per share to shareholders of record on August 12, 2005 and November 11, 2005. The total amount paid in dividends for 2005 was $62.6 million.

On February 14, 2007, we declared a quarterly cash dividend of $0.2875 per share to shareholders of record on February 26, 2007 payable on March 12, 2007. The payment of dividends in the future will be at the discretion of our Board of Directors. Restrictions imposed by our debt instruments and other agreements limit the payment of dividends (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Description of Certain Indebtedness and Capital Stock”).

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Securities Authorized for Issuance Under Equity Compensation Plans

The following table lists all equity compensation plans that provide for the award of our securities or the grant of options as of December 31, 2006:

Plan category	Number of securities to be issued upon exercise of outstanding options (a)		Weighted-average exercise price of outstanding options			Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by shareholders		2,187,107		$	12.07		1,108,632
Equity compensation plans not approved by shareholders		—		—			—
Total		2,187,107		$	12.07		1,108,632

(a)This amount excludes restricted stock awards issued. In addition to the above, we have 3,027,354 shares of unvested restricted stock awards outstanding under equity compensation plans approved by shareholders.

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Stock Performance Graph

The graph below compares the cumulative total stockholder return of the Company; with the cumulative total return of the Standard & Poor’s 500 Stock Index (“S&P 500”) and the Dow Jones US Gambling Index (“Dow Jones US Gambling”).

The performance graph assumes that $100 was invested on December 31, 2001 in each of the common stock of Station Casinos, Inc., the Dow Jones US Gambling and the S&P 500. The stock price performance shown in this graph is neither necessarily indicative of nor intended to suggest future stock price performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Station Casinos, Inc., The S & P 500 Index

And The Dow Jones US Gambling Index

*$100 invested on 12/31/01 in stock or index-including reinvestment of dividends.  Fiscal year ending December 31.

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Issuers Purchases of Equity Securities

The table below sets forth the information with respect to purchases made by or on behalf of us of our common stock during the three months ended December 31, 2006 (unaudited):

Period	Total number of shares purchased (b)		Average price paid per share			Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (c)
October 1 - 31, 2006		395		$	61.87		—		7,475,284
November 1 - 30, 2006		—		—			—		7,475,284
December 1 - 31, 2006		7,577		$	82.35		—		7,475,284
Total		7,972		$	81.34		—		7,475,284

(b)The shares purchased by us during the three months ended December 31, 2006, consisted of 7,972 restricted shares withheld to offset tax withholding obligations that occur upon vesting of the restricted shares.

(c)On July 24, 2006, the Board of Directors authorized us to repurchase up to 10 million shares of our common stock.

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ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data presented below as of and for our fiscal years ended December 31, 2006, 2005, 2004, 2003 and 2002 have been derived from our consolidated financial statements which, except for 2003 and 2002, are contained elsewhere in this Annual Report on Form 10-K. The selected consolidated financial data set forth below are qualified in their entirety by, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements, the notes thereto and other financial and statistical information included elsewhere in this Annual Report on Form 10-K.

	For the years ended December 31,
	2006(a)			2005			2004(b)			2003(c)			2002
	(amounts in thousands, except per share data)
Operating Results:
Net revenues	$	1,339,024		$	1,108,833		$	986,742		$	858,089		$	792,865
Operating costs and expenses, excluding the following items:	983,339			772,927			721,957			655,844			638,164
Development (d)	9,036			8,747			10,683			4,306			—
Preopening (e)	29,461			6,560			848			—			—
Lease terminations (f)	1,053			14,654			—			—			—
Impairment loss (g)	—			—			—			18,868			8,791
Litigation settlement (h)	—			—			—			38,000			—
Operating income	316,135			305,945			253,254			141,071			145,910
Earnings from joint ventures	41,861			38,885			26,524			20,604			11,293
Operating income and earnings from joint ventures	357,996			344,830			279,778			161,675			157,203
Loss on early retirement of debt (i)	—			(1,278		)	(93,265		)	—			(5,808		)
Interest expense, net	(178,544		)	(87,325		)	(81,284		)	(93,498		)	(101,639		)
Income before income taxes and cumulative effect of change in accounting principle	179,452			256,227			105,229			68,177			49,756
Income tax provision	(69,240		)	(94,341		)	(38,879		)	(23,834		)	(18,508		)
Cumulative effect of change in accounting principle (j)	—			—			—			—			(13,316		)
Net income	$	110,212		$	161,886		$	66,350		$	44,343		$	17,932
Basic earning per common share	$	1.90		$	2.46		$	1.03		$	0.76		$	0.31
Diluted earnings per common share	$	1.85		$	2.40		$	1.00		$	0.72		$	0.30
Dividends paid per common share	$	1.08		$	0.92		$	0.69		$	0.25		$	—
Balance Sheet Data:
Total assets	$	3,716,696		$	2,929,043		$	2,045,584		$	1,745,972		$	1,598,347
Long-term debt	3,468,828			1,944,328			1,338,213			1,168,957			1,165,722
Stockholders’ (deficit) equity	(186,858		)	630,814			488,921			339,939			270,678

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(a)On April 18, 2006, we opened Red Rock.

(b)On August 2, 2004, we purchased Magic Star and Gold Rush.

(c)On January 27, 2003, we purchased Wildfire. We opened Thunder Valley on June 9, 2003, which we manage on behalf of the UAIC (see Note 6 to the Consolidated Financial Statements in this Annual Report on Form 10-K).

(d)During the last half of 2003, we increased our development resources in an effort to identify potential gaming opportunities. Development expenses include costs to identify potential gaming opportunities, the internal costs incurred to bring the Native American projects currently under contract to fruition and other development opportunities, which include payroll, travel and legal expenses. Also included in development expense for 2004 is a $2.0 million non-reimbursable milestone payment related to the Gun Lake project in Michigan. During 2003, $2.0 million of costs related to the Graton Rancheria project were expensed after achieving certain milestones on the project and are also not reimbursable (see Note 9 to the Consolidated Financial Statements in this Annual Report on Form 10-K).

(e)Preopening expenses for the years ended December 31, 2006, 2005 and 2004 include costs primarily related to the opening of Red Rock.

(f)During the year ended December 31, 2006 and 2005, we recorded lease terminations primarily related to land adjacent to the current Wild Wild West property.

(g)During the year ended December 31, 2003, we recorded an impairment loss of approximately $18.9 million, of which approximately $17.5 million was related to the impairment of goodwill at Fiesta Rancho as a result of reduced growth assumptions. In addition, approximately $1.4 million of the impairment loss in 2003 was primarily related to the write off of our investment in the development of a new slot product. During the year ended December 31, 2002, we recorded an impairment loss of approximately $8.8 million, of which approximately $3.9 million was related to the write-down of certain assets related to our investment in an Internet, intra-state gaming platform and related technology and approximately $4.9 million, which was related to the write-off of our option to invest in the Internet wagering business with Kerzner Interactive.

(h)On February 9, 2004, we entered into an agreement to settle a lawsuit that centered on allegations of improper conduct by our former Missouri legal counsel for $38 million.

(i)During the year ended December 31, 2005, we redeemed the remaining $16.9 million of outstanding 83¤8% senior notes due 2008 and $17.4 million of outstanding 97¤8% senior subordinated notes due 2010. During the year ended December 31, 2004, we completed tender offers and consent solicitations for approximately $940.6 million of our senior and senior subordinated notes outstanding. During the year ended December 31, 2002, we redeemed our $150 million 93¤4% senior subordinated notes.

(j)The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) 142, “Goodwill and Other Intangible Assets”, in June 2001. SFAS 142 changed the accounting for goodwill from an amortization method to an impairment-only approach. Amortization of goodwill, including goodwill recorded in past business combinations, ceased upon the adoption of SFAS 142. We implemented SFAS 142 on January 1, 2002 and tested for impairment in accordance with the provisions of SFAS 142 in the first quarter of 2002. As a result of an independent third party appraisal, we recorded an impairment loss of $13.3 million, net of the applicable tax benefit, related to Fiesta Rancho, which is shown as a cumulative effect of a change in accounting principle in our consolidated statements of operations.

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ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with “Selected Financial Data” and the financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

Results of Operations

The following table highlights the results of our operations (dollars in thousands):

	Year ended December 31, 2006				Percent change			Year ended December 31, 2005				Percent change		Year ended December 31, 2004
Net revenues—total		$	1,339,024			20.8	%		$	1,108,833		12.4	%		$	986,742
Major Las Vegas Operations (a)		1,189,099				22.8	%		968,017			11.5	%		868,248
Management fees (b)		99,485				4.6	%		95,144			12.4	%		84,618
Other Operations and Corporate (c)		50,440				10.4	%		45,672			34.8	%		33,876
Operating income (loss)—total		$	316,135			3.3	%		$	305,945		20.8	%		$	253,254
Major Las Vegas Operations (a)		290,924				(4.1	)%		303,383			30.4	%		232,677
Management fees (b)		99,485				4.6	%		95,144			12.4	%		84,618
Other Operations and Corporate (c)		(74,274		)		19.8	%		(92,582		)	(44.6	)%		(64,041		)
Cash flows provided by (used in):
Operating activities		$	293,373			(22.2	)%		$	376,891		43.6	%		$	262,411
Investing activities		(836,261		)		5.5	%		(885,327		)	(162.0	)%		(337,929		)
Financing activities		574,234				9.3	%		525,571			543.6	%		81,663

(a)Includes the wholly owned properties of Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Red Rock (since April 18, 2006), Fiesta Rancho and Fiesta Henderson.

(b)Includes management fees from Thunder Valley, Green Valley Ranch, Barley’s and The Greens (since December 17, 2005).

(c)Includes the wholly owned properties of Wild Wild West, Wildfire, Magic Star (since August 2, 2004), Gold Rush (since August 2, 2004), Lake Mead (since October 1, 2006) and corporate and development expense.

Consolidated net revenues for the year ended December 31, 2006 increased 20.8% to $1.3 billion as compared to $1.1 billion for the year ended December 31, 2005. Year over year net revenues increased primarily due to the opening of Red Rock Casino Resort Spa (“Red Rock”) on April 18, 2006.

Combined net revenue from our Major Las Vegas Operations increased 22.8% to $1.2 billion for the year ended December 31, 2006 as compared to $968.0 million for the year ended December 31, 2005, as a result of opening Red Rock as noted above. Combined net revenue from our Major Las Vegas Operations, excluding Red Rock, remained virtually unchanged for the year ended December 31, 2006 as compared to the year ended December 31, 2005.

Consolidated net revenues for the year ended December 31, 2005 increased 12.4% to $1.1 billion as compared to $986.7 million for the year ended December 31, 2004. Year over year net revenues increased primarily due to the continued strength of the Las Vegas local economy, continued population and employment growth in the Las Vegas valley, no new competition in the locals’ market until the latter part of December, as well as the continued success of our Jumbo brand products, including Jumbo Jackpot. Jumbo Jackpot, which we introduced in April 2003, is an exclusive progressive slot jackpot that allows

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customers using a Boarding Pass or Amigo Club card the opportunity to win between $100,000 and $150,000 just for playing slot machines.

Operating Income/Operating Margin

Consolidated operating income increased 3.3% in the year ended December 31, 2006 as compared to the year ended December 31, 2005 while the operating margin decreased to 23.6% from 27.6% for the same periods. The increase in the consolidated operating income is a result of increased consolidated net revenues as noted above offset by operating expenses for Red Rock as well as preopening expenses of $29.5 million in the year ended December 31, 2006 as compared to $6.6 million in the year ended December 31, 2005. The decrease in operating margin was the result of lower operating margins at Red Rock. Prior experience has demonstrated that new facilities initially do not operate as efficiently as more mature facilities. As a result, the operating margins have been lower than we expect them to be in the future.

Consolidated operating income increased 20.8% in the year ended December 31, 2005 as compared to the year ended December 31, 2004. The increase is primarily due to increased consolidated net revenues noted above which were negatively impacted by $14.7 million in lease termination costs. There is significant operating leverage on incremental revenue due to a significant amount of fixed costs. As a result, our consolidated operating margin improved 1.9 percentage points in the year ended December 31, 2005 as compared to the year ended December 31, 2004.

Share-Based Compensation

Effective January 1, 2006, we adopted Statement of Financial Accounting Standards (“SFAS”) 123R, “Share-Based Payment”, utilizing the modified prospective application. Under the modified prospective application, SFAS 123R applies to new awards and awards that were outstanding on December 31, 2005 that are subsequently modified, repurchased or cancelled. Under the modified prospective application, compensation cost recognized in the year ended December 31, 2006 includes compensation cost of all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123 and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Accordingly, prior period amounts are not restated to reflect the impact of adopting SFAS 123R under the modified prospective application.

The recognition of compensation expense related to the issuance of restricted stock has not changed with the adoption of SFAS 123R, except for the addition of the estimate of forfeitures, and such compensation expense continues to be expensed in the statements of operations. During the year ended December 31, 2006, income before income tax and net income were reduced by approximately $2.2 million and $1.4 million, respectively, as a result of adopting SFAS 123R, and basic earnings per share and diluted earnings per share were reduced by $0.03 and $0.02, respectively, reflecting compensation expense related to stock option awards that were previously not recognized in the financial statements due to our prior application of APB Opinion 25.

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The following table highlights our various sources of revenues and expenses as compared to prior years (dollars in thousands):

	Year ended December 31, 2006				Percent change			Year ended December 31, 2005				Percent change			Year ended December 31, 2004
Casino revenues		$	969,147			17.3	%		$	825,995			13.1	%		$	730,584
Casino expenses		348,659				21.7	%		286,503				4.6	%		273,816
Margin		64.0		%					65.3		%					62.5		%
Food and beverage revenues		$	211,579			44.2	%		$	146,774			4.6	%		$	140,332
Food and beverage expenses		152,300				47.9	%		102,970				2.4	%		100,548
Margin		28.0		%					29.8		%					28.4		%
Room revenues		$	82,431			34.6	%		$	61,238			7.3	%		$	57,057
Room expenses		29,962				42.0	%		21,094				0.2	%		21,053
Margin		63.7		%					65.6		%					63.1		%
Other revenues		$	70,245			33.7	%		$	52,550			25.1	%		$	42,008
Other expenses		26,244				47.4	%		17,799				5.8	%		16,820
Selling, general and administrative expenses		$	230,278			26.8	%		$	181,670			5.1	%		$	172,923
Percent of net revenues		17.2		%					16.4		%					17.5		%
Corporate expense		$	63,066			9.5	%		$	57,619			22.1	%		$	47,189
Percent of net revenues		4.7		%					5.2		%					4.8		%
Earnings from joint ventures		$	41,861			7.7	%		$	38,885			46.6	%		$	26,524

Casino.Casino revenues and expenses increased 17.3% and 21.7%, respectively, for the year ended December 31, 2006 as compared to the year ended December 31, 2005. The increase in revenues was due to the same factors affecting our consolidated net revenues noted above. The increase in casino expenses was due to the opening of Red Rock, which includes approximately 3,200 slot machines and over 60 table games. Operating margin was also impacted by the opening of Red Rock as noted above.

Casino revenues increased 13.1% for the year ended December 31, 2005 as compared to the year ended December 31, 2004, due to the same factors affecting our consolidated net revenues noted above. Casino expenses increased 4.6% over the same period due to increased promotional and marketing expenses related to our Jumbo brand products and an increase in gaming taxes as a result of higher casino revenues in 2005. There is also significant operating leverage on incremental gaming revenue due to a significant amount of fixed costs in the casino department and, as a result, the casino profit margin increased by 2.8 percentage points for the year ended December 31, 2005 as compared to the year ended December 31, 2004.

Food and Beverage.   Food and beverage revenues increased 44.2% for the year ended December 31, 2006 as compared to the year ended December 31, 2005, as a result of the opening of Red Rock on April 18, 2006. Food covers increased 20.6% and average guest check increased 14.8% for the year ended December 31, 2006 as compared to the year ended December 31, 2005. Food and beverage expenses increased 47.9% primarily due to the opening of Red Rock as noted above which included the addition of nine restaurants.

Food and beverage revenues increased 4.6% for the year ended December 31, 2005 as compared to the year ended December 31, 2004, due to selected menu price increases, as well as enhancements at Santa Fe Station with the expansion of the café in 2004 and the acquisitions of Magic Star and Gold Rush which was offset slightly by the temporary closure of the Sunset Station buffet for remodeling. Food covers decreased 2.2% for the year ended December 31, 2005 as compared to the year ended December 31, 2004,

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primarily due to the temporary closure of the Sunset Station buffet. The average guest check increased 5.5% for the year ended December 31, 2005 as compared to the year ended December 31, 2004 as a result of increased menu prices. Food and beverage expenses increased 2.4% for the year ended December 31, 2005 as compared to the year ended December 31, 2004, resulting in an increase in the food and beverage net operating margin of 1.4 percentage points for the same period. The increase in food and beverage expense is related to the acquisition of Magic Star and Gold Rush and increases in selected food cost items.

Room.   Room revenues increased 34.6% for the year ended December 31, 2006 as compared to the year ended December 31, 2005. Room expenses increased 42.0% for the year ended December 31, 2006 as compared to the year ended December 31, 2005, which is due to the opening of Red Rock which included approximately 400 hotel rooms. Room occupancy was 95% for the year ended December 31, 2006, as compared to 96% for the year ended December 31, 2005. The average daily room rate increased to $73 for the year ended December 31, 2006 from $61 for the year ended December 31, 2005, primarily due to an average daily room rate of $169 for the year ended December 31, 2006 at Red Rock.

Room revenues increased 7.3% for the year ended December 31, 2005 as compared to the year ended December 31, 2004. Room occupancy remained unchanged at 96% while the average daily room rate increased to $61 for the year ended December 31, 2005 from $56 for the year ended December 31, 2004, as a result of continued increase in consumer demand for rooms in Las Vegas during 2005.

Other.   Other revenues primarily include income from gift shops, bowling, entertainment, leased outlets and the spa. Other revenues increased 33.7% for the year ended December 31, 2006 as compared to the year ended December 31, 2005. The increase in other revenues is primarily due to the opening of Red Rock which includes a full-service spa and several leased outlets including a 16-screen movie theater complex.

Other revenues increased 25.1% for the year ended December 31, 2005 as compared to the year ended December 31, 2004. The increase in other revenues is primarily due to the opening of the bowling center at Sunset Station in April 2005 and the movie theater complex at Santa Fe Station in May 2005.

Management Fees.   We manage Thunder Valley on behalf of the United Auburn Indian Community (“UAIC”) and receive a management fee equal to 24% of net income (as defined in the management agreement). In addition, we are the managing partner for Green Valley Ranch, Barley’s and The Greens and receive a management fee equal to 2% of revenues and approximately 5% of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) from Green Valley Ranch and 10% of EBITDA from Barley’s and The Greens. For the year ended December 31, 2006, management fees increased to approximately $99.5 million as compared to $95.1 million for the year ended December 31, 2005 and $84.6 million for the year ended December 31, 2004. The increase is due to improved results at both Green Valley Ranch and Thunder Valley.

Selling, General and Administrative (“SG&A”).   SG&A as a percentage of net revenues increased to 17.2% in the year ended December 31, 2006 as compared to 16.4% in the year ended December 31, 2005. SG&A expenses increased by 26.8% to $230.3 million for the year ended December 31, 2006, from $181.7 million for the year ended December 31, 2005. The increase is primarily related to the opening of Red Rock during the second quarter.

SG&A as a percentage of net revenues decreased to 16.4% in the year ended December 31, 2005 as compared to 17.5% in the year ended December 31, 2004. A portion of these costs are fixed and, as a result, as revenues increased the percentage of SG&A to net revenues decreased. SG&A expenses increased by 5.1% to $181.7 million for the year ended December 31, 2005, from $172.9 million for the year ended December 31, 2004. The increase is attributable to increases in payroll and related expenses and repair and maintenance related expenses attributable to increased foot traffic.

Corporate Expense.   Corporate expense increased to approximately $63.1 million for the year ended December 31, 2006 as compared to approximately $57.6 million for the year ended December 31, 2005.

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The increase is primarily due to stock option expense as a result of adopting SFAS 123R (see “Share-Based Compensation”), expenses related to costs associated with the Fertitta Colony Partners, LLC transaction (as further described in Note 16 to the Consolidated Financial Statements in this Annual Report on Form 10-K) and additional restricted stock awards offset by lower cash bonuses.

Corporate expenses increased to approximately $57.6 million for the year ended December 31, 2005 as compared to approximately $47.2 million for the year ended December 31, 2004. The increase is primarily due to increased investment in corporate infrastructure to handle prorated growth and a change in incentive compensation from a stock option based program to a program which includes cash and restricted stock.

Development Expense.   Development expense includes costs to identify potential gaming opportunities, the internal costs incurred to bring the Native American projects currently under contract to fruition and other development opportunities, which include payroll, travel and legal expenses. Development expenses for the years ended December 31, 2006, 2005 and 2004 were $9.0 million, $8.7 million and $10.7 million, respectively. Also included in development expense for 2004 is a $2.0 million non-reimbursable milestone payment related to the Gun Lake project in Michigan.

Depreciation and Amortization.   Depreciation and amortization increased 29.3% to approximately $131.1 million for the year ended December 31, 2006 as compared to $101.4 million for the year ended December 31, 2005. This increase was due primarily to the completion of phase I of Red Rock in April 2006, portions of the phase II master planned expansion at Fiesta Henderson in August 2006 and the remodel of the buffet at Sunset Station in December 2005.

Depreciation and amortization increased 18.1% to approximately $101.4 million for the year ended December 31, 2005 as compared to $85.8 million for the year ended December 31, 2004. This increase was due primarily to the addition of new ticket-in, ticket-out slot machines at a majority of the Major Las Vegas properties in 2004, the completion of the ice arena at Fiesta Rancho during 2004, the completion of the Santa Fe Station phase II expansion which opened in phases beginning in the latter part of 2004 and the addition of the bowling center at Sunset Station in April 2005.

Preopening Expense.   Preopening expenses for the year ended December 31, 2006, 2005 and 2004 were approximately $29.5 million, $6.6 million and $0.8 million, respectively, which include costs related to projects under development including Red Rock.

Lease Terminations.   During the year ended December 31, 2006 and 2005, we recorded approximately $1.1 million and $14.7 million, respectively, to terminate various leases primarily related to land adjacent to the current Wild Wild West property.

Earnings From Joint Ventures.   We own a 50% interest in various joint ventures including Green Valley Ranch and Barley’s, and a 6.7% interest in a joint venture that owns the Palms Casino Resort. We recorded our share of the earnings from these joint ventures of $41.9 million, $38.9 million and $26.5 million for the years ended December 31, 2006, 2005 and 2004, respectively. The increase in earnings from joint ventures is primarily related to improved results at Green Valley Ranch as a result of the completion of various portions of the phase III master-planned expansion in October 2006 and phase II master-planned expansion in December 2004.

Interest Expense.   Interest expense, net of capitalized interest, increased 113.7% to $171.7 million in the year ended December 31, 2006 as compared to $80.4 million in the year ended December 31, 2005. Gross interest expense increased approximately $100.3 million due to an increase in our long-term debt of approximately $1.5 billion in the year ended December 31, 2006, and an increase in the weighted average cost of debt to 6.7% from 6.2% for the years ended December 31, 2006 and 2005, respectively. Capitalized interest increased approximately $7.4 million for the year ended December 31, 2006 as compared to the year ended December 31, 2005, primarily due to interest capitalized for the construction of Red Rock.

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Interest expense, net of capitalized interest, increased 4.7% to $80.4 million in the year ended December 31, 2005 as compared to $76.8 million in the year ended December 31, 2004. Gross interest expense increased approximately $18.9 million due to an increase in our long-term debt of approximately $605.6 million in the year ended December 31, 2005, and an increase in the weighted average cost of debt to 6.2% from 6.1% for the years ended December 31, 2005 and 2004, respectively. Capitalized interest increased approximately $15.3 million for the year ended December 31, 2005 primarily due to interest capitalized for the construction of Red Rock.

Interest and Other Expense from Joint Ventures.   For the years ended December 31, 2006, 2005 and 2004, we recorded $6.8 million, $6.9 million and $4.5 million, respectively, in interest and other expense related to our unconsolidated joint ventures. The increase during 2005 in interest and other expense from joint ventures is due to higher debt balances as a result of the approximate 300 room addition completed at Green Valley Ranch in December 2004.

Loss on Early Retirement of Debt.During 2005, we redeemed the remaining $16.9 million of outstanding 83¤8% senior notes due 2008 and $17.4 million of outstanding 97¤8% senior subordinated notes due 2010. As a result of these redemptions, we recorded a loss on early retirement of debt of approximately $1.3 million to reflect the write-off of the unamortized loan costs, unamortized discount and call premium.

During the first quarter of 2004, we refinanced substantially all of our senior and senior subordinated notes. In connection with the refinancing, we completed tender offers and consent solicitations for approximately $940.6 million of our senior and senior subordinated notes outstanding. As a result, we recorded a loss on early retirement of debt of approximately $93.3 million during the year ended December 31, 2004 to reflect the write-off of the unamortized loan costs, unamortized discount, call premium, tender fee and consent payments which were partially offset by the fair value of the interest rate swaps that were tied directly to the redeemed senior and senior subordinated notes.

Liquidity and Capital Resources

The following liquidity and capital resources discussion contains certain forward-looking statements with respect to our business, financial condition, results of operations, dispositions, acquisitions, expansion projects and our subsidiaries, which involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied herein. Such risks and uncertainties include, but are not limited to, financial market risks, the ability to maintain existing management, integration of acquisitions, competition within the gaming industry, the cyclical nature of the hotel business and gaming business, economic conditions, regulatory matters and litigation and other risks described in our filings with the Securities and Exchange Commission. In addition, construction projects such as the expansions at Red Rock, Green Valley Ranch, Santa Fe Station and Fiesta Henderson entail significant risks, including shortages of materials or skilled labor, unforeseen regulatory problems, work stoppages, weather interference, floods and unanticipated cost increases. The anticipated costs and construction periods are based on budgets, conceptual design documents and construction schedule estimates. There can be no assurance that the budgeted costs or construction period will be met. All forward-looking statements are based on our current expectations and projections about future events.

During the year ended December 31, 2006, we generated cash flows from operating activities of $293.4 million. We received $698.5 million from the issuance of senior and senior subordinated notes (see “Description of Certain Indebtedness and Capital Stock—Senior and Senior Subordinated Notes”). In addition, we received approximately $18.0 million from the sale of land, property and equipment. At December 31, 2006, we had total available borrowings of $2.0 billion under our Revolving Facility, which was reduced by borrowings of $1.2 billion and various letters of credit totaling approximately $1.2 million, leaving approximately $843.0 million available as of December 31, 2006. We had $116.9 million in cash and cash equivalents as of December 31, 2006, virtually all of which is used for day-to-day operations of our casinos.

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During the year ended December 31, 2006, total capital expenditures were $756.8 million, of which approximately $379.2 million was related to the development of Red Rock phases I and II (see “Future Development”), approximately $22.7 million was related to the phase III expansion of Red Rock, approximately $19.0 million was for the purchase of land adjacent to the current Wild Wild West property,  approximately $23.8 million was for the purchase of land held for development, approximately $116.7 million was related to the phase III expansion of Santa Fe Station, approximately $46.6 million was related to the phase II expansion of Fiesta Henderson and approximately $148.8 million was for maintenance and other capital expenditures. In addition to capital expenditures, we paid approximately $15.9 million in reimbursable advances for our Native American development projects (see “Future Development”), approximately $65.4 million in common stock dividends, approximately $880.7 million to repurchase 12.7 million shares of our common stock and approximately $42.4 million was contributed to various joint ventures.

Our primary cash requirements for 2007 are expected to include (i) approximately $20 million for the phase II expansion of Red Rock, (ii) approximately $50 million for the phase III expansion of Red Rock, (iii) approximately $12 million for the phase III expansion of Santa Fe Station, (iv) approximately $23 million for the phase II expansion of Fiesta Henderson, (v) payments of cash dividends, (vi) principal and interest payments on indebtedness, (vii) maintenance and other capital expenditures, (viii) other strategic land purchases and (ix) equity contributions to joint ventures.

We believe that cash flows from operations, available borrowings under the Revolving Facility, existing cash balances and the distribution from Green Valley Ranch (see “Description of Certain Indebtedness and Capital Stock—Green Valley Ranch Financing”) will be adequate to satisfy our anticipated uses of capital during 2007. However, we are continually evaluating our financing needs. If more attractive financing alternatives or expansion, development or acquisition opportunities become available to us, we may amend our financing plans assuming such financing would be permitted under our existing debt agreements (see “Description of Certain Indebtedness and Capital Stock”) and other applicable agreements.

It is anticipated that the funds necessary to consummate the Merger and related transactions described in Note 16 to the Consolidated Financial Statements in this Annual Report on Form 10-K will be funded by new credit facilities and equity financing. Our capitalization, liquidity and capital resources will change substantially if the Merger is approved by our shareholders and the related financing transactions are completed. Upon the closing of the financing transactions, we will be highly leveraged. Our liquidity requirements will be significant, primarily due to debt service and lease expense requirements and financing costs related to the indebtedness and lease expense expected to be incurred in connection with the closing of the Merger.

Off Balance Sheet Arrangements

As of December 31, 2006, we have certain off-balance sheet arrangements that affect our financial condition, liquidity and results of operations, which include interest rate swaps with a combined notional amount of $550.0 million (see “Description of Certain Indebtedness and Capital Stock—Interest Rate Swaps”).

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The following table summarizes our contractual obligations and commitments (amounts in thousands):

	Contractual obligations
	Long-term debt (a)		Operating leases (b)		Other long-term obligations (c)			Total contractual cash obligations
Payments due by year
2007	$	242,495	$	10,382		$	45,063		$	297,940
2008	242,486		10,408			27,296			280,190
2009	247,591		7,981			48,897			304,469
2010	1,398,065		7,818			2,502			1,408,385
2011	155,895		7,818			1,384			165,097
Thereafter	2,853,559		320,098			125			3,173,782
Total	$	5,140,091	$	364,505		$	125,267		$	5,629,863

(a)Includes interest related to interest rate swaps estimated based on the notional amount and net interest spread as of December 31, 2006. Interest related to the Revolving Facility is estimated based on the outstanding balance and interest rate as of December 31, 2006. See Note 8 to the Consolidated Financial Statements in this Annual Report on Form 10-K.

(b)See Note 9 to the Consolidated Financial Statements in this Annual Report on Form 10-K.

(c)Other long-term obligations are comprised of employment contracts, long-term stay-on agreements, slot conversion purchases and the purchase of land related to Wild Wild West.

Future Development—Las Vegas

Las Vegas Development

Red Rock

On April 18, 2006, we opened phase I of Red Rock Casino Resort Spa (“Red Rock”) located on Charleston Boulevard at the Interstate 215/Charleston interchange in the Summerlin master-planned community in Las Vegas, Nevada. Phase I included approximately 400 hotel rooms, approximately 3,200 slot machines, 94,000 square feet of meeting and convention space, a full service spa, nine restaurants, a 16-screen movie theater complex, a night club and private pool club, both indoor and outdoor entertainment venues and parking for approximately 5,000 vehicles. Phase II, which included an additional hotel tower containing over 400 rooms and an expanded spa area was completed during December 2006. The total cost of phases I and II of Red Rock is $1.0 billion as of December 31, 2006.

In August 2006, we began a phase III master-planned expansion of Red Rock, which includes a 72-lane bowling center and an expansion of the west parking garage. Construction of the bowling center is expected to be completed in the second quarter of 2007, while the parking garage expansion is expected to be completed in the third quarter of 2007. The total cost of phase III is expected to be between $60 million and $65 million, of which approximately $22.7 million had been incurred as of December 31, 2006.

On July 27, 2005, we entered into a joint venture with Cloobeck Molasky Partners I, LLC (“Cloobeck Molasky”) to develop a high-end residential project on approximately 5 acres located adjacent to the hotel at Red Rock. Pursuant to the terms of the operating agreement, we owned 80% of the joint venture and Cloobeck Molasky owned 20%. In June 2006, we notified Cloobeck Molasky that the joint venture had been dissolved based on the terms of the operating agreement. As of December 31, 2006, we cancelled the residential project resulting in a write-off of approximately $2.5 million, which is included in loss on asset disposals, net on our consolidated statement of operations.

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Santa Fe Station Expansion

In October 2005, we began a $130 million phase III master-planned expansion at Santa Fe Station which included an additional 2,900-space parking garage, a 500-seat buffet, 400 additional slot machines, a remodeled and expanded race and sports book, a meeting and banquet facility and a new center bar. The entire project included approximately 125,000 square-feet of additional space and was completed during the fourth quarter 2006, with the exception of the center bar which is expected to be completed by the summer of 2007.  Approximately $127.8 million had been incurred on the expansion as of December 31, 2006.

Fiesta Henderson Expansion

In October 2005, we began a $75 million phase II master-planned expansion at Fiesta Henderson which included a 1,500-space parking garage, 350 additional slot machines, a remodeled and expanded race and sports book and a 12-screen movie theater complex. Construction of the project was completed in August 2006, with the exception of the movie theater complex which is expected to be completed in the fall of 2007. Approximately $56.2 million had been incurred on the expansion as of December 31, 2006.

Green Valley Ranch Expansion

In October 2006, we opened an additional 1,200-space parking garage, a new race and sports book, a new poker room and two new restaurants as part of the $115 million phase III master-planned expansion at Green Valley Ranch. An entertainment lounge is still under construction and is expected to open in the summer of 2007. Approximately $98.1 million had been incurred on the expansion as of December 31, 2006.

Aliante Station

In December 2005, we entered into an agreement with the Greenspun Corporation to develop Aliante Station, a hotel and casino in the Aliante master-planned community located in North Las Vegas, Nevada. We will develop and manage the facility, to be located on a gaming-entitled 40-acre site on the northeast corner of Interstate 215 and Aliante Parkway, which was contributed by the Greenspun Corporation for their 50% ownership in the joint venture. We will receive a management fee equal to 2% of the property’s revenues and approximately 5% of EBITDA. The first phase of Aliante Station is expected to include 200 hotel rooms, approximately 3,000 slot machines, multiple full-service restaurants and a multi-screen movie theater complex. Construction on Aliante Station began in February 2007 and is expected to be completed by the end of 2008 at a cost of approximately $650 million to $675 million. Pursuant to the terms of the agreement, in January 2006, we contributed a 54 acre site located on Losee Road in North Las Vegas, Nevada, as well as approximately $2.2 million, for our 50% ownership in the joint venture. During the year ended December 31, 2006, we contributed an additional $4.0 million to fund design and development costs.

Rancho Road

In December 2006, we entered into an amended and restated operating agreement with FBLV Holding Company LLC (“FBLV”). Pursuant to the amended and restated operating agreement, the parties contributed approximately 52 acres (with approximately 20 acres contributed by us for our 50% ownership and approximately 32 acres contributed by FBLV for their 50% ownership) of improved and unimproved real property located along Rancho Road located behind Palace Station in Las Vegas, Nevada into a joint venture. It is anticipated that the joint venture will develop, construct and manage, pursuant to a master development plan, a mixed-use residential, retail and entertainment (excluding non-restricted gaming) project on all or a portion of such property. The timing, cost and scope of the project have yet to be determined.

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Native American Development

The Federated Indians of Graton Rancheria

We have entered into Development and Management Agreements with the Federated Indians of Graton Rancheria (the “FIGR”), a federally recognized Native American tribe. Pursuant to those agreements, we will assist the FIGR in developing and operating a gaming and entertainment project to be located in Sonoma County, California. The FIGR selected us to assist them in designing, developing and financing their project and, upon opening, we will manage the facility on behalf of the FIGR. The Management Agreement has a term of seven years from the opening of the facility and we will receive a management fee equal to 24% of the facility’s net income. We will also receive a development fee equal to 2% of the cost of the project upon the opening of the facility.

In August 2003, we entered into an option to purchase 360 acres of land just west of the Rohnert Park city limits in Sonoma County, California. In August 2005, we purchased 180 acres of the optioned property and an additional 90 acres. In March 2006, we purchased an additional 4.7 acres adjacent to the previously acquired property. The property purchased is approximately one-quarter mile from Highway 101 and approximately 43 miles from downtown San Francisco. In October 2003, the FIGR entered into a Memorandum of Understanding with the City of Rohnert Park. Development of the gaming and entertainment project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the United States Department of the Interior (“DOI”) accepting the land into trust on behalf of the FIGR and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. As of December 31, 2006, we have advanced approximately $132.3 million toward the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included on our consolidated balance sheets. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from the FIGR’s gaming revenues. In addition, we have agreed to pay approximately $11.3 million upon achieving certain milestones, which will not be reimbursed. As of December 31, 2006, approximately $2.0 million of these payments had been made and expensed in development expense as incurred. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

Gun Lake Tribe

On November 13, 2003, we agreed to purchase a 50% interest in MPM Enterprises, LLC, a Michigan limited liability company (“MPM”). Concurrently with our agreement to purchase that interest, MPM and the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, a federally recognized Native American tribe commonly referred to as the Gun Lake Tribe (“Gun Lake”), entered into amended Development and Management Agreements, pursuant to which MPM agreed to assist Gun Lake in developing and operating a gaming and entertainment project to be located in Allegan County, Michigan. On July 29, 2005, MPM and Gun Lake entered into amended and restated Development and Management Agreements. We have agreed to pay $6.0 million for our 50% interest in MPM, which is payable upon achieving certain milestones and is not reimbursable. As of December 31, 2006, approximately $2.0 million of these payments had been made and expensed in development expense as incurred. An additional $12.0 million in total may be paid by us in years six and seven of the amended and restated Management Agreement, subject to certain contingencies. Under the terms of the amended and restated Development Agreement, we have agreed to arrange financing for the ongoing development costs and construction of the project. As of December 31, 2006, we have advanced approximately $34.0 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is included on our consolidated balance sheets. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from Gun Lake’s gaming revenues. The amended and restated Management Agreement has a term of seven years from the opening of the facility and provides for a

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management fee of 30% of the project’s net income to be paid to MPM. Pursuant to the terms of the MPM Operating Agreement, our portion of the management fee is 50% of the first $24 million of management fees earned, 83% of the next $24 million of management fees and 93% of any management fees in excess of $48 million.

The proposed project will be located on approximately 146 acres on Highway 131 near 129th Avenue, approximately 25 miles north of Kalamazoo, Michigan. As currently contemplated, the project will include up to 2,500 slot machines, 75 table games, a buffet and specialty restaurants. Construction of the project includes the conversion of an existing 192,000 square-foot building into the casino and entertainment facility. Development of the gaming and entertainment project and operation of Class III gaming is subject to certain governmental and regulatory approvals, including, but not limited to, the signing of a gaming compact by the Governor of the State of Michigan, the DOI taking the land into trust on behalf of Gun Lake and approval of the Management Agreement by the NIGC. On February 27, 2004, the DOI issued a Finding Of No Significant Impact with respect to the proposed project. On May 13, 2005, the DOI published in the Federal Register a Notice of Final Agency Determination (the “Determination”) to take certain land into trust for the benefit of Gun Lake. The publication commenced a thirty-day period in which interested parties could seek judicial review of the Determination. On June 13, 2005, Michigan Gambling Opposition filed a complaint (the “Complaint”) in the United States District Court, District of Columbia, seeking declaratory and injunctive relief against the DOI and officials of the DOI. The Complaint seeks judicial review of the Determination. On July 27, 2005, Gun Lake filed a motion to intervene in that lawsuit. On September 1, 2005, the District Court granted Gun Lake’s motion to intervene. On January 6, 2006, Gun Lake filed a motion for judgment on the pleadings or, in the alternative, for summary judgment. Also on January 6, 2006, the DOI filed a motion to dismiss or, in the alternative, for summary judgment. By May 2006, all responsive pleadings had been filed and the case was ready for consideration by the District Court. On October 27, 2006, the Department of Justice filed a Notice with the District Court indicating that the DOI planned to take the 146-acre site into trust on January 5, 2007, if the plaintiffs did not seek injunctive relief or failed to persuade the court to issue any relief precluding the DOI from doing so. The DOI subsequently amended that date to March 5, 2007, in order to provide the Court sufficient time to render its decision. The Court set oral arguments on the parties’ motions to dismiss or, in the alternative, for summary judgment for November 29, 2006. Oral arguments were heard on that date. On February 23, 2007, the District Court issued its decision in favor of the DOI and Gun Lake, finding that there were no facts which would entitle plaintiffs to any relief on the four issues raised in the Complaint, and granted the parties’ motion to discuss or, in the alternative for summary judgment. As with all litigation, no assurances can be provided as to the outcome of that lawsuit. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

Mechoopda Indian Tribe

We have entered into Development and Management Agreements with the Mechoopda Indian Tribe of Chico Rancheria, California (the “MITCR”), a federally recognized Native American tribe. Pursuant to those agreements, we will assist the MITCR in developing and operating a gaming and entertainment facility to be located on approximately 650 acres in Butte County, California, at the intersection of State Route 149 and Highway 99, approximately 10 miles southeast of Chico, California and 80 miles north of Sacramento, California. Under the terms of the Development Agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by us are expected to be repaid from the proceeds of the facility financing or from the MITCR’s gaming revenues. As of December 31, 2006, we have advanced approximately $8.6 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is included on our consolidated balance sheets. In addition, we have agreed to pay approximately $2.2 million

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of payments upon achieving certain milestones, which will not be reimbursed. As of December 31, 2006, $50,000 of these payments had been made and expensed in development expense as incurred. The Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 24% of the facility’s net income. As currently contemplated, the facility will include approximately 700 slot machines, 12 table games and dining and entertainment amenities. Development of the facility is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the DOI accepting land into trust on behalf of the MITCR and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

North Fork Rancheria of Mono Indian Tribe

We have entered into Development and Management Agreements with the North Fork Rancheria of Mono Indians (the “Mono”), a federally recognized Native American tribe located near Fresno, California. Pursuant to those agreements, we will assist the Mono in developing and operating a gaming and entertainment facility to be located in Madera County, California. We have purchased, for the benefit of the Mono, a 305-acre parcel of land located on Highway 99 north of the city of Madera. Under the terms of the Development Agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from the Mono’s gaming revenues. As of December 31, 2006, we have advanced approximately $6.3 million toward the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included on our consolidated balance sheets. In addition, we have agreed to pay approximately $1.3 million of payments upon achieving certain milestones, which will not be reimbursed and will be expensed as incurred. As of December 31, 2006, none of these payments had been made. The Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 24% of the facility’s net income. As currently contemplated, the facility will include approximately 2,000 slot machines, 60 table games, restaurants, a hotel and entertainment amenities. Development of the gaming and entertainment project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the DOI accepting the land into trust on behalf of the Mono and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict, and is dependant upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

Land Acquisition

We have acquired certain parcels of land as part of future development activities. Our decision whether to proceed with any new gaming or development opportunity is dependent upon future economic and regulatory factors, the availability of financing and competitive and strategic considerations. As many of these considerations are beyond our control, no assurances can be made that we will be able to secure additional, acceptable financing in order to proceed with any particular project.

As of December 31, 2006, we had $214.4 million of land held for development that consists primarily of six sites that are owned or leased, which comprise 220 acres in the Las Vegas valley, 188 acres in the Sacramento, California area near Thunder Valley and 104 acres in Reno, Nevada. The primary gaming-entitled land that we own in the Las Vegas valley consists of 68 acres located at the intersection of Durango Road and the Southern Beltway/Interstate 215 in the southwest area of Las Vegas, 49 acres also located in southwest Las Vegas at the intersection of Flamingo Road and Interstate 215, 61 acres located on the southern end of Las Vegas Boulevard at Cactus Avenue of which we lease and have an option to purchase 2.5 acres and 30 acres on Boulder Highway at the site formerly known as the Castaways Hotel Casino and Bowling Center.

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We also have acquired or are under contract to acquire approximately 69 acres of land on which Wild Wild West is located and the surrounding area of which, approximately 50 acres have been acquired as of December 31, 2006. During the years ended December 31, 2006 and 2005 we incurred and expensed approximately $1.1 million and $11.7 million, respectively to terminate various leases related to this land. In 2003, we exercised our option to purchase the 19-acre parcel of leased land on which Wild Wild West is located which was to occur in July 2005 at a purchase price of  approximately $36 million. We have extended the date for the close of escrow to no later than January 2009. Additionally, the lease expense was reduced from $2.9 million to $1.6 million per year beginning in July 2005. No amounts related to this purchase option have been recorded on our consolidated balance sheets.

Regulation and Taxes

We are subject to extensive regulation by the Nevada gaming authorities and will be subject to regulation, which may or may not be similar to that in Nevada, by any other jurisdiction in which we may conduct gaming activities in the future, including the NIGC and tribal gaming agency of the UAIC.

The gaming industry represents a significant source of tax revenue, particularly to the State of Nevada and its counties and municipalities. From time to time, various state and federal legislators and officials have proposed changes in tax law, or in the administration of such law, affecting the gaming industry. The Nevada Legislature is presently in session and there is currently no proposed legislation to raise gaming taxes.

We believe that our recorded tax balances are adequate. However, it is not possible to determine with certainty the likelihood of possible changes in tax law or in the administration of such law, regulations or compact provisions. Such changes, if adopted, could have a material adverse effect on our operating results.

Description of Certain Indebtedness and Capital Stock

Revolving Facility

In December 2005, we increased our availability under our revolving credit facility (the “Revolving Facility”) from $1.0 billion to $2.0 billion and extended the maturity by one year to December 2010. The Revolving Facility contains no principal amortization. The Borrowers are the major operating subsidiaries and the Revolving Facility is secured by substantially all of our assets. Borrowings under the Revolving Facility bear interest at a margin above the Alternate Base Rate or the Eurodollar Rate (each as defined in the Revolving Facility), as selected by us. The margin above such rates, and the fee on the unfunded portions of the Revolving Facility, will vary quarterly based on our combined consolidated ratio of debt to Adjusted EBITDA (as defined in the Revolving Facility). As of December 31, 2006, the Borrowers’ margin above the Eurodollar Rate on borrowings under the Revolving Facility was 2.00%. The maximum margin for Eurodollar Rate borrowings is 2.25%. The maximum margin for Alternate Base Rate borrowings is 1.00%. As of December 31, 2006, the fee for the unfunded portion of the Revolving Facility was 0.30%.

The Revolving Facility contains certain financial and other covenants, some of which were amended in June and September 2006. These include a maximum funded debt to Adjusted EBITDA ratio for the Borrowers combined of 4.00 to 1.00 for each quarter and a minimum fixed charge coverage ratio for the preceding four quarters for the Borrowers combined of 1.25 to 1.00 for each quarter. As of December 31, 2006, the Borrowers’ funded debt to Adjusted EBITDA ratio was 2.57 to 1.00 and the fixed charge coverage ratio was 1.59 to 1.00. In addition, the Revolving Facility has financial and other covenants, which require that the maximum consolidated funded debt to Adjusted EBITDA ratio can be no more than 7.00 to 1.00 through June 30, 2007, which reduces to 6.75 to 1.00 on September 30, 2007 through June 30, 2008, to 6.50 to 1.00 on September 30, 2008 through December 31, 2008, to 5.75 to 1.00 on March 31, 2009 through December 31, 2009 and to 5.00 to 1.00 on March 31, 2010. Other covenants limit prepayments of

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indebtedness or rent (including subordinated debt other than re-financings meeting certain criteria), asset dispositions, dividends, indebtedness, stock repurchases and investments. As of December 31, 2006, our consolidated funded debt to Adjusted EBITDA ratio was 6.02 to 1.00. We have pledged the stock of all of our major subsidiaries.

Senior and Senior Subordinated Notes

On August 15, 2006, we issued $400.0 million of 73¤4% senior notes due August 15, 2016. On March 13, 2006, we issued $300.0 million of 65¤8% senior subordinated notes due March 2018. Proceeds from the sale of the notes were used to reduce a portion of the amount outstanding on our Revolving Facility.

During 2005, we redeemed the remaining $16.9 million of outstanding 83¤8% senior notes due 2008 and $17.4 million of outstanding 97¤8% senior subordinated notes due 2010. As a result of these redemptions, we recorded a loss on early retirement of debt of approximately $1.3 million in the year ended December 31, 2005 to reflect the write-off of the unamortized loan costs, discounts and call premium.

During the first quarter of 2004, we refinanced substantially all of our senior and senior subordinated notes. In connection with the refinancing, we completed tender offers and consent solicitations for approximately $940.6 million of our senior and senior subordinated notes outstanding. As a result, we recorded a loss on early retirement of debt of approximately $93.3 million during the year ended December 31, 2004 to reflect the write-off of the unamortized loan costs, unamortized discount, call premium, tender fee and consent payments which were partially offset by the fair value of the interest rate swaps that were tied directly to the redeemed senior and senior subordinated notes.

The indentures (the “Indentures”) governing our senior and senior subordinated notes (the “Notes”) contain certain customary financial and other covenants, which limit our and our subsidiaries’ ability to incur additional debt. At December 31, 2006, our Consolidated Coverage Ratio (as defined in the Indentures) was 2.40 to 1.00. The Indentures provide that we may not incur additional indebtedness, other than specified types of indebtedness, unless the Consolidated Coverage Ratio is at least 2.00 to 1.00. In the event our Consolidated Coverage Ratio is below 2.00 to 1.00, the covenant limits our ability to incur additional indebtedness for borrowings under the Revolving Facility not to exceed the greater of $200 million or 1.5 times Operating Cash Flow (as defined in the Indentures) for the four most recent quarters, plus $15 million. The Indentures also give the holders of the Notes the right to require us to purchase the Notes at 101% of the principal amount of the Notes plus accrued interest thereon upon a Change of Control and Rating Decline (each as defined in the Indentures) of the Company. In addition, the indenture governing the senior notes contains a limitation on liens we can incur.

Interest Rate Swaps

We have entered into various interest rate swaps with members of our bank group to manage interest expense. As of December 31, 2006, we have interest rate swaps with a combined notional amount of $550.0 million. We entered into a fair value hedge interest rate swap with a notional amount of $50.0 million tied directly to our 6% senior notes converting a portion of our fixed-rate debt to a floating-rate based upon three-month LIBOR rates, terminating in April 2012. This interest rate swap qualifies for the “shortcut” method allowed under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” and as amended by SFAS 138 and 149, which allows for an assumption of no ineffectiveness. As such, there is no income statement impact from changes in the fair value of the hedging instrument. Instead, the fair value of the instrument is recorded as an asset or liability on our balance sheet with an offsetting adjustment to the carrying value of the related debt. In accordance with SFAS 133, we recorded a liability of $2.2 million and $2.1 million as of December 31, 2006 and 2005, respectively, representing the fair value of this interest rate swap and a corresponding decrease in long-term debt, as this interest rate

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swap is considered highly effective under the criteria established by SFAS 133. We paid a rate based on LIBOR, which approximated 7.1% as of December 31, 2006 and received a fixed rate of 6.0%.

We have entered into two cash flow hedge interest rate swaps with a combined notional amount of $500.0 million tied directly to our Revolving Facility converting a portion of our floating-rate debt to a fixed-rate based on three-month LIBOR rates, terminating in December 2010. As of December 31, 2006, we paid an average fixed rate of 5.1% and received three-month LIBOR which approximated 5.4%. These interest rate swaps are designated and qualify as cash flow hedges resulting in the effective portion of the gain or loss reported as a component of other comprehensive income (loss) with an offsetting adjustment to the carrying value of the related debt. For the years ended December 31, 2006 and 2005, we recorded other comprehensive loss of $0.6 million and $0.8 million, respectively, related to the change in market value of these interest rate swaps. As a result, we recorded an increase in long-term debt of $1.4 million and $0.8 million as of December 31, 2006 and 2005, respectively.

The difference between amounts received and paid under such agreements, as well as any costs or fees, is recorded as a reduction of, or an addition to, interest expense as incurred over the life of the swaps. The net effect of the interest rate swaps resulted in a reduction of interest expense of approximately $0.2 million, $2.1 million and $7.3 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Green Valley Ranch Financing

On February 16, 2007, Green Valley Ranch entered into a new $830 million credit facility (the “Green Valley Facility”). The Green Valley Facility includes a $550 million first lien term loan due February 2014, a $250 million second lien term loan due August 2014 and a $30 million revolver due February 2012. At the time of close, the revolver was unfunded. Proceeds from the Green Valley Facility were used to repay outstanding borrowings under the previous revolving credit facility and term loan, as well as an equal distribution to the partners which totaled approximately $570 million. The outstanding balance of the Green Valley Ranch revolving credit facility as of December 31, 2006, was approximately $228.0 million.

Common Stock

We are authorized to issue up to 135 million shares of our common stock, $0.01 par value per share, 80,507,427 shares were issued and 23,245,751 shares were held in treasury as of December 31, 2006. Each holder of the common stock is entitled to one vote for each share held of record on each matter submitted to a vote of stockholders. Holders of our common stock have no cumulative voting, conversion, redemption or preemptive rights or other rights to subscribe for additional shares other than pursuant to the Rights Plan described below. Subject to any preferences that may be granted to the holders of our preferred stock, each holder of common stock is entitled to receive ratably, such dividends as may be declared by our Board of Directors out of funds legally available therefor, as well as any distributions to the stockholders and, in the event of our liquidation, dissolution or winding up is entitled to share ratably in all our assets remaining after payment of liabilities.

On February 14, 2007, we declared a quarterly cash dividend of $0.2875 per share to shareholders of record on February 26, 2007 payable on March 12, 2007. During the year ended December 31, 2006, we paid a quarterly cash dividend of $0.25 per share to shareholders of record on February 10, 2006 and May 12, 2006 and $0.2875 per share to shareholders of record on August 11, 2006 and November 13, 2006 for a total of $65.4 million.

During the year ended December 31, 2005, we paid a quarterly cash dividend of $0.21 per share to shareholders of record on February 11, 2005 and May 13, 2005 and $0.25 per share to shareholders of record on August 12, 2005 and November 11, 2005 for a total of $62.6 million.

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Under the Merger Agreement described in Note 16 to the Consolidated Financial Statements in this Annual Report on Form 10-K, we are prohibited from making any dividends except for normal quarterly dividends from operations until the consummation of the Merger.

Preferred Stock

We are authorized to issue up to 5 million shares of our preferred stock, $0.01 par value per share of which none are issued. The Board of Directors, without further action by the holders of our common stock, may issue shares of preferred stock in one or more series and may fix or alter the rights, preferences, privileges and restrictions, including the voting rights, redemption provisions (including sinking fund provisions), dividend rights, dividend rates, liquidation rates, liquidation preferences, conversion rights and the description and number of shares constituting any wholly unissued series of preferred stock. Except as described above, our Board of Directors, without further stockholder approval, may issue shares of preferred stock with rights that could adversely affect the rights of the holders of our common stock. The issuance of shares of preferred stock under certain circumstances could have the effect of delaying or preventing a change of control of Station or other corporate action.

Treasury Stock

During the year ended December 31, 2006, we repurchased approximately 12.7 million shares of our common stock for approximately $880.7 million. As of December 31, 2006, we had acquired approximately 23.2 million shares at a cost of approximately $1.0 billion and are authorized to repurchase approximately 7.5 million additional shares of our common stock.

Rights Plan

On October 6, 1997, we declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock. The dividend was paid on October 21, 1997. Each Right entitles the registered holder to purchase from us one one-hundredth of a share of Series A Preferred Stock, par value $0.01 per share (“Preferred Shares”) of Station at a price of $40.00 per one one-hundredth of a Preferred Share, subject to adjustment. The Rights are not exercisable until the earlier of 10 days following a public announcement that a person or group of affiliated or associated persons have acquired beneficial ownership of 15% or more of our outstanding common stock (“Acquiring Person”) or 10 business days (or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in the beneficial ownership by a person or group of 15% or more of our outstanding common stock.

The Rights will expire on October 21, 2007. Acquiring Persons do not have the same rights to receive common stock as other holders upon exercise of the Rights. Because of the nature of the Preferred Shares’ dividend, liquidation and voting rights, the value of one one-hundredth interest in a Preferred Share purchasable upon exercise of each Right should approximate the value of one common share. In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, the proper provisions will be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter become void), will thereafter have the right to receive upon exercise that number of shares of common stock having a market value of two times the exercise price of the Right. In the event that we are acquired in a merger or other business combination transaction or 50% or more of our consolidated assets or earning power are sold after a person or group has become an Acquiring Person, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon exercise thereof, that number of shares of common stock of the acquiring company, which at the time of such transaction will have a market value of two times the exercise price of the Right. Because of the characteristics of the Rights in connection with a person or group of affiliated or associated

49

persons becoming an Acquiring Person, the Rights may have the effect of making an acquisition of Station more difficult and may discourage such an acquisition.

Prior to the execution of the Merger Agreement described in Note 16 to the Consolidated Financial Statements in this Annual Report on Form 10-K, the Special Committee took all action necessary to ensure that FCP, Merger Sub and their respective Affiliates and Associates as well as Existing Equity Holders, each as defined in the rights agreement (the “Rights Agreement”), dated as of October 6, 1997, entered into by and between Station and Continental Stock Transfer & Trust Company (“Continental”), are excepted from the definition of Acquiring Person in the Rights Agreement only to the extent each is a Beneficial Owner (as defined in the Rights Agreement) by entering into an Amendment to the Rights Agreement on February 23, 2007 (the “Amendment”), as a result of the approval, execution and delivery of the Merger Agreement or consummation of the transactions contemplated thereby.

Critical Accounting Policies

Significant Accounting Policies and Estimates

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certain of our accounting policies, including the determination of slot club program liability, the estimated useful lives assigned to our assets, asset impairment, insurance reserves, purchase price allocations made in connection with our acquisitions and the calculation of our income tax liabilities, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from our estimates. To provide an understanding of the methodology we apply, our significant accounting policies and basis of presentation are discussed below, as well as where appropriate in this discussion and analysis and in the notes to our consolidated financial statements.

Slot Club Programs

Our Boarding Pass and Amigo Club player rewards programs (the “Programs”) allow customers to redeem points earned from their gaming activity at all Station and Fiesta properties for complimentary food, beverage, rooms, entertainment and merchandise. At the time redeemed, the retail value of complimentaries under the Programs is recorded as revenue with a corresponding offsetting amount included in promotional allowances. The cost associated with complimentary food, beverage, rooms, entertainment and merchandise redeemed under the Programs is recorded in casino costs and expenses. We also record a liability for the estimated cost of the outstanding points under the Programs that we believe will ultimately be redeemed.

Self-Insurance Reserves

We are self insured up to certain stop loss amounts for workers’ compensation and general liability costs. We are also self insured for major medical claims. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates for claims incurred but not reported. In estimating these accruals, we consider historical loss experience and make judgments about the expected levels of costs per claim. We believe our estimates of future liability are reasonable based upon our methodology; however, changes in health care costs, accident frequency and severity and other factors could materially affect the estimate for these liabilities.

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Interest Rate Swaps

From time to time we enter into interest rate swaps in order to manage interest rate risks associated with our current and future borrowings. As such, we have adopted SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” and as amended by SFAS 138 and 149, to account for our interest rate swaps. The pronouncements require us to recognize our interest rate swaps as either assets or liabilities in the balance sheets at fair value. The accounting for changes in fair value (i.e. gains or losses) of the interest rate swap agreements depends on whether is has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Additionally, the difference between amounts received and paid under such agreements as well as any costs or fees, is recorded as a reduction of, or an addition to, interest expense as incurred over the life of the swap.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and the ineffective portion, if any, is recorded in the statement of operations.

Derivative instruments that are designated as a fair value hedge and qualify for the “shortcut” method under SFAS 133 and as amended by SFAS 138 and 149, allows for an assumption of no ineffectiveness. As such there is no income statement impact from the changes in the fair value of the hedging instrument. Instead, the fair value of the instrument is recorded as an asset or liability on our balance sheet with an offsetting adjustment to the carrying value of the related debt.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the terms of the capitalized lease, whichever is less. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.

We evaluate our property and equipment and other long-lived assets for impairment in accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. For assets to be disposed of, we recognize the asset to be sold at the lower of carrying value or fair market value less costs of disposal. Fair market value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model. For assets to be held and used, we review fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. Our consolidated financial statements reflect all adjustments required by SFAS 144 as of December 31, 2006.

Share-Based Compensation

Effective January 1, 2006, we adopted SFAS 123R, “Share-Based Payment”, utilizing the modified prospective application. Under the modified prospective application, SFAS 123R applies to new awards and awards that were outstanding on December 31, 2005 that are subsequently modified, repurchased or cancelled. Under the modified prospective application, compensation cost recognized in the year ended December 31, 2006 includes compensation cost of all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123 and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Accordingly, prior period amounts are not restated to reflect the impact of adopting SFAS 123R under the modified prospective application.

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Prior to adopting SFAS 123R, we accounted for share-based awards under APB Opinion 25, “Accounting for Stock Issued to Employees”, which resulted in compensation expense recorded only for restricted share awards and for modification of outstanding unvested options. Upon adoption of SFAS 123R, we began recognizing compensation expense related to stock option awards that were previously disclosed as pro forma information regarding net income and earnings per share. Compensation expense related to restricted stock awards continues to be expensed as under APB Opinion 25, with the addition of estimated forfeitures.

Stock Options - The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and expensed using the straight-line approach. Option valuation models require the input of highly subjective assumptions and changes in the assumptions used can materially affect the fair value estimate. Expected volatility and dividends are based on implied and historical factors related to our common stock. The expected term represents the weighted-average time between grant date and exercise date and the risk-free interest rate is based on U.S. Treasury rates appropriate for the expected term. We use historical data and projections to estimate expected employee behaviors related to option exercises and forfeitures. SFAS 123R requires that forfeitures be included as part of the grant date estimate. The effect of forfeitures related to previous SFAS 123 pro forma expense was not material.  Additionally, we receive a tax deduction for certain stock option exercises during the period the options are exercised, generally for the excess of the market price of the option exercised over the exercise price of such options.

Restricted Stock - The unearned share-based compensation related to restricted stock is amortized to compensation expense over the period the restrictions lapse (generally five to ten years). The share-based expense for these awards was determined based on the market price of our stock at the date of grant applied to the total number of shares that were anticipated to fully vest and then amortized over the vesting period. Upon adoption of SFAS 123R, we recognize compensation expense based on our expectation of which restricted stock awards will vest over the requisite service period for such awards. Prior to implementing SFAS 123R, we recognized deferred compensation as a contra-equity account representing the amount of unrecognized restricted stock expense that was reduced as the expense was recognized. Under the provisions of SFAS 123R, the previously recorded deferred compensation was recorded against additional paid-in capital.

The recognition of compensation expense related to the issuance of restricted stock has not changed with the adoption of SFAS 123R, except for the addition of the estimate of forfeitures, and such compensation expense continues to be expensed in the statements of operations.

Goodwill and Other Intangibles

In accordance with SFAS 142, “Goodwill and Other Intangible Assets”, we test for impairment of goodwill annually using the Income Approach, which focuses on the income-producing capability of the respective property during the fourth quarter of each fiscal year. The underlying premise of this approach is that the value of an asset can be measured by the present worth of the net economic benefit (cash receipts less cash outlays) to be received over the life of the subject asset. The steps followed in applying this approach include estimating the expected after-tax cash flows attributable to the respective property and converting these after-tax cash flows to present value through discounting. The discounting process uses a rate of return, which accounts for both the time value of money and investment risk factors. The present value of the after-tax cash flows is then totaled to arrive at an indication of the fair value of the assets. If the fair value of the assets exceeds the carrying value, then impairment is measured based on the difference between the calculated fair value and the carrying value. Our consolidated financial statements reflect all adjustments required by SFAS 142 as of December 31, 2006.

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Income Taxes

We are subject to income taxes in the United States of America and file a consolidated federal income tax return. We account for income taxes according to SFAS 109, “Accounting for Income Taxes”. SFAS 109 requires the recognition of deferred tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be recognized.

Our income tax returns are subject to examination by the Internal Revenue Service and other tax authorities. We regularly assess the potential outcome of these examinations in determining the adequacy of our provision for income taxes and our income tax liabilities. Inherent in our determination of any necessary reserves are assumptions based on past experiences and judgments about potential actions by taxing authorities. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. We believe that we have adequately provided for any reasonable and foreseeable outcome related to uncertain tax matters.

Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”. SFAS 158 applies to all plan sponsors who offer defined postretirement benefit plans and requires an entity to:

·Recognize in its balance sheet an asset for a defined benefit postretirement plan’s overfunded status or a liability for a plan’s underfunded status.

·Measure a defined benefit postretirement plan’s assets and obligations that determine its funded status as of the end of the employer’s fiscal year.

·Recognize changes in the funded status of a defined benefit postretirement plan in comprehensive earnings in the year in which the changes occur.

SFAS 158 does not change the amount of net periodic benefit cost included in net earnings. The requirement to recognize the funded status of a defined benefit postretirement plan and the disclosure requirements are effective for fiscal years ending after December 15, 2006 for public entities. Accordingly, we adopted SFAS 158 in the fourth quarter of 2006 as it relates to the Supplemental Executive Retirement Plan and Supplemental Management Retirement Plan resulting in the recognition of an additional noncurrent pension liability of $15.6 million, a noncurrent deferred tax asset of $5.4 million and accumulated other comprehensive loss of $10.2 million as of December 31, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year end balance sheet is effective for fiscal years ending after December 15, 2008. We currently utilize December 31 as the measurement date for the plan assets and benefit obligations and therefore, comply with the requirement.

In September 2006, the FASB issued SFAS 157, “Fair Value Measurements”. This statement defines fair value, establishes a framework for measuring fair value for both assets and liabilities through a fair value hierarchy and expands disclosure requirements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. We are evaluating SFAS 157 and have not yet determined the impact the adoption will have on the consolidated financial statements.

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In June 2006, the FASB issued Interpretation 48, “Accounting for Uncertainty in Income Taxes”, (“FIN 48”). This interpretation, among other things, creates a two step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more likely than not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the “more likely than not” threshold of being sustained. FIN 48 specifically prohibits the use of a valuation allowance as a substitute for derecognition of tax positions and it has expanded disclosure requirements. FIN 48 is effective for fiscal years beginning after December 15, 2006, in which the impact of adoption should be accounted for as a cumulative-effect adjustment to the beginning balance of retained earnings. We are evaluating FIN 48 and have not yet determined the impact the adoption will have, if any, on the consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our long-term debt. We attempt to limit our exposure to interest rate risk by managing the mix of our long-term fixed-rate borrowings and short-term borrowings under the Revolving Facility. Borrowings under the Revolving Facility bear interest at a margin above the Alternate Base Rate or the Eurodollar Rate (each as defined in the Revolving Facility) as selected by us. However, the amount of outstanding borrowings is expected to fluctuate and may be reduced from time to time. The Revolving Facility matures in December 2010.

The following table provides information about our long-term debt at December 31, 2006 (see also “Description of Certain Indebtedness and Capital Stock”) (amounts in thousands):

	Maturity date	Face amount			Carrying value			Estimated fair value
Revolving Facility, weighted-average interest rate of approximately 7.6%	December 2010	$	2,000,000		$	1,155,800		$	1,155,800
6% senior notes	April 2012	450,000			448,742			426,375
73¤4% senior notes	August 2016	400,000			400,000			404,000
61¤2% senior subordinated notes	February 2014	450,000			450,000			401,625
67¤8% senior subordinated notes	March 2016	700,000			707,427			626,500
65¤8% senior subordinated notes	March 2018	300,000			298,568			258,375
Other debt, weighted-average interest rate of approximately 7.1%	2009-2026	9,196			9,196			9,196
Market value of interest rate swaps	2010-2012	(905		)	(905		)	(905		)
Total		$	4,308,291		$	3,468,828		$	3,280,966

We are also exposed to market risk in the form of fluctuations in interest rates and their potential impact upon our debt. This market risk is managed by utilizing derivative financial instruments in accordance with established policies and procedures. We evaluate our exposure to market risk by monitoring interest rates in the marketplace, and do not utilize derivative financial instruments for trading purposes. Our derivative financial instruments consist exclusively of interest rate swap agreements. Interest differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expense. Interest rate swaps related to debt are matched with specific debt obligations.

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The following table provides information about our financial instruments that are sensitive to changes in interest rates (amounts in thousands):

	During the year ending December 31,
	2007			2008			2009			2010			2011			Thereafter			Total
Long-term debt (including current portion):
Fixed-rate	$	—		$	—		$	5,334		$	—		$	—		$	2,304,738		$	2,310,072
Average interest rate	—			—			6.0		%	—			—			6.7		%	6.7		%
Variable-rate	$	341		$	332		$	102		$	1,155,911		$	120		$	2,855		$	1,159,661
Average interest rate	8.6		%	8.6		%	8.6		%	7.6		%	8.6		%	8.6		%	7.6		%
Interest rate swaps:
Notional amount	$	—		$	—		$	—		$	500,000		$	—		$	50,000		$	550,000
Average payable rate	—			—			—			5.1		%	—			7.1		%	5.3		%
Average receivable rate	—			—			—			5.4		%	—			6.0		%	5.4		%

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firm		57
Consolidated Balance Sheets		59
Consolidated Statements of Operations		60
Consolidated Statements of Stockholders’ (Deficit) Equity		61
Consolidated Statements of Cash Flows		62
Notes to Consolidated Financial Statements		63

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Station Casinos, Inc.:

We have audited the accompanying consolidated balance sheets of Station Casinos, Inc. and its subsidiaries (the “Company”) as of December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

As discussed in Notes 11 and 13, in 2006 the Company adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, and Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2007, expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
Las Vegas, Nevada
February 18, 2007

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Station Casinos, Inc.:

We have audited management’s assessment, included in the accompanying Management’s Report in Internal Control Over Financial Reporting, that Station Casinos, Inc. and its subsidiaries (the “Company”) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2006 and 2005, and the related consolidated statement of operations, stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended December 31, 2006 of the Company, and our report dated February 18, 2007 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
Las Vegas, Nevada
February 18, 2007

58

STATION CASINOS, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)

	December 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	116,898		$	85,552
Receivables, net	40,762			19,604
Inventories	9,676			6,370
Prepaid gaming tax	21,519			17,942
Prepaid expenses	12,696			9,743
Total current assets	201,551			139,211
Property and equipment, net	2,586,473			1,990,584
Goodwill	154,498			154,498
Land held for development	214,374			252,444
Investments in joint ventures	253,577			129,191
Native American development costs	181,153			165,244
Other assets, net	125,070			97,871
Total assets	$	3,716,696		$	2,929,043
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Current portion of long-term debt	$	341		$	108
Accounts payable	19,558			12,611
Construction contracts payable	58,318			83,151
Accrued expenses and other current liabilities	173,689			132,895
Total current liabilities	251,906			228,765
Long-term debt, less current portion	3,468,487			1,944,220
Deferred income tax, net	109,788			79,015
Other long-term liabilities, net	73,373			46,229
Total liabilities	3,903,554			2,298,229
Commitments and contingencies
Stockholders’ (deficit) equity:
Common stock, par value $0.01; authorized 135,000,000 shares; 80,507,427 and 79,047,602 shares issued	593			578
Treasury stock, 23,245,751 and 10,521,414 shares, at cost	(1,039,804		)	(159,128		)
Additional paid-in capital	582,739			627,352
Deferred compensation - restricted stock	—			(73,599		)
Accumulated other comprehensive (loss) income	(10,782		)	24
Retained earnings	280,396			235,587
Total stockholders’ (deficit) equity	(186,858		)	630,814
Total liabilities and stockholders’ (deficit) equity	$	3,716,696		$	2,929,043

The accompanying notes are an integral part of these consolidated financial statements.

59

STATION CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)

	For the years ended December 31,
	2006			2005			2004
Operating revenues:
Casino	$	969,147		$	825,995		$	730,584
Food and beverage	211,579			146,774			140,332
Room	82,431			61,238			57,057
Other	70,245			52,550			42,008
Management fees	99,485			95,144			84,618
Gross revenues	1,432,887			1,181,701			1,054,599
Promotional allowances	(93,863		)	(72,868		)	(67,857		)
Net revenues	1,339,024			1,108,833			986,742
Operating costs and expenses:
Casino	348,659			286,503			273,816
Food and beverage	152,300			102,970			100,548
Room	29,962			21,094			21,053
Other	26,244			17,799			16,820
Selling, general and administrative	230,278			181,670			172,923
Corporate	63,066			57,619			47,189
Development	9,036			8,747			10,683
Depreciation and amortization	131,094			101,356			85,807
Loss on asset disposals, net	1,736			3,916			3,801
Preopening	29,461			6,560			848
Lease terminations	1,053			14,654			—
	1,022,889			802,888			733,488
Operating income	316,135			305,945			253,254
Earnings from joint ventures	41,861			38,885			26,524
Operating income and earnings from joint ventures	357,996			344,830			279,778
Other expense:
Interest expense, net	(171,729		)	(80,378		)	(76,799		)
Interest and other expense from joint ventures	(6,815		)	(6,947		)	(4,485		)
Loss on early retirement of debt	—			(1,278		)	(93,265		)
	(178,544		)	(88,603		)	(174,549		)
Income before income taxes	179,452			256,227			105,229
Income tax provision	(69,240		)	(94,341		)	(38,879		)
Net income	$	110,212		$	161,886		$	66,350
Earnings per common share:
Basic	$	1.90		$	2.46		$	1.03
Diluted	$	1.85		$	2.40		$	1.00
Weighted average common shares outstanding:
Basic	57,969			65,707			64,362
Diluted	59,671			67,588			66,264
Dividends paid per common share	$	1.08		$	0.92		$	0.69

The accompanying notes are an integral part of these consolidated financial statements.

60

STATION CASINOS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(amounts in thousands)

											Deferred				Accumulated
							Additional				compensation -				other								Total
	Common			Treasury			paid - in				restricted				comprehensive				Retained				stockholders’
	stock			stock			capital				stock				(loss) income				earnings				(deficit) equity
Balances, December 31, 2003		$	497	$	(134,534	)		$	387,973			$	(27,003	)		$	(1,334	)		$	114,340			$	339,939
Exercise of stock options		52		—				117,584				—				—				—				117,636
Issuance of restricted stock, net		12		—				61,759				(61,771		)		—				—				—
Amortization of deferred compensation		—		—				—				9,676				—				—				9,676
Purchase of treasury stock, at cost (64 shares)		—		(3,180		)		—				—				—				—				(3,180		)
Interest rate swap market value adjustment, net		—		—				—				—				723				—				723
Dividends paid		—		—				—				—				—				(44,346		)		(44,346		)
Other		—		—				623				1,500				—				—				2,123
Net income		—		—				—				—				—				66,350				66,350
Balances, December 31, 2004		561		(137,714		)		567,939				(77,598		)		(611		)		136,344				488,921
Exercise of stock options		16		—				50,744				—				—				—				50,760
Issuance of restricted stock, net		1		—				8,669				(8,670		)		—				—				—
Amortization of deferred compensation		—		—				—				12,669				—				—				12,669
Purchase of treasury stock, at cost (336 shares)		—		(21,414		)		—				—				—				—				(21,414		)
Interest rate swap market value adjustment, net		—		—				—				—				635				—				635
Dividends paid		—		—				—				—				—				(62,643		)		(62,643		)
Net income		—		—				—				—				—				161,886				161,886
Balances, December 31, 2005		578		(159,128		)		627,352				(73,599		)		24				235,587				630,814
SFAS 123R adoption reclass		—		—				(73,599		)		73,599				—				—				—
Exercise of stock options		1		—				4,706				—				—				—				4,707
Issuance of restricted stock, net		14		—				(14		)		—				—				—				—
Share-based compensation expense		—		—				24,294				—				—				—				24,294
Purchase of treasury stock, at cost (12.7 million shares)		—		(880,676		)		—				—				—				—				(880,676		)
Interest rate swap market value adjustment, net		—		—				—				—				(636		)		—				(636		)
Adoption of SFAS 158, net		—		—				—				—				(10,170		)		—				(10,170		)
Dividends paid		—		—				—				—				—				(65,403		)		(65,403		)
Net income		—		—				—				—				—				110,212				110,212
Balances, December 31, 2006		$	593	$	(1,039,804	)		$	582,739			$	—			$	(10,782	)		$	280,396			$	(186,858	)

The accompanying notes are an integral part of these consolidated financial statements.

61

STATION CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)

	For the years ended December 31,
	2006			2005			2004
Cash flows from operating activities:
Net income	$	110,212		$	161,886		$	66,350
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	131,094			101,356			85,807
Tax benefit from exercise of stock options	—			31,803			62,643
Excess tax benefit from exercise of stock options	(3,145		)	—			—
Share-based compensation	24,294			12,669			9,676
Earnings from joint ventures	(35,046		)	(31,938		)	(22,039		)
Distributions of earnings from joint ventures	890			11,867			815
Amortization of debt discount and issuance costs	4,731			3,262			2,945
Loss on early retirement of debt	—			1,278			93,265
Changes in assets and liabilities:
Receivables, net	(21,158		)	1,848			6,772
Inventories and prepaid expenses	(9,836		)	(4,419		)	(2,488		)
Deferred income tax	38,739			59,481			(28,174		)
Accounts payable	6,947			2,260			(10,087		)
Accrued expenses and other current liabilities	39,589			19,885			(9,619		)
Other, net	6,062			5,653			6,545
Total adjustments	183,161			215,005			196,061
Net cash provided by operating activities	293,373			376,891			262,411
Cash flows from investing activities:
Capital expenditures	(754,988		)	(830,805		)	(382,035		)
Proceeds from sale of land, property and equipment	18,002			22,143			28,090
Investments in joint ventures, net	(39,759		)	(1,295		)	1,587
Construction contracts payable	(24,833		)	46,853			36,298
Native American development costs	(15,909		)	(111,900		)	(22,243		)
Other, net	(18,774		)	(10,323		)	374
Net cash used in investing activities	(836,261		)	(885,327		)	(337,929		)
Cash flows from financing activities:
Borrowings (payments) under bank facility with maturity dates less than three months, net	825,800			278,500			(75,500		)
Payments under bank facility, maturity dates greater than three months	—			—			(50,000		)
Purchase of treasury stock	(880,676		)	(21,414		)	(3,180		)
Exercise of stock options	1,562			18,957			54,993
Excess tax benefit from exercise of stock options	3,145			—			—
Redemption of senior and senior subordinated notes	—			(34,272		)	(1,028,815		)
Proceeds from the issuance of senior and senior subordinated notes, net	698,500			358,250			1,248,214
Payment of dividends	(65,403		)	(62,643		)	(44,346		)
Debt issuance costs	(8,660		)	(11,381		)	(19,429		)
Other, net	(34		)	(426		)	(274		)
Net cash provided by financing activities	574,234			525,571			81,663
Cash and cash equivalents:
Increase in cash and cash equivalents	31,346			17,135			6,145
Balance, beginning of year	85,552			68,417			62,272
Balance, end of year	$	116,898		$	85,552		$	68,417
Supplemental cash flow disclosures:
Cash paid for interest, net of $29,638, $22,287 and $6,968 capitalized	$	137,464		$	75,424		$	62,832
Cash paid (received) for income taxes, net	$	34,283		$	3,036		$	(2,558	)
Supplemental disclosure of non-cash items:
Capital expenditures financed by debt	$	1,788		$	—		$	—
Land contributed to joint ventures, net	$	50,708		$	—		$	—
Investment in MPM	$	—		$	3,467		$	—

The accompanying notes are an integral part of these consolidated financial statements.

62

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Basis of Presentation

Basis of Presentation and Organization

Station Casinos, Inc. (the “Company”, “Station”, “we”, “our”, “ours” or “us”), a Nevada corporation, is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) under the Station and Fiesta brand names and seven smaller casino properties (two of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. The accompanying consolidated financial statements include the accounts of Station and its wholly owned subsidiaries and MPM Enterprises, LLC (which is 50% owned by Station and required to be consolidated). Investments in all other 50% or less owned affiliated companies are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions for items such as slot club program liability, self-insurance reserves, bad debt reserves, estimated useful lives assigned to fixed assets, asset impairment, purchase price allocations made in connection with acquisitions and the calculation of the income tax liabilities, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand at our properties, as well as investments purchased with an original maturity of 90 days or less.

Inventories

Inventories are stated at the lower of cost or market; cost being determined on a weighted-average basis.

Fair Value of Financial instruments

The carrying value of our cash and cash equivalents, receivables and accounts payable approximates fair value primarily because of the short maturities of these instruments. The estimated fair value of our long-term debt is based on quoted market prices on or about December 31, 2006, for our debt securities that are publicly traded. For debt with short-term maturities, the fair value approximates the carrying amount.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the terms of the capitalized lease, whichever is less. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.

We evaluate our property and equipment and other long-lived assets for impairment in accordance with Statement of Financial Accounting Standard (“SFAS”) 144, “Accounting for the Impairment or

63

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

Disposal of Long-Lived Assets”. For assets to be disposed of, we recognize the asset to be sold at the lower of carrying value or fair market value less costs of disposal. Fair market value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model. For assets to be held and used, we review fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. Our consolidated financial statements reflect all adjustments required by SFAS 144 as of December 31, 2006.

Capitalization of Interest

We capitalize interest costs associated with debt incurred in connection with major construction projects. Interest capitalization ceases once the project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. When no debt is specifically identified as being incurred in connection with such construction projects, we capitalize interest on amounts expended on the project at our weighted average cost of borrowings. Interest capitalized was approximately $29.6 million, $22.3 million and $7.0 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Goodwill

In accordance with SFAS 142, “Goodwill and Other Intangible Assets”, we test for impairment of goodwill annually using the Income Approach, which focuses on the income-producing capability of the respective property during the fourth quarter of each fiscal year. The underlying premise of this approach is that the value of an asset can be measured by the present worth of the net economic benefit (cash receipts less cash outlays) to be received over the life of the subject asset. The steps followed in applying this approach include estimating the expected after-tax cash flows attributable to the respective property and converting these after-tax cash flows to present value through discounting. The discounting process uses a rate of return, which accounts for both the time value of money and investment risk factors. The present value of the after-tax cash flows is then totaled to arrive at an indication of the fair value of the assets. If the fair value of the assets exceeds the carrying value, then impairment is measured based on the difference between the calculated fair value and the carrying value. We have determined there to be no impairment during 2004, 2005 and 2006.

Native American Development Costs

We incur certain costs associated with development and management agreements entered into with Native American Tribes (the “Tribe”). In accordance with SFAS 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects”, costs for the acquisition and related development of the land and the casino facilities are capitalized as long-term assets until such time as the assets are transferred to the Tribe at which time a long term receivable is recognized.

In accordance with SFAS 34, “Capitalization of Interest Costs”, we capitalize interest to the project once a “Notice of Intent” (or the equivalent) to transfer the land into trust, signifying that activities

64

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

are in progress to prepare the asset for its intended use, has been issued by the United States Department of the Interior (“DOI”).

We earn a return on the costs incurred for the acquisition and development of the projects based upon the costs incurred over the development period of the project. In accordance with SFAS 66, “Accounting for Sales of Real Estate”, we recognize the return when the facility is complete and collectability of the receivable is assured. Due to the uncertainty surrounding the estimated cost to complete and the collectability of the stated return, we defer the return until the gaming facility is complete and transferred to the Tribe and the resulting receivable has been repaid. Repayment of the resulting advances would be from a refinancing by the Tribe or from the cash flow from the gaming facility or both.

On a quarterly basis, we evaluate the Native American Development Costs for impairment in accordance with SFAS 144. We review the Native American Costs for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying amount of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment is measured based on fair value compared to carrying amount, with fair value typically based on a discounted cash flow model. The consolidated financial statements reflect all adjustments required by SFAS 144 as of December 31, 2006.

Debt Issuance Costs

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over the expected terms of the related debt agreements and are included in other assets on our consolidated balance sheets.

Advertising

We expense advertising costs the first time the advertising takes place. Advertising expense, which is generally included in selling, general and administrative expenses on the accompanying consolidated statement of operations were approximately $19.1 million, $13.5 million and $13.6 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Preopening

Preopening expenses have been expensed as incurred. The construction phase of a project typically covers a period of 12 to 24 months. The majority of preopening costs are incurred in the three months prior to opening. During the years ended December 31, 2006, 2005 and 2004, we incurred preopening expenses of $29.5 million, $6.6 million and $0.8 million, respectively, primarily related to the development of Red Rock which opened on April 18, 2006.

Interest Rate Swaps

From time to time we enter into interest rate swaps in order to manage interest rate risks associated with our current and future borrowings. As such, we have adopted SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” and as amended by SFAS 138 and 149, to account for interest rate

65

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

swaps. The pronouncements require us to recognize the interest rate swaps as either assets or liabilities in the balance sheets at fair value. The accounting for changes in fair value (i.e. gains or losses) of the interest rate swap agreements depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Additionally, the difference between amounts received and paid under such agreements, as well as any costs or fees, is recorded as a reduction of, or an addition to, interest expense as incurred over the life of the swap.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and the ineffective portion, if any, is recorded in the statement of operations.

Derivative instruments that are designated as fair value hedges and qualify for the “shortcut” method under SFAS 133 (and as amended by SFAS 138 and 149) allow for an assumption of no ineffectiveness. As such there is no income statement impact from the changes in the fair value of the hedging instrument. Instead, the fair value of the instrument is recorded as an asset or liability on our balance sheet with an offsetting adjustment to the carrying value of the related debt (see Note 8).

Revenues and Promotional Allowances

We recognize as casino revenues the net win from gaming activities, which is the difference between gaming wins and losses. All other revenues are recognized as the service is provided. Additionally, our Boarding Pass and Amigo Club player rewards programs (the “Programs”) allow customers to redeem points earned from their gaming activity at all Station and Fiesta properties for complimentary food, beverage, rooms, entertainment and merchandise. At the time redeemed, the retail value of complimentaries under the Programs is recorded as revenue with a corresponding offsetting amount included in promotional allowances. The cost associated with complimentary food, beverage, rooms, entertainment and merchandise redeemed under the Programs is recorded in casino costs and expenses. The estimated departmental costs of providing such promotional allowances are included in casino costs and expenses and consist of the following (amounts in thousands):

	For the years ended December 31,
	2006		2005		2004
Food and beverage	$	82,270	$	62,424	$	59,391
Room	5,794		3,786		3,489
Other	3,832		3,414		2,891
Total	$	91,896	$	69,624	$	65,771

We also record a liability for the estimated cost of the outstanding points under the Programs that we believe will ultimately be redeemed.

Related Party Transactions

We have entered into various related party transactions, which consist primarily of lease payments related to ground leases at Boulder Station and Texas Station and the purchase of certain assets. The expenses related to these related party ground lease transactions were approximately $6.2 million, $5.9 million and $5.7 million for the years ended December 31, 2006, 2005 and 2004, respectively. In February 2005, we purchased approximately 96 acres of gaming-entitled property in Reno, Nevada for

66

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

$15.1 million from Blake L. Sartini, the brother-in-law of Frank J. Fertitta III, Chief Executive Officer, and Lorenzo J. Fertitta, President. Additionally, we have purchased tickets to events held by Zuffa, LLC which is the parent company of the Ultimate Fighting Championship and is owned by Frank J. Fertitta III and Lorenzo J. Fertitta. For the year ended December 31, 2006, ticket purchases totaled approximately $0.3 million.

Earnings Applicable to Common Stock

In accordance with the provisions of SFAS 128, “Earnings Per Share”, basic EPS is computed by dividing net income applicable to common stock by the weighted average common shares outstanding, excluding unvested restricted stock, during the period. Diluted EPS reflects the additional dilution for all potentially dilutive securities such as stock options and unvested restricted stock.

The weighted average number of common shares used in the calculation of basic and diluted earnings per share consisted of the following (amounts in thousands):

	For the years ended December 31,
	2006	2005	2004
Weighted average common shares outstanding (used in calculation of basic earnings per share)	57,969	65,707	64,362
Potential dilution from the assumed exercise of stock options and unvested restricted stock	1,702	1,881	1,902
Weighted average common and common equivalent shares outstanding (used in calculation of diluted earnings per share)	59,671	67,588	66,264

Share-Based Compensation

Effective January 1, 2006, we adopted SFAS 123R, “Share-Based Payment”, utilizing the modified prospective application. Under the modified prospective application, SFAS 123R applies to new awards and awards that were outstanding on December 31, 2005 that are subsequently modified, repurchased or cancelled. Under the modified prospective application, compensation cost recognized in the year ended December 31, 2006 includes compensation cost of all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123 and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Accordingly, prior period amounts are not restated to reflect the impact of adopting SFAS 123R under the modified prospective application.

67

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

Prior to adopting SFAS 123R, we accounted for share-based awards under APB Opinion 25, “Accounting for Stock Issued to Employees”, which resulted in compensation expense recorded only for restricted share awards and for modification of outstanding unvested options. Upon adoption of SFAS 123R, we began recognizing compensation expense related to stock option awards that were previously disclosed as pro forma information regarding net income and earnings per share. Compensation expense related to restricted stock awards continues to be expensed as under APB Opinion 25, with the addition of estimated forfeitures.

Stock Options - The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and expensed using the straight-line approach. Option valuation models require the input of highly subjective assumptions and changes in the assumptions used can materially affect the fair value estimate. Expected volatility and dividends are based on implied and historical factors related to our common stock. The expected term represents the weighted-average time between grant date and exercise date and the risk-free interest rate is based on U.S. Treasury rates appropriate for the expected term. We use historical data and projections to estimate expected employee behaviors related to option exercises and forfeitures. SFAS 123R requires that forfeitures be included as part of the grant date estimate. The effect of forfeitures related to previous SFAS 123 pro forma expense was not material.

We receive a tax deduction for certain stock option exercises during the period the options are exercised, generally for the excess of the market price of the option exercised over the exercise price of such options. In accordance with SFAS 123R, for the year ended December 31, 2006, we reported the tax benefit from the exercise of stock options as financing cash flows rather than operating cash flows as reported prior to the adoption of SFAS 123R. For the year ended December 31, 2006, we reported $3.1 million of excess tax benefit.

Restricted Stock - The unearned share-based compensation related to restricted stock is amortized to compensation expense over the period the restrictions lapse (generally five to ten years). The share-based expense for these awards was determined based on the market price of our stock at the date of grant applied to the total number of shares that were anticipated to fully vest and then amortized over the vesting period. Upon adoption of SFAS 123R, we recognize compensation expense based on our expectation of which restricted stock awards will vest over the requisite service period for such awards. Prior to implementing SFAS 123R, we recognized deferred compensation as a contra-equity account representing the amount of unrecognized restricted stock expense that was reduced as the expense was recognized. Under the provisions of SFAS 123R, the previously recorded deferred compensation was recorded against additional paid-in capital.

The recognition of compensation expense related to the issuance of restricted stock has not changed with the adoption of SFAS 123R, except for the addition of the estimate of forfeitures, and such compensation expense continues to be expensed in the statements of operations. During the year ended December 31, 2006, income before income tax and net income were reduced by approximately $2.2 million and $1.4 million, respectively, as a result of adopting SFAS 123R, and basic earnings per share and diluted earnings per share were reduced by $0.03 and $0.02, respectively, reflecting compensation expense related to stock option awards that were previously not recognized in the financial statements due to our prior application of APB Opinion 25.

68

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

Operating Segments

SFAS 131, “Disclosures about Segments of an Enterprise and Related Information”, requires separate financial information be disclosed for all operating segments of a business. We believe we meet the “economic similarity” criteria established by SFAS 131, and as a result, we aggregate all of our properties into one operating segment. All of our properties offer the same products, cater to the same customer base, are all located in the greater Las Vegas, Nevada area, have the same regulatory and tax structure, share the same marketing techniques and are all directed by a centralized management structure.

Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”. SFAS 158 applies to all plan sponsors who offer defined postretirement benefit plans and requires an entity to:

·Recognize in its balance sheet an asset for a defined benefit postretirement plan’s overfunded status or a liability for a plan’s underfunded status.

·Measure a defined benefit postretirement plan’s assets and obligations that determine its funded status as of the end of the employer’s fiscal year.

·Recognize changes in the funded status of a defined benefit postretirement plan in comprehensive earnings in the year in which the changes occur.

SFAS 158 does not change the amount of net periodic benefit cost included in net earnings. The requirement to recognize the funded status of a defined benefit postretirement plan and the disclosure requirements are effective for fiscal years ending after December 15, 2006 for public entities. Accordingly, we adopted SFAS 158 in the fourth quarter of 2006 as it relates to the Supplemental Executive Retirement Plan and Supplemental Management Retirement Plan, resulting in the recognition of an additional noncurrent pension liability of $15.6 million, a noncurrent deferred tax asset of $5.4 million and accumulated other comprehensive loss of $10.2 million as of December 31, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year end balance sheet is effective for fiscal years ending after December 15, 2008. We currently utilize December 31 as the measurement date for the plan assets and benefit obligations and therefore, comply with the requirement. See Note 13 for additional information required to be disclosed in accordance with SFAS 158.

In September 2006, the FASB issued SFAS 157, “Fair Value Measurements”. This statement defines fair value, establishes a framework for measuring fair value for both assets and liabilities through a fair value hierarchy and expands disclosure requirements. SFAS 157 is effective for financial statements issued for fiscals years beginning after November 15, 2007 and interim periods within those fiscal years. We are evaluating SFAS 157 and have not yet determined the impact the adoption will have on the consolidated financial statements.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”, (“FIN 48”). This interpretation, among other things, creates a two step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two)

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1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

determines the amount of benefit that more-likely-than-not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when a company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. FIN 48 specifically prohibits the use of a valuation allowance as a substitute for derecognition of tax positions and it has expanded disclosure requirements. FIN 48 is effective for fiscal years beginning after December 15, 2006, in which the impact of adoption should be accounted for as a cumulative-effect adjustment to the beginning balance of retained earnings. We are evaluating FIN 48 and have not yet determined the impact the adoption will have, if any, on the consolidated financial statements.

Reclassifications

Certain amounts in the December 31, 2005 and 2004 consolidated financial statements have been reclassified to conform to the December 31, 2006 presentation. These reclassifications had no effect on the previously reported net income.

2. Receivables

Components of receivables are as follows (amounts in thousands):

	December 31,
	2006			2005
Casino	$	12,882		$	5,696
Hotel	6,475			2,997
Management fees	9,459			8,523
Income tax	7,100			156
Due from unconsolidated joint ventures	1,988			1,436
Other	6,190			2,462
	44,094			21,270
Allowance for doubtful accounts	(3,332		)	(1,666		)
Receivables, net	$	40,762		$	19,604

3. Property and Equipment

Property and equipment consists of the following (amounts in thousands):

			December 31,
	Estimated life (years)		2006			2005
Land		—	$	312,714		$	230,856
Buildings and improvements		10-45	2,034,613			1,027,936
Furniture, fixtures and equipment		3-7	745,457			531,459
Construction in progress		—	148,296			729,892
			3,241,080			2,520,143
Accumulated depreciation and amortization			(654,607		)	(529,559		)
Property and equipment, net			$	2,586,473		$	1,990,584

At December 31, 2006 and 2005, substantially all our property and equipment is pledged as collateral for long-term debt.

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4. Land Held for Development

As of December 31, 2006, we had $214.4 million of land held for development that consists primarily of six sites that are owned or leased, which comprise 220 acres in the Las Vegas valley, 188 acres in the Sacramento, California area near Thunder Valley and 104 acres in Reno, Nevada. The primary gaming-entitled land that we own in the Las Vegas valley consists of 68 acres located at the intersection of Durango Road and the Southern Beltway/Interstate 215 in the southwest area of Las Vegas, 49 acres also located in southwest Las Vegas at the intersection of Flamingo Road and Interstate 215, 61 acres located on the southern end of Las Vegas Boulevard at Cactus Avenue of which we lease and have an option to purchase 2.5 acres and 30 acres on Boulder Highway at the site formerly known as the Castaways Hotel Casino and Bowling Center.

We also have acquired or are under contract to acquire approximately 69 acres of land on which Wild Wild West is located and the surrounding area, of which approximately 50 acres have been acquired as of December 31, 2006. During the years ended December 31, 2006 and 2005 we incurred and expensed approximately $1.1 million and $11.7 million, respectively, to terminate various leases related to this land. In 2003, we exercised our option to purchase the 19-acre parcel of leased land on which Wild Wild West is located which was to occur in July 2005 at a purchase price of approximately $36 million. We have extended the date for the close of escrow to no later than January 2009. Additionally, the lease expense was reduced from $2.9 million to $1.6 million per year beginning in July 2005. No amounts related to this purchase option have been recorded on our consolidated balance sheets at December 31, 2006 and 2005.

Our decision whether to proceed with any new gaming or development opportunity is dependent upon future economic and regulatory factors, the availability of acceptable financing and competitive and strategic considerations. As many of these considerations are beyond our control, no assurances can be made that we will be able to proceed with any particular project.

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5. Investments in Joint Ventures

We have various investments in 50% owned joint ventures, and a 6.7% investment in a joint venture that owns the Palms Casino Resort in Las Vegas, Nevada, which are accounted for under the equity method. Under the equity method, original investments are recorded at cost and adjusted by our share of earnings, losses and distributions of the joint ventures. The investment balance also includes interest capitalized during the construction period. Investments in joint ventures consist of the following (amounts in thousands):

	December 31,
	2006		2005
Green Valley Ranch (50.0%)	$	135,271	$	104,290
Aliante Station (50.0%)	56,812		—
Rancho Road (50.0%)	28,285		—
Palms Casino Resort (6.7%)	18,089		17,886
Sunset GV (50.0%)	8,029		—
Barley’s (50.0%)	3,580		3,619
The Greens (50.0%)	3,511		3,396
Investments in joint ventures	$	253,577	$	129,191

Summarized balance sheet information for the joint ventures is as follows (amounts in thousands):

	December 31,
	2006		2005
Current assets	$	90,581	$	67,436
Property and equipment and other assets, net	1,394,021		835,171
Current liabilities	103,551		74,393
Long-term debt and other liabilities	628,788		384,289
Stockholders’ equity	752,263		443,925

Summarized results of operations for the joint ventures are as follows (amounts in thousands):

	For the years ended December 31,
	2006		2005		2004
Net revenues	$	499,111	$	437,618	$	385,838
Operating costs and expenses	392,689		341,021		302,135
Operating income	106,422		96,597		83,703
Interest and other expense, net	22,931		14,368		10,069
Net income	$	83,491	$	82,229	$	73,634

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Investments in Joint Ventures (Continued)

The operating earnings from these joint ventures are shown as a separate line item on our consolidated statements of operations after operating income. In addition, interest and other expense from these joint ventures are shown as a separate component under other expense in our consolidated statements of operations. The following table identifies the total equity earnings from joint ventures (amounts in thousands):

	For the years ended December 31,
	2006			2005			2004
Operating earnings from joint ventures	$	41,861		$	38,885		$	26,524
Interest and other expense from joint ventures	(6,815		)	(6,947		)	(4,485		)
Net earnings from joint ventures	$	35,046		$	31,938		$	22,039

6. Management Fees

We manage Thunder Valley on behalf of the United Auburn Indian Community (“UAIC”) and receive a management fee equal to 24% of net income (as defined in the management agreement). We are also the managing partner for Green Valley Ranch, Barley’s and The Greens and receive a management fee equal to 2% of revenues and approximately 5% of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) from Green Valley Ranch and 10% of EBITDA from Barley’s and The Greens. Our management fees are included in net revenues on our consolidated statements of operations.

United Auburn Indian Community

We have entered into a Development Services Agreement and a Management Agreement with the UAIC. Our seven-year Management Agreement was approved by the National Indian Gaming Commission (the “NIGC”) and expires in June 2010. Pursuant to those agreements, and in compliance with a Memorandum of Understanding entered into by the UAIC and Placer County, California, we developed, with the UAIC, Thunder Valley, a gaming and entertainment facility on approximately 49 acres located approximately seven miles north of Interstate 80 on Highway 65, in Placer County, California, near Sacramento, which opened on June 9, 2003.

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (amounts in thousands):

	December 31,
	2006		2005
Accrued payroll and related	$	47,210	$	53,523
Accrued interest payable	66,466		35,932
Accrued gaming and related	32,645		26,052
Other accrued expenses and current liabilities	27,368		17,388
Total accrued expenses and other current liabilities	$	173,689	$	132,895

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8. Long-term Debt

Long-term debt consists of the following (amounts in thousands):

	December 31,
	2006			2005
Revolving credit facility, $2.0 billion limit at December 31, 2006, due December 16, 2010, interest at a margin above the Alternate Base Rate or the Eurodollar Rate (7.6% and 5.8% at December 31, 2006 and 2005, respectively)	$	1,155,800		$	330,000
6% senior notes, interest payable semi-annually, principal due April 1, 2012, callable April 1, 2008, net of unamortized discount of $1.3 million and $1.5 million at December 31, 2006 and 2005, respectively	448,742			448,542
73¤4% senior notes, interest payable semi-annually, principal due August 15, 2016, callable August 15, 2011	400,000			—
61¤2% senior subordinated notes, interest payable semi-annually, principal due February 1, 2014, callable February 1, 2009	450,000			450,000
67¤8% senior subordinated notes, interest payable semi-annually, principal due March 1, 2016, callable March 1, 2009, net of unamortized premium of $7.4 million and $8.0 million at December 31, 2006 and 2005, respectively	707,427			708,003
65¤8% senior subordinated notes, interest payable semi-annually, principal due March 15, 2018, callable March 15, 2011, net of unamortized discount of $1.4 million at December 31, 2006	298,568			—
Other long-term debt, weighted-average interest of 7.1% and 6.4% at December 31, 2006 and 2005, respectively, maturity dates ranging from 2009 to 2026	9,196			9,244
Total long-term debt	3,469,733			1,945,789
Current portion of long-term debt	(341		)	(108		)
Market value of interest rate swaps	(905		)	(1,461		)
Total long-term debt, net	$	3,468,487		$	1,944,220

Revolving Facility

In December 2005, we increased our availability under our revolving credit facility (the “Revolving Facility”) from $1.0 billion to $2.0 billion and extended the maturity by one year to December 2010. The Revolving Facility contains no principal amortization. The Borrowers are the major operating subsidiaries and the Revolving Facility is secured by substantially all of our assets. Borrowings under the Revolving Facility bear interest at a margin above the Alternate Base Rate or the Eurodollar Rate (each as defined in the Revolving Facility), as selected by us. The margin above such rates, and the fee on the unfunded portions of the Revolving Facility, will vary quarterly based on our combined consolidated ratio of debt to Adjusted EBITDA (as defined in the Revolving Facility). As of December 31, 2006, the Borrowers’ margin above the Eurodollar Rate on borrowings under the Revolving Facility was 2.00%. The maximum margin for Eurodollar Rate borrowings is 2.25%. The maximum margin for Alternate Base Rate borrowings is 1.00%. As of December 31, 2006, the fee for the unfunded portion of the Revolving Facility was 0.30%.

The Revolving Facility contains certain financial and other covenants, some of which were amended in June and September 2006. These include a maximum funded debt to Adjusted EBITDA ratio for the

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8. Long-term Debt (Continued)

Borrowers combined of 4.00 to 1.00 for each quarter and a minimum fixed charge coverage ratio for the preceding four quarters for the Borrowers combined of 1.25 to 1.00 for each quarter. As of December 31, 2006, the Borrowers’ funded debt to Adjusted EBITDA ratio was 2.57 to 1.00 and the fixed charge coverage ratio was 1.59 to 1.00. In addition, the Revolving Facility has financial and other covenants, which require that the maximum consolidated funded debt to Adjusted EBITDA ratio can be no more than 7.00 to 1.00 through June 30, 2007, which reduces to 6.75 to 1.00 on September 30, 2007 through June 30, 2008, to 6.50 to 1.00 on September 30, 2008 through December 31, 2008, to 5.75 to 1.00 on March 31, 2009 through December 31, 2009 and to 5.00 to 1.00 on March 31, 2010. Other covenants limit prepayments of indebtedness or rent (including subordinated debt other than re-financings meeting certain criteria), asset dispositions, dividends, indebtedness, stock repurchases and investments. As of December 31, 2006, our consolidated funded debt to Adjusted EBITDA ratio was 6.02 to 1.00. We have pledged the stock of all of our major subsidiaries.

Senior and Senior Subordinated Notes

On August 15, 2006, we issued $400.0 million of 73¤4% senior notes due August 15, 2016. On March 13, 2006, we issued $300.0 million of 65¤8% senior subordinated notes due March 2018. Proceeds from the sale of the notes were used to reduce a portion of the amount outstanding on our Revolving Facility.

During 2005, we redeemed the remaining $16.9 million of outstanding 83¤8% senior notes due 2008 and $17.4 million of outstanding 97¤8% senior subordinated notes due 2010. As a result of these redemptions, we recorded a loss on early retirement of debt of approximately $1.3 million in the year ended December 31, 2005 to reflect the write-off of the unamortized loan costs, discounts and call premium.

During the first quarter of 2004, we refinanced substantially all of our senior and senior subordinated notes. In connection with the refinancing, we completed tender offers and consent solicitations for approximately $940.6 million of our senior and senior subordinated notes outstanding. As a result, we recorded a loss on early retirement of debt of approximately $93.3 million during the year ended December 31, 2004 to reflect the write-off of the unamortized loan costs, unamortized discount, call premium, tender fee and consent payments which were partially offset by the fair value of the interest rate swaps that were tied directly to the redeemed senior and senior subordinated notes.

The indentures (the “Indentures”) governing our senior and senior subordinated notes (the “Notes”) contain certain customary financial and other covenants, which limit our and our subsidiaries’ ability to incur additional debt. At December 31, 2006, our Consolidated Coverage Ratio (as defined in the Indentures) was 2.40 to 1.00. The Indentures provide that we may not incur additional indebtedness, other than specified types of indebtedness, unless the Consolidated Coverage Ratio is at least 2.00 to 1.00. In the event our Consolidated Coverage Ratio is below 2.00 to 1.00, the covenant limits our ability to incur additional indebtedness for borrowings under the Revolving Facility not to exceed the greater of $200 million or 1.5 times Operating Cash Flow (as defined in the Indentures) for the four most recent quarters, plus $15 million. The Indentures also give the holders of the Notes the right to require us to purchase the Notes at 101% of the principal amount of the Notes plus accrued interest thereon upon a Change of Control and Rating Decline (each as defined in the Indentures) of the Company. In addition, the indenture governing the senior notes contains a limitation on liens we can incur.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Long-term Debt (Continued)

The estimated fair value of our long-term debt at December 31, 2006 was approximately $3.3 billion, compared to the book value of approximately $3.5 billion. At December 31, 2005, the estimated fair value of our long-term debt was approximately $1.96 billion, compared to the book value of $1.95 billion. The estimated fair value amounts were based on quoted market prices on or about December 31, for our debt securities that are publicly traded. For the Revolving Facility, the fair value approximates the carrying amount of the debt due to short-term maturities of the individual components of the debt.

Scheduled maturities of long-term debt are as follows (amounts in thousands):

Years ending December 31,
2007	$	341
2008	332
2009	5,437
2010	1,155,911
2011	120
Thereafter	2,307,592
Total	$	3,469,733

Interest Rate Swaps

We have entered into various interest rate swaps with members of our bank group to manage interest expense. As of December 31, 2006, we have interest rate swaps with a combined notional amount of $550.0 million. We entered into a fair value hedge interest rate swap with a notional amount of $50.0 million tied directly to our 6% senior notes converting a portion of our fixed-rate debt to a floating-rate based upon three-month LIBOR rates, terminating in April 2012. This interest rate swap qualifies for the “shortcut” method allowed under SFAS 133 and as amended by SFAS 138 and 149, which allows for an assumption of no ineffectiveness. As such, there is no income statement impact from changes in the fair value of the hedging instrument. Instead, the fair value of the instrument is recorded as an asset or liability on our balance sheet with an offsetting adjustment to the carrying value of the related debt. In accordance with SFAS 133, we recorded a liability of $2.2 million and $2.1 million as of December 31, 2006 and 2005, respectively, representing the fair value of this interest rate swap and a corresponding decrease in long-term debt, as this interest rate swap is considered highly effective under the criteria established by SFAS 133. We paid a rate based on LIBOR, which approximated 7.1% as of December 31, 2006 and received a fixed rate of 6.0%.

We have entered into two cash flow hedge interest rate swaps with a combined notional amount of $500.0 million tied directly to our Revolving Facility converting a portion of our floating-rate debt to a fixed-rate based on three-month LIBOR rates, terminating in December 2010. As of December 31, 2006, we paid an average fixed rate of 5.1% and received three-month LIBOR which approximated 5.4%. These interest rate swaps are designated and qualify as cash flow hedges resulting in the effective portion of the gain or loss reported as a component of other comprehensive income (loss) with an offsetting adjustment to the carrying value of the related debt. For the years ended December 31, 2006 and 2005, we recorded other comprehensive loss of $0.6 million and $0.8 million, respectively, related to the change in market value of these interest rate swaps. As a result, we recorded an increase in long-term debt of $1.4 million and $0.8 million as of December 31, 2006 and 2005, respectively.

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8. Long-term Debt (Continued)

The difference between amounts received and paid under such agreements, as well as any costs or fees, is recorded as a reduction of, or an addition to, interest expense as incurred over the life of the swaps. The net effect of the interest rate swaps resulted in a reduction of interest expense of approximately $0.2 million, $2.1 million and $7.3 million for the years ended December 31, 2006, 2005 and 2004, respectively.

9. Commitments and Contingencies

Leases

Boulder Station Lease

We entered into a ground lease for 27 acres of land on which Boulder Station is located. We lease this land from KB Enterprises, a company owned by Frank J. Fertitta, Jr. and Victoria K. Fertitta (the “Related Lessor”), the parents of Frank J. Fertitta III, Chairman of the Board and Chief Executive Officer of Station and Lorenzo J. Fertitta, Vice Chairman and President of Station. The lease has a maximum term of 65 years, ending in June 2058. The lease provides for monthly payments of $183,333 through June 2008. In July 2008, and every ten years thereafter, the rent will be adjusted by a cost of living factor. In July 2013, and every ten years thereafter, the rent will be adjusted to the product of the fair market value of the land and the greater of (i) the then prevailing annual rate of return for comparably situated property or (ii) 8% per year. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, we have an option, exercisable at five-year intervals with the next option in June 2008, to purchase the land at fair market value. Our leasehold interest in the property is subject to a lien to secure borrowings under the Revolving Facility.

Texas Station Lease

We entered into a ground lease for 47 acres of land on which Texas Station is located. We lease this land from Texas Gambling Hall & Hotel, Inc., a company owned by the Related Lessor. The lease has a maximum term of 65 years, ending in July 2060. The lease provides for monthly rental payments of $337,417 through June 2010. In July 2010, and every ten years thereafter, the rent will be adjusted to the product of the fair market value of the land and the greater of (i) the then prevailing annual rate of return being realized for owners of comparable land in Clark County or (ii) 8% per year. In July 2015, and every ten years thereafter, the rent will be adjusted by a cost of living factor. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, we have an option, exercisable at five-year intervals with the next option in May 2010, to purchase the land at fair market value. Our leasehold interest in the property is subject to a lien to secure borrowings under the Revolving Facility.

Wild Wild West Lease

We exercised our option to purchase the 19-acre parcel of land on which Wild Wild West is located in 2003 which was to occur in July 2005 at a purchase price of $36 million. We have extended the date for the close of escrow to no later than January 2009. Additionally, the lease expense was reduced from $2.9 million to $1.6 million per year beginning in July 2005. No amounts related to this purchase option have been recorded on our consolidated balance sheets at December 31, 2006 and 2005.

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9. Commitments and Contingencies (Continued)

Operating Leases

We lease several parcels of land, buildings and equipment used in our operations. Leases on various parcels ranging from 2.5 acres to 47 acres have terms expiring between January 2009 and August 2103. Future minimum lease payments required under these operating leases and other noncancelable operating leases are as follows (amounts in thousands):

Years ending December 31,
2007	$	10,382
2008	10,408
2009	7,981
2010	7,818
2011	7,818
Thereafter	320,098
Total	$	364,505

Rent expense totaled approximately $12.4 million, $12.8 million and $14.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Las Vegas Development

Red Rock

In August 2006, we began a $60 million to $65 million phase III master-planned expansion of Red Rock, which includes a bowling center and an expansion of the west parking garage. Construction of the bowling center is expected to be completed in the second quarter of 2007, while the parking garage expansion is expected to be completed in the third quarter of 2007. Approximately $22.7 million had been incurred as of December 31, 2006.

On July 27, 2005, we entered into a joint venture with Cloobeck Molasky Partners I, LLC (“Cloobeck Molasky”) to develop a high-end residential project on approximately 5 acres located adjacent to the hotel at Red Rock. Pursuant to the terms of the operating agreement, we owned 80% of the joint venture and Cloobeck Molasky owned 20%. In June 2006, we notified Cloobeck Molasky that the joint venture had been dissolved based on the terms of the operating agreement. As of December 31, 2006, we cancelled the residential project resulting in a write-off of approximately $2.5 million, which is included in loss on asset disposals, net on our consolidated statement of operations.

Santa Fe Station Expansion

In October 2005, we began a $130 million phase III master-planned expansion at Santa Fe Station which included an additional parking garage, a buffet, additional slot machines, a remodeled and expanded race and sports book, a meeting and banquet facility and a new center bar. The entire project included approximately 125,000 square-feet of additional space and was completed during the fourth quarter 2006, with the exception of the center bar which is still under construction.  Approximately $127.8 million had been incurred on the expansion as of December 31, 2006.

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9. Commitments and Contingencies (Continued)

Fiesta Henderson Expansion

In October 2005, we began a $75 million phase II master-planned expansion at Fiesta Henderson which included a parking garage, additional slot machines, a remodeled and expanded race and sports book and a multi-screen movie theater complex. Construction of the project was completed in August 2006, with the exception of the movie theater complex which is still under construction. Approximately $56.2 million had been incurred on the expansion as of December 31, 2006.

Green Valley Ranch Expansion

In October 2006, we opened an additional parking garage, a new race and sports book, a new poker room and two new restaurants as part of the $115 million phase III master-planned expansion at Green Valley Ranch. An entertainment lounge is still under construction. Approximately $98.1 million had been incurred on the expansion as of December 31, 2006.

Aliante Station

In December 2005, we entered into an agreement with the Greenspun Corporation to develop Aliante Station, a hotel and casino in the Aliante master-planned community located in North Las Vegas, Nevada. We will develop and manage the facility, to be located on a gaming-entitled 40-acre site on the northeast corner of Interstate 215 and Aliante Parkway, which was contributed by the Greenspun Corporation for their 50% ownership in the joint venture. We will receive a management fee equal to 2% of the property’s revenues and approximately 5% of EBITDA. The first phase of Aliante Station is expected to include a hotel, casino, multiple full-service restaurants and a multi-screen movie theater complex. Construction on Aliante Station began in February 2007. Pursuant to the terms of the agreement, in January 2006, we contributed a 54 acre site located on Losee Road in North Las Vegas, Nevada, as well as approximately $2.2 million, for our 50% ownership in the joint venture. During the year ended December 31, 2006, we contributed an additional $4.0 million to fund design and development costs.

Rancho Road

In December, 2006, we entered into an amended and restated operating agreement with FBLV Holding Company LLC (“FBLV”). Pursuant to the amended and restated operating agreement, the parties contributed, approximately 52 acres (with approximately 20 acres contributed by us for our 50% ownership and approximately 32 acres contributed by FBLV for their 50% ownership) of improved and unimproved real property located along Rancho Road behind Palace Station in Las Vegas, Nevada into a joint venture. It is anticipated that the joint venture will develop, construct and manage, pursuant to a master development plan, a mixed-use residential, retail and entertainment (excluding non-restricted gaming) project on all or a portion of such property. The timing, cost and scope of the project have yet to be determined.

Native American Development

The Federated Indians of Graton Rancheria

We have entered into Development and Management Agreements with the Federated Indians of Graton Rancheria (the “FIGR”), a federally recognized Native American tribe. Pursuant to those

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9. Commitments and Contingencies (Continued)

agreements, we will assist the FIGR in developing and operating a gaming and entertainment project to be located in Sonoma County, California. The FIGR selected us to assist them in designing, developing and financing their project and, upon opening, we will manage the facility on behalf of the FIGR. The Management Agreement has a term of seven years from the opening of the facility and we will receive a management fee equal to 24% of the facility’s net income. We will also receive a development fee equal to 2% of the cost of the project upon the opening of the facility.

In August 2003, we entered into an option to purchase 360 acres of land just west of the Rohnert Park city limits in Sonoma County, California. In August 2005, we purchased 180 acres of the optioned property and an additional 90 acres. In March 2006, we purchased an additional 4.7 acres adjacent to the previously acquired property. The property purchased is approximately one-quarter mile from Highway 101 and approximately 43 miles from downtown San Francisco. In October 2003, the FIGR entered into a Memorandum of Understanding with the City of Rohnert Park. Development of the gaming and entertainment project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the DOI accepting the land into trust on behalf of the FIGR and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. As of December 31, 2006, we have advanced approximately $132.3 million toward the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included on our consolidated balance sheets. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from the FIGR’s gaming revenues. In addition, we have agreed to pay approximately $11.3 million upon achieving certain milestones, which will not be reimbursed. As of December 31, 2006, approximately $2.0 million of these payments had been made and expensed in development expense as incurred. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

Gun Lake Tribe

On November 13, 2003, we agreed to purchase a 50% interest in MPM Enterprises, LLC, a Michigan limited liability company (“MPM”). Concurrently with our agreement to purchase that interest, MPM and the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, a federally recognized Native American tribe commonly referred to as the Gun Lake Tribe (“Gun Lake”), entered into amended Development and Management Agreements, pursuant to which MPM agreed to assist Gun Lake in developing and operating a gaming and entertainment project to be located in Allegan County, Michigan. On July 29, 2005, MPM and Gun Lake entered into amended and restated Development and Management Agreements. We have agreed to pay $6.0 million for our 50% interest in MPM, which is payable upon achieving certain milestones and is not reimbursable. As of December 31, 2006, approximately $2.0 million of these payments had been made and expensed in development expense as incurred. An additional $12.0 million in total may be paid by us in years six and seven of the amended and restated Management Agreement, subject to certain contingencies. Under the terms of the amended and restated Development Agreement, we have agreed to arrange financing for the ongoing development costs and construction of the project. As of December 31, 2006, we have advanced approximately $34.0 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is included on our consolidated balance sheets. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from Gun Lake’s gaming revenues. The amended and restated

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9. Commitments and Contingencies (Continued)

Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 30% of the project’s net income to be paid to MPM. Pursuant to the terms of the MPM Operating Agreement, our portion of the management fee is 50% of the first $24 million of management fees earned, 83% of the next $24 million of management fees and 93% of any management fees in excess of $48 million.

The proposed project will be located on approximately 146 acres on Highway 131 near 129th Avenue, approximately 25 miles north of Kalamazoo, Michigan. As currently contemplated, the project will include slot machines, table games, a buffet and specialty restaurants. Construction of the project includes the conversion of an existing 192,000 square-foot building into the casino and entertainment facility. Development of the gaming and entertainment project and operation of Class III gaming is subject to certain governmental and regulatory approvals, including, but not limited to, the signing of a gaming compact by the Governor of the State of Michigan, the DOI taking the land into trust on behalf of Gun Lake and approval of the Management Agreement by the NIGC. On February 27, 2004, the DOI issued a Finding Of No Significant Impact with respect to the proposed project. On May 13, 2005, the DOI published in the Federal Register a Notice of Final Agency Determination (the “Determination”) to take certain land into trust for the benefit of Gun Lake. The publication commenced a thirty-day period in which interested parties could seek judicial review of the Determination. On June 13, 2005, Michigan Gambling Opposition filed a complaint (the “Complaint”) in the United States District Court, District of Columbia, seeking declaratory and injunctive relief against the DOI and officials of the DOI. The Complaint seeks judicial review of the Determination. On July 27, 2005, Gun Lake filed a motion to intervene in that lawsuit. On September 1, 2005, the District Court granted Gun Lake’s motion to intervene. On January 6, 2006, Gun Lake filed a motion for judgment on the pleadings or, in the alternative, for summary judgment. Also on January 6, 2006, the DOI filed a motion to dismiss or, in the alternative, for summary judgment. By May 2006, all responsive pleadings had been filed and the case was ready for consideration by the District Court. On October 27, 2006, the Department of Justice filed a Notice with the District Court indicating that the DOI planned to take the 146-acre site into trust on January 5, 2007, if the plaintiffs did not seek injunctive relief or failed to persuade the court to issue any relief precluding the DOI from doing so. The DOI subsequently amended that date to March 5, 2007, in order to provide the Court sufficient time to render its decision. The Court set oral arguments on the parties’ motions to dismiss or, in the alternative, for summary judgment for November 29, 2006. Oral arguments were heard on that date. On February 23, 2007, the District Court issued its decision in favor of the DOI and Gun Lake, finding that there were no facts which would entitle plaintiffs to any relief on the four issues raised in the Complaint, and granted the parties’ motion to discuss or, in the alternative for summary judgment. As with all litigation, no assurances can be provided as to the outcome of that lawsuit. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

Mechoopda Indian Tribe

We have entered into Development and Management Agreements with the Mechoopda Indian Tribe of Chico Rancheria, California (the “MITCR”), a federally recognized Native American tribe. Pursuant to those agreements, we will assist the MITCR in developing and operating a gaming and entertainment facility to be located on approximately 650 acres in Butte County, California, at the intersection of State

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9. Commitments and Contingencies (Continued)

Route 149 and Highway 99, approximately 10 miles southeast of Chico, California and 80 miles north of Sacramento, California. Under the terms of the Development Agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by us are expected to be repaid from the proceeds of the facility financing or from the MITCR’s gaming revenues. As of December 31, 2006, we have advanced approximately $8.6 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is included on our consolidated balance sheets. In addition, we have agreed to pay approximately $2.2 million of payments upon achieving certain milestones, which will not be reimbursed. As of December 31, 2006, $50,000 of these payments had been made and expensed in development expense as incurred. The Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 24% of the facility’s net income. As currently contemplated, the facility will include slot machines, table games and dining and entertainment amenities. Development of the facility is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the DOI accepting land into trust on behalf of the MITCR and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

North Fork Rancheria of Mono Indian Tribe

We have entered into Development and Management Agreements with the North Fork Rancheria of Mono Indians (the “Mono”), a federally recognized Native American tribe located near Fresno, California. Pursuant to those agreements, we will assist the Mono in developing and operating a gaming and entertainment facility to be located in Madera County, California. We have purchased, for the benefit of the Mono, a 305-acre parcel of land located on Highway 99 north of the city of Madera. Under the terms of the Development Agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from the Mono’s gaming revenues. As of December 31, 2006, we have advanced approximately $6.3 million toward the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included on our consolidated balance sheets. In addition, we have agreed to pay approximately $1.3 million of payments upon achieving certain milestones, which will not be reimbursed and will be expensed as incurred. As of December 31, 2006, none of these payments had been made. The Management Agreement has a term of seven years from the opening of the facility and provides for a management fee of 24% of the facility’s net income. As currently contemplated, the facility will include slot machines, table games, restaurants, a hotel and entertainment amenities. Development of the gaming and entertainment project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of California, the DOI accepting the land into trust on behalf of the Mono and approval of the Management Agreement by the NIGC. Prior to obtaining third-party financing, we will contribute significant financial support to the project. The timing of this type of project is difficult to predict, and is dependant upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when or if these approvals will be obtained.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Stockholders’ Equity

Common Stock

We are authorized to issue up to 135 million shares of our common stock, $0.01 par value per share, 80,507,427 shares which were issued and 23,245,751 shares which were held in treasury as of December 31, 2006. Each holder of the common stock is entitled to one vote for each share held of record on each matter submitted to a vote of stockholders. Holders of the common stock have no cumulative voting, conversion, redemption or preemptive rights or other rights to subscribe for additional shares other than pursuant to the Rights Plan described below. Subject to any preferences that may be granted to the holders of our preferred stock, each holder of common stock is entitled to receive ratably, such dividends as may be declared by the Board of Directors out of funds legally available therefore, as well as any distributions to the stockholders and, in the event of our liquidation, dissolution or winding up is entitled to share ratably in all our assets remaining after payment of liabilities.

During the year ended December 31, 2006, we paid a quarterly cash dividend of $0.25 per share to shareholders of record on February 10, 2006 and May 12, 2006 and $0.2875 per share to shareholders of record on August 11, 2006 and November 13, 2006 for a total of $65.4 million.

During the year ended December 31, 2005, we paid a quarterly cash dividend of $0.21 per share to shareholders of record on February 11, 2005 and May 13, 2005 and $0.25 per share to shareholders of record on August 12, 2005 and November 11, 2005 for a total of $62.6 million. During the year ended December 31, 2004, we paid a quarterly cash dividend of $0.125 per share to shareholders of record on February 12, 2004, $0.175 per share to shareholders of record on May 14, 2004 and August 13, 2004 and $0.21 per share to shareholders of record on November 12, 2004 for a total of $44.3 million.

Preferred Stock

We are authorized to issue up to 5 million shares of our preferred stock, $0.01 par value per share of which none are issued. The Board of Directors, without further action by the holders of common stock, may issue shares of preferred stock in one or more series and may fix or alter the rights, preferences, privileges and restrictions, including the voting rights, redemption provisions (including sinking fund provisions), dividend rights, dividend rates, liquidation rates, liquidation preferences, conversion rights and the description and number of shares constituting any wholly unissued series of preferred stock. Except as described above, the Board of Directors, without further stockholder approval, may issue shares of preferred stock with rights that could adversely affect the rights of the holders of common stock. The issuance of shares of preferred stock under certain circumstances could have the effect of delaying or preventing a change of control of Station or other corporate action.

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10. Stockholders’ Equity (Continued)

Treasury Stock

During the year ended December 31, 2006, we repurchased approximately 12.7 million shares of our common stock for approximately $880.7 million. As of December 31, 2006, we had acquired approximately 23.2 million shares at a cost of approximately $1.0 billion and are authorized to repurchase approximately 7.5 million additional shares of our common stock.

Other Comprehensive Income

SFAS 130, “Reporting Comprehensive Income”, requires companies to disclose other comprehensive income and the components of such income. Comprehensive income is the total of net income and all other non stockholder changes in equity. For the years ended December 31, 2006, 2005 and 2004, we recorded the mark-to-market valuation of our interest rate swaps and our 50% interest in the mark-to-market valuation of the interest rate swaps at Green Valley Ranch, as well as the adjustment to initially apply SFAS 158 for the year ended December 31, 2006, as other comprehensive income. Comprehensive income was computed as follows (amounts in thousands):

	For the years ended December 31,
	2006			2005		2004
Net income	$	110,212		$	161,886	$	66,350
Mark-to-market valuation of interest rate swaps, net of tax	(636		)	635		723
Adoption of SFAS 158, net of tax	(10,170		)	—		—
Comprehensive income	$	99,406		$	162,521	$	67,073

Effective December 31, 2006, we adopted SFAS 158 and recognized an additional noncurrent pension liability of $15.6 million, a noncurrent deferred tax asset of $5.4 million and accumulated other comprehensive loss of $10.2 million in the accompanying consolidated financial statements. See Note 13 for additional information.

Rights Plan

On October 6, 1997, we declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock. The dividend was paid on October 21, 1997. Each Right entitles the registered holder to purchase from us one one-hundredth of a share of Series A Preferred Stock, par value $0.01 per share (“Preferred Shares”) of Station at a price of $40.00 per one one-hundredth of a Preferred Share, subject to adjustment. The Rights are not exercisable until the earlier of 10 days following a public announcement that a person or group of affiliated or associated persons have acquired beneficial ownership of 15% or more of our outstanding common stock (“Acquiring Person”) or 10 business days (or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in the beneficial ownership by a person or group of 15% or more of our outstanding common stock.

The Rights will expire on October 21, 2007. Acquiring Persons do not have the same rights to receive common stock as other holders upon exercise of the Rights. Because of the nature of the Preferred Shares’

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10. Stockholders’ Equity (Continued)

dividend, liquidation and voting rights, the value of one one-hundredth interest in a Preferred Share purchasable upon exercise of each Right should approximate the value of one common share. In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, the proper provisions will be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter become void), will thereafter have the right to receive upon exercise that number of shares of common stock having a market value of two times the exercise price of the Right. In the event that we are acquired in a merger or other business combination transaction or 50% or more of our consolidated assets or earning power are sold after a person or group has become an Acquiring Person, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon exercise thereof, that number of shares of common stock of the acquiring company, which at the time of such transaction will have a market value of two times the exercise price of the Right. Because of the characteristics of the Rights in connection with a person or group of affiliated or associated persons becoming an Acquiring Person, the Rights may have the effect of making an acquisition of Station more difficult and may discourage such an acquisition.

11. Share-Based Compensation

In May 2005, the stockholders approved and we adopted the 2005 Stock Compensation Plan (the “2005 Plan”) which provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock awards (collectively, the “Awards”). Individuals eligible to receive Awards under the 2005 Plan include employees, directors and independent contractors of the Company and its subsidiaries and other entities controlled by us. However, incentive stock options may be granted only to an employee of ours or a subsidiary of ours. Upon adoption of the 2005 Plan, no additional grants of awards will be made under the following plans of Station (the “Prior Plans”): (i) the Incentive Stock Option Plan, (ii) the Compensatory Stock Option Plan, (iii) the Restricted Share Plan, (vi) the Non-employee Director Stock Option Plan, (v) the 1999 Compensatory Stock Option Plan, and (vi) the 1999 Share Plan.

Under the 2005 Plan the maximum number of shares of common stock that will be available for the grants of Awards is 3,829,671, which includes 3,000,000 new shares and 829,671 shares that were available for awards under the Prior Plans. The number of shares otherwise available for the grant of Awards under the 2005 Plan will be increased by the number of shares subject to awards granted under any of the Prior Plans that are currently outstanding which are cancelled, terminated, or forfeited or expire after the effective date of the 2005 Plan. Each share subject to an award of restricted stock, restricted stock unit or other stock award shall reduce the shares available for grant by 1.9 shares. Options are granted at the current market price at the date of grant. The plan provides for a variety of vesting schedules, including immediate, 20% per year for five years, 10% per year for 10 years, and a cliff vest at the vesting date, to be determined at the time of grant. Generally, all options expire 10 years from the date of grant.

The 2005 Plan will terminate 10 years from the date of adoption or extension, unless terminated earlier by the Board of Directors, and no options or restricted shares may be granted.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Share-Based Compensation (Continued)

Summarized information for the 2005 Plan and Prior Plans, collectively, is as follows:

	Options		Weighted average exercise price			Restricted Shares		Weighted average grant date fair value			Total
Outstanding at December 31, 2005	2,314,182			$	12.12	2,124,594			$	37.24	4,438,776
Granted	—			—		1,374,100			$	68.21	1,374,100
Exercised/Lapsed	(120,325	)		$	12.99	(436,740	)		$	30.13	(557,065	)
Canceled	(6,750	)		$	15.26	(34,600	)		$	55.17	(41,350	)
Outstanding at December 31, 2006	2,187,107			$	12.07	3,027,354			$	52.12	5,214,461
Exercisable at December 31, 2006	2,069,407			$	11.81
Available for grant at December 31, 2006											1,108,632

Stock Options

No stock options were granted since 2003 resulting in no assumptions for dividend yield, expected volatility, risk-free interest rate or expected term of option for 2006, 2005 or 2004.

We use historical data and projections to estimate expected employee behaviors related to option exercises and forfeitures. SFAS 123R requires that forfeitures be included as part of the grant date estimate. The effect of forfeitures related to previous SFAS 123 pro forma expense was not material. At December 31, 2006, there was $0.4 million of unrecognized compensation expense related to share-based payments which is expected to be recognized over a weighted-average period of one year. Based on stock options outstanding at December 31, 2006, we estimate $0.3 million of expense in 2007 and virtually zero thereafter. The remaining weighted average contractual term for options outstanding at December 31, 2006 is 4.6 years and 4.5 years for options exercisable at December 31, 2006.

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the stock option. At December 31, 2006, the aggregate intrinsic value of stock options outstanding was $152.2 million and the aggregate intrinsic value of stock options exercisable was $144.6 million. Total intrinsic value of stock options exercised was $6.9 million, $87.4 million and $176.3 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Net cash proceeds from the exercise of stock options were $1.6 million, $19.0 million and $55.0 million for the years ended December 31, 2006, 2005 and 2004, respectively. The actual income tax benefit realized from stock option exercises was $3.1 million, $31.8 million and $62.6 million for the same periods, respectively.

Restricted Stock

As of December 31, 2006, we have unearned share-based compensation of $143.4 million associated with restricted stock awards which is expected to be recognized over a weighted-average period of 5.3 years. During the years ended December 31, 2006, 2005 and 2004, we granted 1,374,100, 137,000, 1,420,413, respectively, of restricted stock awards at a weighted-average grant date fair value of $68.21, $66.33 and $46.39 for the same periods. The total fair value of restricted shares that vested for the years ended December 31, 2006, 2005 and 2004 was $32.4 million, $30.5 million and $15.9 million, respectively.

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STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Share-Based Compensation (Continued)

The following table represents where reported share-based compensation expense was classified in the accompanying consolidated statements of operations (amounts in thousands):

	For the years  ended December 31,
	2006			2005			2004
Casino expense	$	359		$	229		$	156
Food & beverage expense	44			56			84
Room expense	12			1			12
Selling, general & administrative	2,567			1,787			1,741
Corporate	18,163			8,534			6,332
Development	2,327			1,485			1,283
Preopening	223			367			33
Total share-based compensation	23,695			12,459			9,641
Tax benefit	(8,293		)	(4,361		)	(3,374		)
Total share-based compensation, net of tax	$	15,402		$	8,098		$	6,267

Had compensation expense for the 2005 Plan and Prior Plans been determined in accordance with SFAS 123, the effect on our net income and basic and diluted earnings per common share would have been as follows (amount in thousands, except per share date):

	For the years ended December 31,
	2005			2004
Net income:
As reported	$	161,886		$	66,350
Share-based compensation expense reported in net income	—			404
Additional share-based compensation expense under fair value method	(2,646		)	(6,029		)
Pro forma net income	$	159,240		$	60,725
Earnings per common share:
Basic—as reported	$	2.46		$	1.03
Basic—pro forma	2.42			0.94
Diluted—as reported	$	2.40		$	1.00
Diluted—pro forma	2.36			0.92

12. Executive Compensation Plans

We have employment agreements with certain of our executive officers. These contracts provide for, among other things, an annual base salary, supplemental long-term disability and supplemental life insurance benefits in excess of our normal coverage for employees. In addition, we have adopted a Supplemental Executive Retirement Plan for our Chief Executive Officer and President and a Supplemental Management Retirement Plan for certain key executives as selected by the Governance and Compensation Committee of our Board of Directors. Other executive plans include a Deferred Compensation Plan and a Long-Term Stay-On Performance Incentive Plan.

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STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Retirement Plans

Effective as of November 30, 1994, we adopted the Supplemental Executive Retirement Plan (the “SERP”), which is an unfunded defined benefit plan for the Chief Executive Officer and President as sole participants. On January 21, 2005, Station amended the SERP (the “SERP Amendment”). The purpose of the SERP Amendment was to (i) increase the Early Retirement Date (as defined in the SERP) for participants from age 45 to age 50, (ii) increase the Normal Retirement Date (as defined in the SERP) for the participants from age 55 to age 60, (iii) add the President of the Company as a participant, and (iv) include the average annual bonus (in addition to base salary) earned by participants for the three most recent fiscal years in determining Final Annual Compensation (as defined in the SERP).

Effective as of November 30, 1994, we adopted the Supplemental Management Retirement Plan (the “SMRP”), which is an unfunded defined benefit plan. Certain key executives (other than the Chief Executive Officer and President) as selected by the Governance and Compensation Committee are able to participate in the SMRP.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Retirement Plans (Continued)

A reconciliation of the beginning and ending balances of the pension benefit obligation and fair value of the plan assets and the funded status is as follows (in thousands):

	December 31,
	2006			2005
Change in pension benefit obligation:
Benefit obligation at beginning of year	$	28,491		$	17,563
Service cost	2,070			1,336
Interest cost	1,680			1,087
Net actuarial (gain) loss	(1,851		)	8,505
Benefit obligation at end of year	$	30,390		$	28,491
Funded status of the plan (underfunded)	$	(30,390	)	$	(28,491	)
Unrecognized net actuarial loss	—			5,639
Unrecognized actuarial loss	—			12,916
Net amount recognized	$	(30,390	)	$	(9,936	)
Amounts recognized in the consolidated balance sheet consist of:
Accrued pension costs	$	(14,744	)	$	(9,936	)
Accumulated other comprehensive loss	(15,646		)	—
Net amount recognized	$	(30,390	)	$	(9,936	)
Weighted average assumptions:
Discount rate	5.50		%	5.75		%
Salary rate increase	5.00		%	4.00		%

The components of the net periodic pension benefit cost consist of the following (in thousands):

	For the years ended December 31,
	2006		2005		2004
Service cost	$	2,070	$	1,336	$	763
Interest cost	1,680		1,087		621
Amortization of prior service cost	312		312		58
Amortization actuarial losses	746		259		195
Net periodic pension cost	$	4,808	$	2,994	$	1,637
Curtailment charge	—		96		(436		)
Total pension cost	$	4,808	$	3,090	$	1,201

401(k) Plan

We have a defined contribution 401(k) plan, which covers all employees who meet certain age and length of service requirements and allows an employer contribution up to 50% of the first 4% of each participating employee’s compensation. Plan participants can elect to defer before tax compensation through payroll deductions. These deferrals are regulated under Section 401(k) of the Internal Revenue Code. Our matching contribution was approximately $2.8 million, $2.2 million and $2.0 million for the years ended December 31, 2006, 2005 and 2004, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Income Taxes

We file a consolidated federal income tax return. The provision for income taxes for financial reporting purposes was $69.2 million, $94.3 million and $38.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.

The provision for income taxes attributable to net income consists of the following (amounts in thousands):

	For the years ended December 31,
	2006		2005		2004
Current	$	30,753	$	31,864	$	10,187
Deferred	38,487		62,477		28,692
Total income taxes	$	69,240	$	94,341	$	38,879

The income tax provision differs from that computed at the federal statutory corporate tax rate as follows:

	For the years ended December 31,
	2006			2005			2004
Federal statutory rate		35.0	%		35.0	%		35.0	%
Lobbying and political		0.3			0.2			0.4
Fines and penalties		—			—			0.6
Meals and entertainment		—			—			0.1
Credits earned, net		(0.5	)		(0.3	)		(0.6	)
Nondeductible officers compensation		3.4			1.7			2.4
Reduction in liability based on conclusion of an IRS examination		—			—			(1.1	)
Other, net		0.4			0.2			0.1
Effective tax rate		38.6	%		36.8	%		36.9	%

We recorded $3.1 million, $31.8 million and $62.6 million as an increase to contributed capital for certain tax benefits from employee share-based compensation for the years ended December 31, 2006, 2005 and 2004, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Income Taxes (Continued)

The tax effects of significant temporary differences representing net deferred tax assets and liabilities are as follows (amounts in thousands):

	December 31,
	2006			2005
Deferred tax assets:
Accrued vacation, bonuses and group insurance	$	5,187		$	6,394
Preopening and other costs, net of amortization	700			1,051
Accrued benefits	26,305			15,752
FICA credits	—			3,961
Minimum tax credit carryover	—			22,712
Other deferred tax assets	8,295			5,237
Total deferred tax assets	$	40,487		$	55,107
Deferred tax liabilities:
Prepaid expenses and other	$	(16,573	)	$	(12,373	)
Temporary differences related to property and equipment	(122,295		)	(112,641		)
Amortization	(14,670		)	(9,880		)
Total deferred tax liabilities	$	(153,538	)	$	(134,894	)
Net	$	(113,051	)	$	(79,787	)

We did not record a valuation allowance at December 31, 2006 or 2005 relating to recorded tax benefits because all benefits are more likely than not to be realized.

15. Legal Matters

Station and its subsidiaries are defendants in various lawsuits relating to routine matters incidental to their business. As with all litigation, no assurance can be provided as to the outcome of the following matters and litigation inherently involves significant costs. Following is a summary of key litigation impacting Station. Station believes that the plaintiffs’ claims are without merit and does not expect that the lawsuits will have a material adverse effect on the financial position or results of operations.

Litigation Relating to the Merger

On December 4, 2006, we announced that we had received a proposal from Fertitta Colony Partners, LLC, (“FCP”) to acquire all of our outstanding common stock for $82 per share in cash.

On December 4, 2006, Helen Roessler filed a purported class action complaint in the District Court of Clark County, Nevada (the “District Court”), Case No. A532367, against the Company, our Board of Directors and Fertitta Colony Partners LLC (“FCP”).  The complaint alleges that the defendants breached their fiduciary duties and challenges the proposed transaction as inadequate and unfair to the Company’s public stockholders.  The complaint seeks, among other relief, class certification of the lawsuit and an injunction against the proposed transaction.  Three similar putative class actions were subsequently filed in the District Court:  Goldman v. Station Casinos, Inc., et al., Case No. A532395, filed on December 4, 2006, Traynor v. Station Casinos, Inc., et al., Case No. A532407, filed on December 4, 2006, and Filhaber v. Station Casinos, Inc., et al., Case No. A532499, filed on December 5, 2006.  (The four above-referenced actions are collectively referred to as the “Initial Lawsuits.”)

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STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Legal Matters (Continued)

On January 2, 2007, David Griffiths filed a purported class action complaint in the District Court against the Company, our Board of Directors, Delise F. Sartini, Blake L. Sartini, Colony Capital, LLC (“Colony Capital”), Colony Capital Acquisitions, LLC (“Colony Acquisitions”) and FCP.  The complaint alleges that the Company’s Board of Directors breached their fiduciary duties and the remaining defendants aided and abetted the alleged breaches of fiduciary duties in connection with the proposed transaction.  The complaint seeks, among other relief, class certification of the lawsuit, an injunction against the proposed transaction, declaratory relief, the imposition of a constructive trust upon the defendants, and an award of attorneys’ fees and expenses to plaintiffs.

On January 4, 2007, the District Court consolidated the Initial Lawsuits under the heading In Re Station Casino’s Shareholder Litigation and appointed lead counsel and liason counsel in connection therewith.  On January 29, 2007, plaintiff Griffiths filed a motion to vacate the District Court’s order appointing lead counsel and to establish a briefing schedule on motions to appoint lead plaintiff and lead counsel.  A hearing on that motion has been scheduled for March 5, 2007.

On February 14, 2007, the West Palm Beach Firefighters’ Pension Fund filed a purported class and derivative action complaint in District Court against the Company’s Board of Directors, Thomas J. Barrack, Jr., Delise Sartini, Blake Sartini, Colony Capital, Colony Acquisitions, FCP, Deutsche Bank Trust Company Americas and German American Capital Corporation.  The complaint alleges, among other things, that the Company breached its fiduciary duties and the remaining defendants aided and abetted the alleged breaches of fiduciary duty in connection with the proposed transaction.  The complaint seeks, among other relief, class certification of the lawsuit, an injunction against the proposed transaction unless and until the Company adopts and implements a fair sale process, the disclosure of all material information to the Company’s stockholders, the imposition of a constructive trust upon the defendants, and an award of attorneys’ fees and expenses to plaintiffs.

The Company believes that all of the above-referenced actions are without merit and intends to vigorously defend such actions.

16. Subsequent Events

Green Valley Ranch Financing

On February 16, 2007, Green Valley Ranch entered into a new $830 million credit facility (the “Green Valley Facility”). The Green Valley Facility includes a $550 million first lien term loan due February 2014, a $250 million second lien term loan due August 2014 and a $30 million revolver due February 2012. At the time of close, the revolver was unfunded. Proceeds from the Green Valley Facility were used to repay outstanding borrowings under the previous revolving credit facility and term loan, as well as an equal distribution to the partners which totaled approximately $570 million.

Merger Agreement (unaudited)

On February 23, 2007, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Fertitta Colony Partners LLC, a Nevada limited liability company (“FCP”), and FCP Acquisition Sub, a Nevada corporation and a wholly-owned subsidiary of FCP (“Merger Sub”).  Pursuant to the terms of the Merger Agreement, Merger Sub will be merged with and into the Company, and as a result the Company will continue as the surviving corporation and as a direct or indirect wholly-owned subsidiary of FCP (the “Merger”).  FCP is owned by FC Investor, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Colony Capital Acquisitions, LLC (the “Sponsor”), Frank J. Fertitta III, the Chairman and

92

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Subsequent Events (Continued)

Chief Executive Officer of the Company, and Lorenzo J. Fertitta, the Vice Chairman and President of the Company.

At the effective time of the Merger, each outstanding share of our common stock, including any rights associated therewith, other than shares owned by us, FCP and Merger Sub, will be cancelled and converted into the right to receive $90 in cash, without interest.

Our Board of Directors, acting upon the unanimous recommendation of a special committee comprised entirely of independent directors (the “Special Committee”), has approved the Merger Agreement and has recommended that our stockholders vote in favor of the Merger Agreement.

Frank J. Fertitta, Lorenzo J. Fertitta, Blake L. Sartini and Delise F. Sartini (the “Rollover Stockholders”) have agreed to contribute a portion of their shares of our Common Stock to FCP and, subject to specified exceptions, to vote their shares of Common Stock in favor of the Merger pursuant to a voting agreement entered into on February 23, 2007, by and among the Rollover Stockholders, the Company and FCP.

The Merger Agreement provides that, upon termination under specified circumstances related to a competing acquisition proposal, the Company would be required to pay a termination fee of $160 million to FCP, except in the case of a termination resulting from a superior proposal received within 30 business days following the execution of the Merger Agreement, in which case the termination fee payable to FCP will be $106 million.  If the Company’s stockholders do not approve the Merger under certain circumstances, the Company must reimburse FCP for reasonable out-of-pocket fees and expenses (including reasonable legal fees and expenses) incurred by FCP, Merger Sub and their respective affiliates in connection with the transactions contemplated by the Merger Agreement.  The Company’s reimbursement of FCP’s expenses would reduce the amount of any required termination fee that becomes payable by the Company.  The Merger Agreement further provides that upon termination under specified circumstances related to a breach of any representation, warranty, covenant or agreement on the part of FCP or Merger Sub or failure to obtain gaming approvals, FCP would be required to pay to the Company a reverse termination fee of $160 million or a regulatory termination fee of $106 million, respectively.  Pursuant to a limited guarantee, dated as of February 23, 2007, affiliates of the Sponsor guaranteed the payment of the reverse termination fee, the regulatory termination fee and amounts arising from indemnification and expense reimbursement obligations of FCP or Merger Sub under the Merger Agreement, up to $175 million in the aggregate.

FCP has obtained equity and debt financing commitments for the transactions contemplated by the Merger Agreement, the proceeds of which will be used by FCP to pay the aggregate merger consideration and related fees and expenses of the transactions contemplated by the Merger Agreement. In connection with the debt financing commitments, the Company and certain of its subsidiaries (the “Operating Subs”) entered into a purchase and sale agreement with a newly created wholly-owned subsidiary of the Company (“NewCo”), pursuant to which the Operating Subs’ interests in certain real property will be sold to NewCo and leased back to the Company and the Operating Subs (the “Sale and Leaseback Transaction”). The Sale and Leaseback Transaction was approved by the Special Committee of the Board of Directors, which obtained a fairness opinion in connection therewith. The closing of the Sale and Leaseback Transaction is contingent upon the consummation of the Merger. Consummation of the Merger is not subject to a

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STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Subsequent Events (Continued)

financing condition but is subject to various other conditions to closing, including approval of the Merger by our stockholders and regulatory approvals.  The Merger is expected to be completed by the fourth quarter of 2007.

We are prohibited from making any dividends except for normal quarterly dividends from operations until the consummation of the Merger.

If the Merger Agreement is consummated, all stock options under the 2005 Plan and Prior Plans will become vested and all related unrecognized compensation cost will be recognized during the period in which the Merger is consummated.

17. Quarterly Financial Information (Unaudited)

	Net revenues		Operating income			Income  before income taxes		Net income applicable to common stock			Diluted earnings per common share
	(amounts in thousands, except per share amounts)
Year ended December 31, 2006
First quarter (a)	$	292,470		$	79,102	$	65,641		$	41,122		$	0.62
Second quarter (b)	341,791			76,588		43,680			26,793			0.44
Third quarter	345,968			76,983		32,036			19,229			0.34
Fourth quarter (c)	358,795			83,462		38,095			23,068			0.41
Year ended December 31, 2005
First quarter (d)	$	273,460		$	74,639	$	64,001		$	40,640		$	0.59
Second quarter (e)	273,968			76,774		64,458			40,609			0.58
Third quarter (f)	276,337			75,424		61,841			38,960			0.56
Fourth quarter (g)	285,068			79,108		65,927			41,677			0.61

(a)Includes preopening expense of approximately $14.1 million and lease terminations of approximately $0.5 million.

(b)Includes preopening expense of approximately $13.6 million.

(c)Includes preopening expense of approximately $2.0 million and lease terminations of approximately $0.6 million.

(d)Includes preopening expense of approximately $0.6 million, lease terminations of approximately $8.1 million and loss on early retirement of debt of approximately $0.7 million.

(e)Includes preopening expense of approximately $1.2 million and lease terminations of approximately $3.6 million.

(f)Includes preopening expense of approximately $1.7 million and loss on early retirement of debt of approximately $0.6 million.

(g)Includes preopening expense of approximately $3.1 million and lease terminations of approximately $3.0 million.

94

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.CONTROLS AND PROCEDURES

As of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out by the Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report. No changes were made to the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further because of changes in conditions, the effectiveness of internal controls may vary over time.

Management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2006. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment we believe that, as of December 31, 2006, the Company’s internal control over financial reporting is effective based on those criteria.

The Company’s independent auditors have issued an audit report on our assessment of the company’s internal control over financial reporting. This report appears on page 58.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

There is incorporated by reference the information appearing in the section entitled “Directors, Executive Officers and Corporate Governance” in the Registrant’s definitive Proxy Statement to be made publicly available with the Securities and Exchange Commission.

ITEM 11.EXECUTIVE COMPENSATION

There is incorporated by reference the information appearing in the section entitled “Executive Compensation” in the Registrant’s definitive Proxy Statement to be made publicly available with the Securities and Exchange Commission.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

There is incorporated by reference the information appearing in the section entitled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in the Registrant’s definitive Proxy Statement to be made publicly available with the Securities and Exchange Commission.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

There is incorporated by reference the information appearing in the sections entitled “Certain Relationships and Related Transactions, and Director Independence” in the Registrant’s definitive Proxy Statement to be made publicly available with the Securities and Exchange Commission.

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

There is incorporated by reference the information appearing in the section entitled “Principal Accounting Fees and Services” in the Registrant’s definitive Proxy Statement to be made publicly available with the Securities and Exchange Commission.

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PART IV

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)1.   Financial Statements (including related notes to Consolidated Financial Statements) filed in Part II of this report are listed below:

Reports of Independent Registered Public Accounting Firm—Ernst & Young LLP

Consolidated Balance Sheets as of December 31, 2006 and 2005

Years Ended December 31, 2006, 2005 and 2004

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

2.    None

3.    Exhibits

Exhibit Number		Description
2	.1	Agreement and Plan of Merger, dated February 23, 2007, by and among Station Casinos, Inc., Fertitta Colony Partners LLC and FCP Acquisition Sub. (Incorporated herein by reference to the Company’s Form 8-K dated February 23, 2007)
2	.2	Voting Agreement, dated February 23, 2007, by and among Station Casinos, Inc., Fertitta Colony Partners LLC and Rollover Stockholders. (Incorporated herein by reference to the Company’s Form 8-K dated February 23, 2007)
2	.3	Purchase and Sale Agreement, dated February 23, 2007, by and among NewCo and Operating Subs. (Incorporated herein by reference to the Company’s Form 8-K dated February 23, 2007)
2	.4	Limited Guarantee, dated February 23, 2007, from Colony to Station Casinos, Inc. (Incorporated herein by reference to the Company’s Form 8-K dated February 23, 2007)
2	.5	Amendment to Rights Agreement, dated February 23, 2007, by and among Station Casinos, Inc. and Continental. (Incorporated herein by reference to the Company’s Form 8-K dated February 23, 2007)
3	.1	Amended and Restated Articles of Incorporation of the Registrant. (Incorporated herein by reference to Registration Statement No. 33-76156)
3	.2	Restated Bylaws of the Registrant. (Incorporated herein by reference to Registration Statement No. 33-76156)
4	.1	Form of 6% Senior Notes of the Registrant (March 2004 Issue). (Included in Exhibit 4.2 which is incorporated herein by reference to Registration Statement No. 333-113986)
4	.2	Indenture dated as of March 17, 2004 between the Registrant and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to Registration Statement No. 333-113986)
4	.3	Form of 61¤2% Subordinated Notes of the Registrant (January 2004 Issue). (Included in Exhibit 4.4 which is incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2003)
4	.4	Indenture dated as of January 29, 2004 between the Registrant and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2003)

97

4	.5	Form of 67¤8% Subordinated Notes of the Registrant (February 2004 Issue). (Included in Exhibit 4.6 which is incorporated herein by reference to the Company’s Annual Report of Form 10-K for the period ended December 31, 2003)
4	.6	Indenture dated as of February 27, 2004 between the Registrant and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2003)
4	.7	Form of 65¤8% Subordinated Notes of the Registrant (March 2006 Issue). (Included in Exhibit 4.8 which is incorporated herein by reference to the Company’s Quarterly Report of Form 10-Q for the period ended March 31, 2006)
4	.8	Indenture dated as of March 13, 2006 between the Registrant and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2006)
4	.9	Form of 7¾% Senior Notes of the Registrant (August 2006 Issue). (Included in Exhibit 4.10 which is incorporated herein by reference to the Company’s Form 8-K dated August 2, 2006)
4	.10	Indenture dated as of August 1, 2006 between the Registrant and Law Debenture Trust Company of New York as Trustee. (Included in Exhibit 4.10 which is incorporated herein by reference to the Company’s Form 8-K dated August 2, 2006)
4	.11	Third Amended and Restated Loan Agreement (“Revolving Credit Facility”) dated as of December 15, 2005. (Incorporated herein by reference to the Company’s Form 8-K dated December 19, 2005)
4.	12	Amendment No. 1 to the Third Amended and Restated Loan Agreement. (Incorporated herein by reference to the Company’s Form 8-K dated June 28, 2006)
4.	13	Amendment No. 2 to the Third Amended and Restated Loan Agreement. (Incorporated herein by reference to the Company’s Form 8-K dated September 26, 2006)
4	.14	Rights Agreement dated October 6, 1997 between the Company and Continental Stock Transfer and Trust Company, as Rights Agent. (Incorporated herein by reference to the Company’s Form 8-K dated October 9, 1997)
4	.15	Amendment to Rights Agreement, dated as of January 16, 1998, between Station Casinos, Inc. and Continental Stock Transfer & Trust Company, as Rights Agent. (Incorporated herein by reference to the Company’s Form 8-K dated January 27, 1998)
4	.16	Amendment No. 2 to Rights Agreement, dated as of December 1, 1998, between Station Casinos, Inc. and Continental Stock Transfer & Trust Company, as Rights Agent. (Incorporated herein by reference to the Company’s Form 8-K dated November 6, 1998)
10	.1	Ground Lease between Boulder Station, Inc. and KB Enterprises dated as of June 1, 1993. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1993)
10	.2	Option to Lease or Purchase dated as of June 1, 1993 between Boulder Station, Inc. and KB Enterprises. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1993)
10	.3	Option to Acquire Interest Under Purchase Contract dated as of June 1, 1993 between Boulder Station, Inc. and KB Enterprises. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1993)
10	.4	First Amendment to Ground Lease and Sublease, dated as of June 30, 1995, by and between KB Enterprises, as landlord and Boulder Station, Inc. (Incorporated herein by reference to the Company’s Form 8-K dated July 5, 1995)

98

10	.5	Lease Amendment No. 1, dated December 23, 1996 between Boulder Station, Inc. and KB Enterprises. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2005)
10	.6	Second Amendment to Ground Lease and Sublease, dated January 7, 1997, by and between KB Enterprises, as landlord and Boulder Station, Inc. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2005)
10	.7	Rent Agreement to the First Amendment to Ground Lease and Sublease, dated as of March 30, 2003, by and between KB Enterprises, as landlord and Boulder Station, Inc. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q dated March 31, 2003)
10	.8	Ground Lease between Registrant and Texas Gambling Hall & Hotel, Inc. dated as of June 1, 1995. (Incorporated herein by reference to the Company’s Form 8-K dated July 5, 1995)
10	.9	First Amendment to Ground Lease dated as of June 30, 1995 between Registrant and Texas Gambling Hall & Hotel, Inc. (Incorporated herein by reference to the Company’s Form 8-K dated July 5, 1995)
10	.10	Lease Amendment No. 1, dated December 23, 1996 between Registrant and Texas Gambling Hall & Hotel, Inc. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2005)
10	.11	Second Amendment to Ground Lease, dated January 7, 1997, by and between Texas Gambling Hall & Hotel, Inc. as landlord and Registrant. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2005)
10	.12	Rent Agreement to the First Amendment to Ground Lease, dated as of May 12, 2000 between Registrant and Texas Gambling Hall & Hotel, Inc. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2003)
10	.13	Assignment, Assumption and Consent Agreement (Ground Lease) dated as of July 6, 1995 between Registrant and Texas Station, Inc. (Incorporated herein by reference to the Company’s Form 8-K dated July 5, 1995)
10	.14	Executive Employment Agreement between Frank J. Fertitta III and the Registrant dated as of May 20, 2003. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003)
10	.15	First Amendment to Executive Employment Agreement between Frank J. Fertitta III and the Registrant dated as of February 4, 2005. (Incorporated herein by reference to the Company’s Form 8-K dated February 7, 2005)
10	.16	Executive Employment Agreement between Glenn C. Christenson and the Registrant dated as of May 20, 2003. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003)
10	.17	First Amendment to Executive Employment Agreement between Glenn C. Christenson and the Registrant dated as of July 13, 2004. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005)
10	.18	Executive Employment Agreement between Scott M Nielson and the Registrant dated as of May 20, 2003. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003)
10	.19	First Amendment to Executive Employment Agreement between Scott M Nielson and the Registrant dated as of July 13, 2004. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2004)

99

10	.20	Executive Employment Agreement between Lorenzo J. Fertitta and the Registrant dated as of May 20, 2003. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003)
10	.21	First Amendment to Executive Employment Agreement between Lorenzo J. Fertitta and the Registrant dated as of February 4, 2005. (Incorporated herein by reference to the Company’s Form 8-K dated February 7, 2005)
10	.22	Executive Employment Agreement between William W. Warner and the Registrant dated as of May 20, 2003. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003)
10	.23	Executive Employment Agreement between Richard J. Haskins and the Registrant dated as of July 13, 2004. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004)
10	.24	2005 Stock Compensation Program of the Registrant effective as of May 18, 2005. (Incorporated herein by reference to the Company’s Form S-8 filed as of August 10, 2005)
10	.25	Supplemental Executive Retirement Plan of the Registrant dated as of November 30, 1994. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 1994)
10	.26	First Amendment to the Supplemental Executive Retirement Plan of the Registrant dated as of February 4, 2005. (Incorporated herein by reference to the Company’s Form 8-K dated February 7, 2005)
10	.27	Supplemental Management Retirement Plan of the Registrant dated as of November 30, 1994. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 1994)
10	.28	Long-Term Stay-On Performance Incentive Payment Agreement between the Registrant and Lorenzo J. Fertitta dated as of March 15, 2002. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2001)
10	.29	Long-Term Stay-On Performance Incentive Payment Agreement between the Registrant and William W. Warner dated April 1, 2002. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2003)
10	.30	Long-Term Stay-On Performance Incentive Payment Agreement between the Registrant and Richard J. Haskins dated as of April 1, 2004. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004)
10	.31	Amended and Restated Deferred Compensation Plan of the Registrant dated as of September 12, 2001. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2001)
10	.32	First Amendment to the Amended and Restated Deferred Compensation Plan dated as of December 4, 2002. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2002)
10	.33	Special Long-Term Disability Plan of the Registrant dated as of November 30, 1994. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 1994)
10	.34	Form of Indemnification Agreement for Directors and Executive Officers. (Incorporated herein by reference to the Company’s Registration Statement No. 33-59302)
10	.35	Form of Indemnification Agreement between the Registrant and Frank Fertitta, Jr. (Incorporated herein by reference to the Company’s Registration Statement No. 33-59302)

100

10	.36	Operating Agreement dated March 10, 2000, among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Registrant. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 1999)
10	.37	First Amendment to Operating Agreement dated March 10, 2000, among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Registrant, dated as of September 17, 2001. (Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2001)
10	.38	Second Amendment to Operating Agreement dated December 19, 2003, among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Registrant. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2003)
10	.39	Third Amendment to Operating Agreement dated December 17, 2004, among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Registrant. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2004)
10	.40	Second Amended and Restated Management Agreement between the Registrant and the United Auburn Indian Community dated as of November 1, 2002. (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2002)
10	.41	Operating Agreement dated December 16, 2005, among Aliante Holding, LLC, G.C. Aliante, LLC and Aliante Station, LLC, a wholly-owned subsidiary of the Registrant.
10	.42	Amended and Restated Operating Agreement of Aliante Gaming, LLC dated January 6, 2006 among Aliante Gaming, LLC, a wholly-owned subsidiary of the Registrant, Aliante Holding, LLC and Aliante Station, LLC.
21	.1	Subsidiaries of the Registrant
23	.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
31	.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32	.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)None

(c)None

101

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STATION CASINOS, INC.
Dated: February 28, 2007	By:	/s/ FRANK J. FERTITTA III
		Frank J. Fertitta III Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

	Signature		Title		Date
/s/ Frank J. Fertitta III		Chairman of the Board and Chief Executive		February 28, 2007
Frank J. Fertitta III		Officer (Principal Executive Officer)
/s/ Lorenzo J. Fertitta		Vice Chairman, President and Director		February 28, 2007
Lorenzo J. Fertitta
/s/ Glenn C. Christenson		Executive Vice President, Chief Financial		February 28, 2007
Glenn C. Christenson		Officer, Chief Administrative Officer and Treasurer (Principal Financial and Accounting Officer)
/s/ Lowell H. Lebermann, Jr.		Director		February 28, 2007
Lowell H. Lebermann, Jr.
/s/ James E. Nave		Director		February 28, 2007
James E. Nave
/s/ Lee S. Isgur		Director		February 28, 2007
Lee S. Isgur
/s/ Robert E. Lewis		Director		February 28, 2007
Robert E. Lewis

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EX-10.41

Exhibit 10.41

FINAL

OPERATING AGREEMENT

OF

ALIANTE  HOLDING, LLC

DECEMBER 16, 2005

TABLE OF CONTENTS

ARTICLE I	DEFINITIONS
1.1	Definitions	1
ARTICLE II	FORMATION
2.1	Formation	15
2.2	Name	15
2.3	Purposes and Powers	15
2.4	Registered Agent and Registered Office	16
ARTICLE III	MANAGEMENT
3.1	The Executive Committee	16
3.2	No Liability for Fees, Costs and Expenses of Aliante LLC and Losee LLC	16
3.3	[Reserved.]	16
3.4	[Reserved.]	16
3.5	[Reserved.]	17
3.6	Expense reimbursement	17
3.7	Removal of the Manager	17
3.8	Officers	17
3.9	Competing Transactions	17
3.10	Tax Matters Partner	18
3.11	Liability of Members	18
3.12	Prohibition Against Publicly Traded Partnership	18
3.13	Executive Committee Membership	18
3.14	Decisions Subject to Executive Committee Approval	19
3.15	Place of Meetings and Meetings by Telephone	19
3.16	Regular Meetings	19
3.17	Special Meetings	19
3.18	Quorum	19
3.19	Manner of Acting	19
3.20	Waiver of Notice	19
3.21	Adjournment	20
3.22	Action Without a Meeting	20
3.23	Resignation	20
3.24	Removal	20
3.25	Vacancies	20
3.26	Compensation to EC Members	20
3.27	Liability to Third Parties	20
3.28	No Guarantee of Return by EC Members	20
3.29	Transactions with Company or Otherwise	20
3.30	Indemnification	21
ARTICLE IV	FINANCIAL MATTERS
4.1	Initial Capital Contributions	21
4.2	Additional Capital Contributions	21
4.3	Default	25
4.4	Allocation of Profits and Losses	29

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4.5	Distributions	31
ARTICLE V	MEMBERS; TRANSFER OF INTERESTS
5.1	Admission	32
5.2	Transfer of Interests	32
5.3	Gaming Licensing	35
5.4	Required Member Approvals	36
5.5	Place of Meetings and Meetings by Telephone	36
5.6	Annual Meeting	36
5.7	Special Call of Meetings	36
5.8	Notice of Meetings of Members	36
5.9	Manner of Giving Notice	37
5.10	Adjourned Meeting; Notice	37
5.11	Quorum; Voting	37
5.12	Waiver of Notice by Consent of Absent Members	37
5.13	Member Action by Written Consent Without a Meeting	37
5.14	Record Date for Member Notice, Voting, and Giving Consents	37
5.15	In General	38
5.16	Compliance with the Aliante Operating Agreement and the Losee Operating Agreement	41
ARTICLE VI	DISSOLUTION, LIQUIDATION AND TERMINATION
6.1	Dissolution	42
6.2	Liquidation and Termination	42
6.3	Articles of Dissolution	42
6.4	Negative Capital Accounts	42
6.5	Deemed Distribution and Recontribution	42
6.6	Limitations on Rights of Members	43
ARTICLE VII	AMENDMENTS
7.1	Amendments Generally	43
7.2	Amendments by the Executive Committee	43
ARTICLE VIII	MISCELLANEOUS
8.1	Notices	43
8.2	Binding Effect	44
8.3	Headings	44
8.4	Severability	44
8.5	Further Action	44
8.6	Governing Law	44
8.7	Waiver of Action for Partition	44
8.8	Counterpart Execution	44
8.9	Publicity	44
8.10	Transition as Manager	45
8.11	Broker Fees	45
8.12	Securities Under the UCC	45

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LIST OF EXHIBITS
Exhibit A	Legal Description of Aliante Property
Exhibit B	List of Investment Banking Firms
Exhibit C-1	Aliante Property Representations by GC
Exhibit C-2	Losee Property Representations by Station and Parent
Exhibit D	New Property(ies)
Exhibit E	Legal Description of Losee Property
Exhibit F	Notice Addresses
Exhibit G	Initial Members and Membership Interests
Exhibit H-1	Permitted Exceptions (Aliante Property)
Exhibit H-2	Permitted Exceptions (Losee Property)
Exhibit I	Articles of Organization

LIST OF SCHEDULES
Schedule 4.1(a)	GC’s Initial Capital Contribution
Schedule 4.1(b)	Station’s Initial Capital Contribution
ATTACHMENTS
Attachment I	Form of Aliante Operating Agreement
Attachment II	Form of Losee Operating Agreement
Attachment III	Form of GC Assignment of Membership Interest
Attachment IV	Form of Station Assignment of Membership Interest

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OPERATING AGREEMENT

OF

ALIANTE HOLDING, LLC

This OPERATING AGREEMENT, dated as of December 16, 2005 (the “Effective Date”), is entered into by and among (1) ALIANTE HOLDING, LLC, a Nevada limited liability company (the “Company”); (2) G.C. ALIANTE, LLC, a Nevada limited liability company (“GC”); and (3) ALIANTE STATION, LLC, a Nevada limited liability company (“Station”) and a wholly-owned subsidiary of Station Casinos, Inc. (“Parent”).  Each of the Company, GC and Station is sometimes referred to herein as a “Party,” and all of them, together, are sometimes referred to herein as the “Parties.”

RECITALS

WHEREAS, the Parties desire to enter into this Agreement to set forth (i) their respective rights, privileges, duties and obligations with respect to the Company and (ii) the terms and conditions of the management and operation of the Company.

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

AGREEMENT

ARTICLE I

Definitions

1.1           Definitions.  The following capitalized words and phrases have the indicated meanings in this Agreement:

“Acquisition Notice” has the meaning set forth in Exhibit D.

“Act” means Chapter 86 of the Nevada Revised Statutes, as amended from time to time (and any corresponding provisions of succeeding law).

“Additional Capital Contribution(s)” shall mean all Capital Contributions of the Members other than their Initial Capital Contributions.

“Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

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(i)            Credit to such Capital Account any amounts that such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(ii)           Debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.

“Additional Contribution Default” has the meaning set forth in Section 4.3(b)(i).

“Affiliate” means, with respect to any Person, (i) any other Person directly or indirectly controlling, controlled by, or under common control with, such Person (excluding employees of a Person, other than executive officers and board members of such Person), (ii) any Person who is an officer or director of any Person described in Clause (i) of this definition, (iii) with respect to GC, any Greenspun Family Member, and with respect to either Parent or Station, any Fertitta Family Member, or (iv) any family member of any Person described in Clause (iii) of this definition.  For purposes of this definition, the term “family member” shall be deemed to be the spouses and lineal descendants of the Persons described in Clause (iii) of this definition.

“Affiliate Transaction” has the meaning set forth in Section 3.9.

“Agreement” means this Operating Agreement, together with all exhibits and schedules hereto, as amended from time to time.  Words such as “herein,” “hereinafter,” “hereof,” “hereto,” and “hereunder” refer to this Agreement as a whole, unless the context otherwise requires.

“Aliante Additional Capital Call(s)” has the meaning set forth in Section 4.2(f)(i).

“Aliante Financing Arrangements” means the Construction Financing, Expansion Financing or Permanent Financing, as such terms are defined in the Aliante Operating Agreement.

“Aliante LLC” means Aliante Gaming, LLC, a Nevada Limited liability company.

“Aliante Membership Interests” has the meaning set forth in Schedule 4.1(a).

“Aliante Operating Agreement” means the Amended and Restated Operating Agreement of Aliante Gaming, LLC, dated and to be effective as of January 6, 2006, by and among Aliante LLC, the Company and Station, as Manager, and acknowledged and agreed to by GC and Station, as members of the Company, together with all exhibits and schedules thereto, as amended from time to time, in the form attached hereto as Attachment I.

“Aliante Owner’s Policy” has the meaning set forth on Schedule 4.1(a).

“Aliante Project” means, collectively, all of the improvements to, and to be located on, the Aliante Property.

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“Aliante Property” means the real property upon which the Aliante Project is to be developed.  The Aliante Property is legally described on Exhibit A.

“Aliante Property Documents” has the meaning set forth in Exhibit C-1.

“Annual Plan and Operating Budget” means the operating plan and budget for each Fiscal Year, as approved by the Executive Committee pursuant to the terms of this Agreement, setting forth in reasonable detail the Company’s projected gross revenues, operating costs, debt service requirements and capital expenditures and working capital requirements, including in each case the components thereof.

“Appraised Value” means, in the case of a Membership Interest, the fair market value thereof as determined by agreement of Station and GC or, in the event that Station and GC are unable to agree upon such value within thirty (30) days after the requirement to determine Appraised Value arises, as determined by one (1) investment banking firm selected jointly (and paid equally) by Station and GC from the list attached hereto as Exhibit B; provided, however, if either Station or GC give written notice to the other within five (5) days after the expiration of the foregoing thirty (30) day period that it desires to have three (3) investment banking firms determine the Appraised Value of the Membership Interests, rather than one (1) investment banking firm, or if Station and GC are unable to agree on one (1) investment banking firm within such thirty (30) day period, the determination of fair market value shall be made by three (3) investment banking firms, one (1) of which shall be selected and paid by Station from Exhibit B, one (1) of which shall be selected and paid by GC from Exhibit B within fifteen (15) days after the expiration of the foregoing thirty (30) day period and one (1) of which shall be selected from Exhibit B by the two (2) investment banking firms so selected within fifteen (15) days after the expiration of the foregoing fifteen (15) day period and paid equally by Station and GC.  In the event that there is one (1) investment banking firm, its determination of fair market value shall be the Appraised Value.  If there are three (3) investment banking firms, the Appraised Value shall be the average of the two (2) closest determinations, in dollar value, of fair market value made by the three (3) investment banking firms as so selected.  Unless the Members unanimously instruct the Executive Committee otherwise, the Executive Committee shall instruct the investment banking firm to calculate the fair market value of the Company as a going concern, without any discount for (i) lack of liquidity, (ii) restrictions on transferability, (iii) minority interest, (iv) lack of control, (v) overhead charges, (vi) rights to receive management fees or similar types of payments for services rendered by the owner of the Membership Interest being valued and/or (vii) the financial condition, operating performance or business reputation of the Member or any party controlling the Member, but less any Company indebtedness, multiplied by the percentage ownership interest represented by the Membership Interest in question.  The determination of Appraised Value pursuant to the foregoing process shall be final and binding on all Parties.

“Articles” has the meaning set forth in Section 2.1.

“Bankrupt” means with respect to any Person the occurrence of any of the following:

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(i)            Filing a voluntary petition in bankruptcy or for reorganization or for adoption of an arrangement under the United States Bankruptcy Code, as amended from time to time (or any corresponding provisions of succeeding law);

(ii)           Making a general assignment for the benefit of creditors;

(iii)          The appointment by a court of a receiver for all or substantially all of the assets of such Person

(iv)          The entry of an order for relief in the case of an involuntary petition in bankruptcy; or

(v)           The assumption of custody or sequestration by a court of competent jurisdiction of all or substantially all of the Person’s assets.

“Base Management Fee” means the base management fee to be paid to the Manager pursuant to Section 3.5(a) of the Aliante Operating Agreement.

“Capital Account” means, with respect to any Member, the capital account maintained for such Member in accordance with the following provisions:

(i)            To each Member’s Capital Account there shall be credited such Member’s Capital Contributions, such Member’s distributive share of Profits and any items in the nature of income or gain that are specially allocated to such Member pursuant to Section 4.4(c), and the amount of any Company liabilities assumed by such Member or that are secured by any Company property distributed to such Member;

(ii)           To each Member’s Capital Account there shall be debited the amount of cash and the Gross Asset Value of any property other than money distributed to such Member pursuant to any provision of this Agreement (other than payments made pursuant to Section 3.5), such Member’s distributive share of Losses and any items in the nature of expenses or losses that are specially allocated to such Member pursuant to Section 4.4(c);

(iii)          In the event that all or any part of a Membership Interest  is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred interest; and

(iv)          In determining the amount of any liability for purposes of the foregoing Clauses (i) and (ii) of this definition, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations.  The Executive Committee shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g),

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and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Section 1.704-1(b) of the Regulations.

“Capital Contribution” means, with respect to a Member as of any date, the amount of money and other property actually contributed to the Company by such Member through such date.  The amount of a Capital Contribution made in property other than money shall be the fair market value, net of assumed liabilities, of the contributed property as determined in good faith by the Executive Committee; provided, however, GC’s Initial Capital Contribution and Station’s Initial Capital Contribution shall have the values ascribed in Schedule 4.1(a) and Schedule 4.1(b), respectively.

“Change in Control” means, in the case of Station, an event or series of events by which:

(i)Parent or a wholly-owned Subsidiary of Parent ceases to own one hundred percent (100%) of the issued and outstanding voting securities of Station; or

(ii)Parent sells, conveys, transfers or leases, directly or indirectly, all or substantially all of the properties and assets of Parent and its subsidiaries to any Person; or

(iii)any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) (other than Existing Equity Holders, as defined below) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person shall be deemed to have “beneficial  ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly of securities representing forty percent (40%) or more of the combined voting power of Parent’s Voting Stock and at such time as the Existing Equity Holders together shall fail to beneficially own, directly or indirectly, securities representing at least the same percentage of the combined voting power of Parent’s Voting Stock as is “beneficially owned” by such “person;” or

(iv)Parent consolidates with or merges into another corporation or any corporation consolidates with or merges into Parent, in either event pursuant to a transaction in which the outstanding Voting Stock of Parent is changed into or exchanged for cash, securities or other property, other than any such transaction between Parent and its wholly-owned subsidiaries, with the effect that any “person” (other than the Existing Equity Holders) becomes the “beneficial owner,” directly or indirectly, of securities representing forty percent (40%) or more of the combined voting power of Parent’s Voting Stock and at such time as the Existing Equity Holders together shall fail to beneficially own, directly or indirectly, securities representing at least  at least the same percentage of the combined voting power of Parent’s Voting Stock as is “beneficially owned” by such “person”; or

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(v)Neither Frank J. Fertitta III, nor Lorenzo J. Fertitta, nor any of their  respective lineal descendants, is, for a period of ninety (90) days or more in any calendar year, the chief executive officer of Parent with the powers, duties and authority commensurate with such office.

“Change in Control Call” has the meaning set forth in Section 5.2(b)(ii).

“Change in Control Call Exercise Notice” has the meaning set forth in Section 5.2(b)(ii).

“Change in Control Notice” has the meaning set forth in Section 5.2(b)(i).

“Change in Control Put” has the meaning set forth in Section 5.2(b)(iii).

“Change in Control Put Exercise Notice” has the meaning set forth in Section 5.2(b)(iii).

“Change in Control Put Period” has the meaning set forth in Section 5.2(b)(iii).

“Claims” has the meaning set forth in Section 3.29(a).

“Code” means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law).

“Collateral’s Fair Market Value” has the meaning set forth in Section 4.2(f)(ix).

“Company” has the meaning set forth in the introductory paragraph.

“Construction Financing” means third-party debt financing for the construction of the Aliante Project (not including any Expansion Project).

“Construction Loan Documents” means any and all documents executed in connection with the Construction Financing as approved by Executive Committee of Aliante LLC at any time and from time to time pursuant to the terms of the Aliante Operating Agreement.

“Contracts, as to the Aliante Property, has the meaning set forth in Exhibit C-1 and, as to the Losee Property, has the meaning set forth in Exhibit C-2.

“Contribution Date” means January 6, 2006.

“Cross-Default Member” has the meaning set forth in Section 4.2(f)(ix).

“Curable Default” has the meaning set forth in Section 4.2(f)(ix).

“Cure Collateral” has the meaning set forth in Section 4.2(f)(ix).

“Cure Cost of Capital” has the meaning set forth in Section 4.2(f)(ix).

“Cure Pledge” has the meaning set forth in Section 4.2(f)(ix).

“Curing Party” has the meaning set forth in Section 4.2(f)(ix).

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“Default Amount” has the meaning set forth in Section 4.3(b)(i).

“Default Call” has the meaning set forth in Section 4.3(d)(i).

“Default Contribution” has the meaning set forth in Section 4.3(b)(i).

“Default Distribution” has the meaning set forth in Section 4.3(b)(i).

“Default Loan” has the meaning set forth in Section 4.3(g).

“Default Loan Interest” has the meaning set forth in Section 4.3(g).

“Default Put” has the meaning set forth in Section 4.3(d)(ii).

“Default Put Exercise Date” has the meaning set forth in Section 4.3(d)(ii).

“Default Repayment Event” has the meaning set forth in Section 4.3(b)(ii).

“Defaulting Member” means a Member that fails to pay all or any portion of a Capital Contribution when required to do so hereunder.

“Dilution Date” has the meaning set forth in Section 4.3(d)(i).

“Dilution Interest” has the meaning set forth in Section 4.3(b)(i).

“Dilution Interest Payment Amount” has the meaning set forth in Section 4.3(b)(i).

“Disproportionate Contribution” has the meaning set forth in Section 4.2(f)(iii).

“Disproportionate Guaranty Contribution” has the meaning set forth in Section 4.2(f)(viii).

“Distributable Cash” has the meaning set forth in Section 4.5(a).

“EC Member” means either of the GC EC Member and the Station EC Member.

“Effective Date” has the meaning set forth in the introductory paragraph hereof.

“Excess Construction Contributions” has the meaning set forth in Section 4.2(b) of the Aliante Operating Agreement.

“Executive Committee” has the meaning set forth in Section 3.12.

“Exempt Affiliate” means a Person who is not a Fertitta Family Member, but who is an Affiliate solely because such Person is an investor in Parent or an investor in a successor to Parent by merger, consolidation, acquisition or similar manner, for a bona fide business purpose other than to evade the prohibition set forth in Section 3.8(a) in the Aliante Operating Agreement

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“Exempt Property” means a hotel and/or casino owned, operated, or managed by an investor in Parent (other than a Fertitta Family Member) or a successor to Parent (by merger, consolidation, acquisition or similar manner which is undertaken for an independent, bona fide business purpose other than to evade the prohibition set forth in Section 3.8(a) of the Aliante Operating Agreement) which was owned, operated or managed by such an investor in Parent (other than a Fertitta Family Member) or a successor to Parent prior to such merger, consolidation, acquisition or similar transaction.

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

“Expansion Financing” means third-party debt financing for the construction of each Expansion Project and to refinance the previous construction financing therefor, as approved by Executive Committee of Aliante LLC at any time and from time to time pursuant to the terms of the Aliante Operating Agreement.

“Expansion Project” means each additional construction project at the Aliante Project after the initial construction project if and as approved by the Executive Committee of Aliante LLC at any time and from time to time pursuant to the terms of the Aliante Operating Agreement.

“Expansion Project Loan Documents” means any and all documents, agreements and instruments evidencing the terms and conditions of an Expansion Financing, as approved by the Executive Committee at any time and from time to time pursuant to the terms of the Aliante Operating Agreement.

“Fair Market Value” has the meaning set forth in Exhibit D.

“Fertitta Family Members” means Frank J. Fertitta III and Lorenzo J. Fertitta, and such Persons’ spouses and lineal descendants or trusts for the benefit of such Persons or their spouses or lineal descendants.

“Fiscal Year” means the Company’s fiscal year ending on December 31 of each year (or, if earlier, the date on which the Company is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g)).  The first Fiscal Year of the Company shall commence on the Effective Date, and subsequent Fiscal Years shall commence on January 1.

“Gaming Authority” means those federal, state and local governmental, regulatory and administrative authorities, agencies, boards and officials responsible for or involved in the regulation of gaming or gaming activities in any jurisdiction, including within the State of

8

Nevada, specifically, the Nevada Gaming Commission, the Nevada State Gaming Control Board, and applicable local authorities.

“Gaming Laws” means those laws pursuant to which any Gaming Authority possesses regulatory, licensing or permit authority over gaming within any jurisdiction and, within the State of Nevada, specifically, the Nevada Gaming Control Act, as codified in the Chapter 463 of the Nevada Revised Statutes, and the regulations of the Nevada Gaming Commission and Nevada State Gaming Control Board promulgated thereunder, as amended from time to time.

“Gaming Licenses” shall mean all licenses, consents, permits, approvals, authorizations, registrations, findings of suitability, franchises and entitlements issued by any Gaming Authority necessary for or relating to the conduct of activities under the Gaming Laws.

“Gaming Problem” has the meaning set forth in Section 5.3(b).

“GC” has the meaning set forth in the introductory paragraph.

“GC’s actual knowledge” has the meaning set forth in Exhibit C-1.

“GC Affiliates” has the meaning set forth in Section 4.2(f)(iv).

“GC EC Member” has the meaning set forth in Section 3.12.

“GC’s Initial Capital Contribution” has the meaning set forth in Section 4.1(a).

“GC Pledgors” has the meaning set forth in Section 4.2(f) of the Aliante Operating Agreement.

“Governmental Permits” as to the Aliante Property, has the meaning set forth in Exhibit C-1 and, as to the Losee Property, has the meaning set forth in Exhibit C-2.

“Greenspun Family Member” means any of the following people: Susan Fine, Daniel Greenspun, Jane Greenspun Gayle, Brian Greenspun, and Phillip Peckman, and each of such Persons’ spouses and lineal descendants or trusts for the benefit of any such Persons or their spouses and lineal descendants.

“Greenspun Person” means each of GC, the Greenspun Family Members or any Affiliate of the foregoing (excluding any Exempt Affiliate).

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(i)            The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined in good faith by the Executive Committee, as of the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital

9

Contribution; and the distribution by the Company to a Member of more than a de minimis amount of property as consideration for the Member’s interest in the Company;

(ii)           The Gross Asset Value of any Company asset distributed to any Member shall be the gross fair market value of such asset, as determined in good faith by the Executive Committee, on the date of distribution;

(iii)          The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this Clause (iii) to the extent that an adjustment pursuant to the foregoing Clause (i) is made in connection with a transaction that would otherwise result in an adjustment pursuant to this Clause (iii); and

(iv)          The Gross Asset Value of any asset contributed to the Company shall be its agreed-upon fair-market value, adjusted for book depreciation, amortization or other cost recovery deductions for periods subsequent to its contribution in the manner provided in Clause (vi) of the definition of “Profit” and “Loss.”

“Hazardous Materials” as to the Aliante Property, has the meaning set forth in Exhibit C-1 and, as to the Losee Property, has the meaning set forth in Exhibit C-2.

“Incentive Management Fee” means the incentive management fee payable to the Manager pursuant to Section 3.5(b) of the Aliante Operating Agreement.

“Indemnitee” has the meaning set forth in Section 3.30(a).

“Initial Capital Contributions” means GC’s Initial Capital Contribution and Station’s Initial Capital Contribution.

“Initial Dilution” has the meaning set forth in Section 4.3(b)(i).

“Leases” as to the Aliante Property, has the meaning set forth in Exhibit C-1 and, as to the Losee Property, has the meaning set forth in Exhibit C-2.

“Losee Additional Capital Call” has the meaning set forth in Section 4.2(g).

“Losee LLC” means Losee Elkhorn Properties, LLC, a Nevada Limited liability company.

“Losee Membership Interests” has the meaning set forth on Schedule 4.1(b).

“Losee Operating Agreement” means the Amended and Restated Operating Agreement of Losee Elkhorn Properties, LLC, dated and to be effective as of January 6, 2006, by and between Losee LLC and the Company,  and acknowledged and agreed to by GC and Station, as members

10

of the Company, together with all exhibits and schedules thereto, as amended from time to time, in the form attached hereto as Attachment II.

“Losee Owner’s Policy” has the meaning set forth on Schedule 4.1(b).

“Lossee Project” means, collectively, all of the improvements to, and to be located on, the Losee Property.

“Losee Property” means the real property legally described on Exhibit E.

“Losee Property Documents” has the meaning set forth in Exhibit C-2.

“Manager” means Station in its capacity as the Manager of Aliante LLC pursuant to the Aliante Operating Agreement.

“Member” means any Person that is or becomes a party to this Agreement as a member of the Company.  The initial Members of the Company are GC and Station, and the addresses of the initial Members are set forth on Exhibit F.

“Member Nonrecourse Deductions” shall mean “partner nonrecourse deductions” as determined in accordance with Regulations Section 1.704-2(i)(2).

“Membership Interest” means a Member’s undivided percentage interest in the Company.  Such interest includes any and all rights to which such Member may be entitled as provided in this Agreement or the Act, including such Member’s Capital Account, together with all obligations of such Member under this Agreement or the Act.  The initial percentage Membership Interests of the initial Members of the Company are set forth on Exhibit G, which percentages shall be subject to adjustment from time to time as set forth in Sections 4.2 and 4.3.

“Minimum Gain” shall mean “partnership minimum gain” as determined in accordance with Regulations Section 1.704-2(d)(1).

“Minimum Gain Attributable to Member Nonrecourse Debt” shall mean “partner nonrecourse debt minimum gain” as determined in accordance with Regulations Section 1.704-2(i)(3).

“New Property” has the meaning set forth in Exhibit D.

“New Property Costs” has the meaning set forth in Exhibit D.

“New Property Operating Agreement” has the meaning set forth in Exhibit D.

“New Property Purchase Agreement” has the meaning set forth in Exhibit D.

“Nonrecourse Deductions” shall have the meaning set forth in Regulations Section 1.704-2(c).

“Non-Defaulting Member” means a Member that has made all of its Capital Contributions hereunder at a time when the other Member is a Defaulting Member.

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“Notice Address” has the meaning set forth in Section 8.1.

“Notices” has the meaning set forth in Section 8.1.

“Notice to Participate” has the meaning set forth in Exhibit D.

“Offering Member” has the meaning set forth in Exhibit D.

“Offering Member’s Interest” has the meaning set forth in Exhibit D.

“Opening” means the date on which the casino portion of the Aliante Project is first opened to the public and commences business.

“Other Member” has the meaning set forth in Exhibit D.

“Owners Policy” as to the Aliante Property, has the meaning set forth in Schedule 4.1(a) and, as to the Losee Property, has the meaning set forth in Schedule 4.1(b).

“Parent” has the meaning set forth in the introductory paragraph.

“Participation Election” has the meaning set forth in Exhibit D.

“Participation Election Period” has the meaning set forth in Exhibit D.

“Party” and “Parties” have the meanings set forth in the introductory paragraph.

“Permanent Financing” means any debt financing incurred by Aliante LLC for refinancing or replacing, in whole or in part, the Construction Financing, any Expansion Financing or prior Permanent Financing on terms and conditions approved by the Executive Committee of Aliante LLC at any time and from time to time pursuant to the terms of the Aliante Operating Agreement.

“Permanent Loan Documents” means any and all documents executed in connection with any Permanent Financing as approved by Executive Committee of Aliante LLC at any time and from time to time pursuant to the terms of the Aliante Operating Agreement.

“Permitted Exceptions” means, with respect to the Aliante Property, those matters set forth on Exhibit H-1, and with respect to the Losee Property, those matters set forth on Exhibit H-2.

“Person” means any individual, corporation, limited liability company, partnership, trust or other entity.

“Pledge/Guaranty Document” and “Pledge/Guaranty Documents” each have the meanings set forth in Section 4.2(f) of the Aliante Operating Agreement.

“Problem Member” has the meaning set forth in Sections 5.3(a) and (b).

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“Profits” and “Losses” for each Fiscal Year (or other period) means an amount equal to the Company’s taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(i)            Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss;

(ii)           Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss;

(iii)          In the event the Gross Asset Value of any Company asset is adjusted pursuant to Clause (i) or Clause (ii) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

(iv)          Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(v)           Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to Sections 4.4(c) and 4.4(d)(ii) hereof shall be excluded from such taxable income or loss; and

(vi)          If the Gross Asset Value of any Company asset is different from its adjusted tax basis at the beginning of the Fiscal Year, then, in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction bears to such beginning adjusted tax basis; provided, however, that if such beginning adjusted tax basis is zero, such amount shall be determined with reference to such beginning Gross Asset Value using any reasonable method determined by the Executive Committee.

“Regulations” means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“Regulatory Allocations” has the meaning set forth in Section 4.4(c)(vi).

“Registered Agent” has the meaning set forth in Section 2.4.

“Removal Put Exercise Date” has the meaning set forth in Section 3.6(a).

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“Required Guaranty Payment” has the meaning set forth in Section 4.2(f)(viii).

“Restricted Activity” has the meaning set forth in Section 3.8(a) in the Aliante Operating Agreement.

“Restricted Area” means the property area set forth on Exhibit L to the Aliante Operating Agreement.

“Restricted Period” has the meaning set forth in Section 3.8(a) to the Aliante Operating Agreement.

“Retained Distributions” has the meaning set forth in Section 4.3(b)(ii).

“Secondary Dilution” has the meaning set forth in Section 4.3(b)(i).

“Section 3.8(a) Restrictions” has the meaning set forth in Section 3.8(a) of the Aliante Operating Agreement

“Shared Expenses” has the meaning set forth in the Aliante Operating Agreement.

“Station” has the meaning set forth in the introductory paragraph.

“Station EC Member” has the meaning set forth in Section 3.12.

“Station Officer” means the Chief Executive Officer, the President or any Executive Vice President of Parent.

“Station Pledgors” has the meaning set forth in Section 4.2(f) of the Aliante Operating Agreement.

“Station’s Initial Capital Contribution” has the meaning set forth in Section 4.1(b).

“Station’s actual knowledge” has the meaning set forth in Exhibit C-2.

“Subsidiary” means, with respect to any Person, any other Person at least fifty percent (50%) of the economic or voting interest of which is owned by such Person.

“Tax Bills” means, with respect to the Aliante Property, those tax bills set forth on Exhibit C-1, and with respect to the Losee Property, those tax bills set forth on Exhibit C-2.

“Tax Items” has the meaning set forth in Section 4.4(d)(i).

“Tax Matters Member” has the meaning set forth in Section 3.10.

“Transfer” means, as a noun, any voluntary or involuntary transfer, sale, assignment, pledge, hypothecation or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell, assign, pledge, hypothecate or otherwise dispose of.

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“Twenty Five Percent Payment” means a payment of twenty five percent (25%) per annum on the outstanding amount of a Default Amount (after reflecting at each point during the calculation of such twenty five percent (25%) payment the amount of any Default Distributions or Retained Distributions) to be paid by the Defaulting Member to the Non-Defaulting Member pursuant to the terms of Section 4.3 from the date on which such Default Amount was to be paid through the date on which such Default Amount is last outstanding (up to a maximum of one (1) year).

“Unsuitable Person” means a Member, or officer of the Company, an EC Member or an Affiliate of any such Person, (i) who is denied or refused a Gaming License by any Gaming Authority in the State of Nevada, disqualified from eligibility for a Gaming License necessary for the ownership of or participation in non-restricted gaming in the State of Nevada, determined to be unsuitable to own or control a Membership Interest or determined to be unsuitable to be connected with a Person engaged in gaming activities in the State of Nevada by a Gaming Authority or otherwise fails to obtain a Gaming License necessary for the ownership of or participation in non-restricted gaming in the State of Nevada, or (ii) whose continued involvement in the business of the Company as a Member, EC Member, officer, employee or otherwise, (A) causes the Company to lose or to be threatened with the reasonably likely loss of any Gaming License, or (B) is deemed likely, in the reasonable discretion of GC and Station and based on verifiable information or information received from the Gaming Authorities, to jeopardize or adversely affect the likelihood that the Gaming Authorities will issue a Gaming License to the Company and Aliante or to adversely affect the Company’s use of or entitlement to any Gaming License or that of GC, Aliante, Station or Parent, or any of their Affiliates.

“Voting Stock” means all issued and outstanding shares of a Person’s stock of any type, or class or any other security issued by such Person, entitling the holder of such stock or other security to vote for any member of such Person’s board of directors or otherwise with respect to the control and affairs of such Person, but excluding convertible indebtedness, of any Person that is normally entitled to vote in the election of directors, managers, managing partners or trustees.

“Withheld Taxes” has the meaning set forth in Section 4.5(b).

ARTICLE II

Formation

2.1           Formation.  The Company was formed by the filing of the Articles of Organization with the Nevada Secretary of State on December 16, 2005, which Articles of Organization are attached hereto as Exhibit I (the “Articles”).

2.2           Name.  The name of the Company shall be “Aliante Holding, LLC,”“ and all business of the Company shall be conducted in such name or in any other name or names that are selected by the Executive Committee.

2.3           Purposes and Powers.  The purpose of the Company is to own all of the issued and outstanding membership interests in Aliante LLC and Losee LLC, New Properties and/or equity interests in entities formed to acquire, hold and/or operate New Properties.  In connection

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therewith, the Company shall have authority to engage in any lawful business, purpose or activity permitted by the Act, and it shall possess and may exercise all of the powers and privileges granted by the Act or which may be exercised by any limited liability company organized pursuant to the Act, together with any powers incidental thereto, so far as such powers or privileges are necessary or convenient to the conduct, promotion or attainment of the business, purposes or activities of the Company.

2.4           Registered Agent and Registered Office.  Key Reid shall be the Company’s registered agent for purposes of the Act (the “Registered Agent”),  and the Registered Agent shall maintain the registered office of the Company as required by the Act.  The address of the Company’s initial registered office shall be c/o G.C. Aliante, LLC, c/o The Greenspun Corporation, 901 North Green Valley Parkway, Suite 210, Henderson,, Nevada 89074.  In addition to any records required by the Act, the Registered Agent shall maintain the following records at the registered office: (i) a current list of the full name and last known business address of each Member, separately identifying the Members in alphabetical order; (ii) a copy of the filed Articles and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any document has been executed; (iii) copies of the Company’s federal, foreign, state and local income tax returns and reports, if any, for the three (3) most recent years; (iv) copies of this Agreement and any amendments thereto; and (v) any financial statements of the Company for the three (3) most recent years.  The Company’s Registered Agent and office may be changed by the Executive Committee.

ARTICLE III

Management

3.1           The Executive Committee.  Subject to this Agreement and to the approval rights vested in the Members and/or GC pursuant to this Agreement, the sole responsibility and authority for the management of the Company is vested in the Executive Committee, and the Executive Committee shall have the complete right and authority to manage the business and affairs of the Company.  No Member, acting in its capacity as a Member, shall constitute an agent of the Company or have any authority to act for or bind the Company.  The Members agree that they shall use commercially reasonable efforts to cooperate with the EC Members as reasonably requested by the Executive Committee in carrying out its duties under this Agreement and in complying with any restrictions placed on the Members or the Company by any Gaming Authority.

 3.2          No Liability for Fees, Costs and Expenses of Aliante LLC or Losee LLC. The Company and the Members shall have no responsibility for the fees, costs, expenses, indebtedness or liabilities of Aliante LLC, Losee LCC or any entity entities formed to acquire, hold and/or operate New Properties or and none of such fees, costs, expenses indebtedness or liabilities shall be an obligation, liability or the responsibility of the Company or the Members.

3.3           [Reserved.]

3.4           [Reserved.]

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3.5           [Reserved.]

3.6           Expense Reimbursement.  The Company shall be responsible for all operating costs incurred in accordance with the terms and provisions of this Agreement, including the Annual Plan and Operating Budget, and will reimburse all such operating costs incurred thereby by or on behalf of the Members pursuant to an approved Annual Plan and Operating Budget.

3.7           Removal of the Manager.

(a)           In the event that GC exercises its right under the Aliante Operating Agreement to remove Station as the Manager, Station shall have the right to require GC to acquire Station’s entire Membership Interest in the Company at the Appraised Value.  Station shall notify GC in writing within sixty (60) days after being removed as the Manager that it is considering exercising such right and that the Appraised Value must be determined.  Within thirty (30) days following the determination of Appraised Value, Station must give written notice to GC if it desires to sell its Membership Interest at the Appraised Value (the “Removal Put Exercise Date”).  The closing on such acquisition shall occur within sixty (60) days after the receipt of all necessary consents and approvals for such Transfer.  Station’s Membership Interest shall be conveyed free and clear of all liens and encumbrances, except those of this Agreement, and Station and its Affiliates shall be released from all indebtedness or guaranties incurred on behalf of the Company.  The purchase price shall be paid in cash, unless otherwise agreed by Station.

(b)           In the event GC defaults on acquiring a Station’s Membership Interest pursuant to this Subsection, or the requisite consents and approvals to Transfer have not been (or cannot be) obtained for such sale within one (1) year after the Removal Put Exercise Date, or Station and its Affiliates cannot be released from all indebtedness or guaranties upon such sale within one (1) year after the Removal Put Exercise Date, then Station can require the Company or its assets to be sold pursuant to actions taken by an investment banker (selected by Station from the list on Exhibit B) in a commercially reasonable time frame.

3.8           Officers.  Subject to applicable provisions of the Gaming Laws, the Executive Committee shall have the authority to appoint and remove, in its sole discretion, Persons serving as officers of the Company and to delegate to such Persons such duties and responsibilities as the Executive Committee shall deem to be in the best interests of the Company. All such appointments and delegations may be revocable at will by the Executive Committee.  If any Person appointed to serve as an officer of the Company is found to be an Unsuitable Person, the Executive Committee shall immediately remove such Person as an officer, and such Person shall thereupon automatically cease to be an officer.  Either EC Member may require the Executive Committee to discharge an officer of the Company in the event that, after notice from the Executive Committee and a sixty (60) day opportunity to cure, such officer’s performance is unsatisfactory to such EC Member.  The second request by the same EC Member to discharge an officer of the Company shall result in the termination of such officer without further notice or opportunity to cure.

3.9           Competing Transactions.   Subject to Sections 3.8(a) and 3.8(b) of the Aliante Operating Agreement, each Fertitta Person and each Greenspun Person shall be entitled to enter into any transaction that may be considered to be competitive with, or a business opportunity that

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may be beneficial to, the Company.  Any transactions or agreements (other than transactions or agreements expressly contemplated by this Agreement or the Aliante Operating Agreement, including reimbursement of Shared Expenses, as long as such transactions are otherwise in compliance with this Agreement or the Aliante Operating Agreement) between the Fertitta Persons and the Greenspun Persons (on the one hand) and the Company (on the other) (any such transaction referred to herein as an “Affiliate Transaction”) shall be disclosed to the Members in advance and shall be on commercially reasonable terms that are no less favorable to the Company than could be obtained from an independent third party.  No transaction with the Company shall be voidable solely because a Member has a direct or indirect interest in the transaction if either (a) the transaction is fair to the Company or (b) the disinterested Manager or disinterested Member(s), in either case knowing the material facts of the transaction and the Member’s interest, authorizes, approves or ratifies the transaction.  Notwithstanding the foregoing, any loans to the Company by any Member or Affiliate of a Member shall require the approval of the Executive Committee pursuant to the terms of this Agreement or the Aliante Operating Agreement.

3.10         Tax Matters Partner.  Station is hereby designated as the “tax matters partner” of the Company under Code Section 6231(a)(7) (the “Tax Matters Member”).  The Tax Matters Member shall give prompt notice to the Members of (a) the receipt by the Tax Matters Member of written notice that a federal, state or local taxing authority intends to examine the Company’s income tax returns for any year; (b) receipt by the Tax Matters Member of written notice of a final partnership administrative adjustment under Code Section 6223; and (c) receipt by the Tax Matters Member of any request from the Internal Revenue Service for waiver of any applicable statute of limitations with respect to any tax return of the Company.  The Tax Matters Member may not extend or waive the statute of limitations or take any other action that would compromise any tax position of the Company without the approval of the Executive Committee.

3.11         Liability of Members.  Except as otherwise provided by the Act, none of the Members shall be obligated personally for any debt, obligation or liability of the Company or of any other Member solely by reason of being a Member. Except as otherwise provided in this Agreement or by applicable law, none of the Members shall have any fiduciary or other duty to the Company or any Member with respect to the business and affairs of the Company.  The Company shall indemnify each Member and hold each Member harmless from and against any and all debts, obligations, and liabilities of the Company, if any, to which such Member becomes subject solely by reason of being a Member, whether arising in contract, tort or otherwise; provided, however, that the indemnification obligation of the Company under this Section 3.10 shall be paid only from the assets of the Company, and no Member shall have any personal obligation, or any obligation to make any Capital Contribution, with respect thereto.

3.12         Prohibition Against Publicly Traded Partnership.  The Executive Committee shall take all action necessary to prevent the Company from qualifying as a publicly traded partnership within the meaning of Section 7704 of the Code.

3.13         Executive Committee Membership.  There shall be an executive committee (the “Executive Committee”) of the Company comprised of one (1) representative of each of Station (the “Station EC Member”) and GC (the “GC EC Member”), so long as such Persons remain as Members.  The initial Station EC Member designated by Station shall be Frank J. Fertitta III, and

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the initial GC EC Member designated by GC shall be Brian L. Greenspun so long as they are alive and not disabled and are not found to be Unsuitable Persons. Station and GC shall designate their respective replacement appointees to the Executive Committee in writing to the other Member and, except as set forth in the prior sentence, may remove their respective appointees at any time by written notice to the other.  Subject to the provisions of Section 4.3(c), at all times the GC EC Member shall be a Greenspun Family Member, and the Station EC Member shall be either a Fertitta Family Member or a Station Officer.  Subject to the provisions of Section 4.3(c), at any time a vacancy is created on the Executive Committee by death, removal (with or without cause) or resignation, no action shall be taken by the Executive Committee until the Executive Committee is reconstituted in accordance with the provisions of this Section 3.13, unless the Member that is entitled to nominate such replacement EC Member shall consent to the taking of such action.  In the event of a Transfer permitted pursuant to Section 5.2(a) of the entire Membership Interest of a Member, the transferee shall have the power to appoint the EC Member previously granted to its transferor.  If any Person appointed to serve as an EC Member is found to be an Unsuitable Person, such Person shall immediately be removed as an EC Member and shall thereupon automatically cease to be a member of the Executive Committee.

3.14         Decisions Subject to Executive Committee Approval.  Except as specifically delegated in writing or set forth in an action or resolution of the Executive Committee, all matters and decisions relating to the operation of the Company shall require the approval of both EC Members.

3.15         Place of Meetings and Meetings by Telephone.  All meetings of the Executive Committee may be held at any place that has been designated from time to time by resolution of the Executive Committee.  In the absence of such a designation, regular meetings shall be held at the Registered Office.  Any meeting, regular or special, may be held by conference telephone or similar communications equipment so long as all EC Members participating in the meeting can hear one another, and all EC Members participating by telephone or similar communications equipment shall be deemed to be present in person at the meeting.

3.16         Regular Meetings.  The Executive Committee shall not be required to have regular meetings, except as otherwise determined by the Executive Committee.

3.17         Special Meetings.  Special meetings of the Executive Committee for any purpose or purposes may be called at any time by one (1) EC Member.  Notice of the time and place of a special meeting shall be given and deemed received pursuant to Section 8.1.

3.18         Quorum.  All of the EC Members shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.21.

3.19         Manner of Acting.  Every act or decision of the Executive Committee shall require the affirmative unanimous approval of all of the EC Members.

3.20         Waiver of Notice.  Notice of any meeting need not be given to any EC Member who either before or after the meeting signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes.  The waiver of notice or consent need not specify the

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purpose of the meeting.  All such waivers, consents, and approvals shall be filed with the records of the Company or made a part of the minutes of the meeting.  Notice of a meeting shall also be deemed given to any EC Member who attends the meeting without protesting before or at its commencement the lack of notice to that EC Member.

3.21         Adjournment.  If a quorum is not present, any EC Member present (including all EC Members participating as permitted by Section 3.15), whether or not constituting a quorum, may adjourn any meeting to another time and place.  Notice of the time and place of holding an adjourned meeting need not be given unless the meeting is adjourned for more than forty eight (48) hours, in which case notice of the time and place shall be given before the time of the adjourned meeting in the manner specified in Section 3.17.

3.22         Action Without a Meeting.  Any action to be taken by the Executive Committee at a meeting may be taken without such meeting by the written consent of all of the EC Members.  Any such written consent may be executed and given by telecopy or similar electronic means.

3.23         Resignation.  Any member of the Executive Committee may resign at any time by giving written notice to the Members of the Company.  The resignation of any members of the Executive Committee shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

3.24         Removal.  A member of the Executive Committee may only be removed pursuant to Section 3.12 or Section 4.3(c).

3.25         Vacancies.  A vacancy on the Executive Committee may only be filled in accordance with Section 3.12.

3.26         Compensation to EC Members.  The EC Members shall receive no compensation but shall be reimbursed for their reasonable and customary expenses incurred in attending meetings of the Executive Committee.

3.27         Liability to Third Parties.  The debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the Company, and no EC Member shall be obligated personally for any such debt, obligation, or liability by reason of his acting as an EC Member.

3.28         No Guarantee of Return by EC Members.  The Company and the EC Members do not, in any way, guarantee the return of the Members’ Capital Contributions or a profit for the Members from the operations of the Company.  Except as set forth in Section 3.8 of the Aliante Operating Agreement, the EC Members shall incur no liability to the Company or to any of the Members as a result of engaging in any other business or venture.  The EC Members shall be entitled to any other protection afforded to such EC Members under the Act.

3.29         Transactions with Company or Otherwise.  The EC Members, or any agent, servant, or employee of the EC Members, may engage in and possess any interest in other businesses or ventures of every nature and description, independently or with other Persons, and neither the Company nor any of the Members shall have any rights, by virtue of this Agreement

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or otherwise, in and to such independent ventures or the income or profits derived therefrom, or any rights, duties, or obligations in respect thereof.

3.30         Indemnification.  To the fullest extent permitted by the Act:

(a)           The Company (and any receiver, liquidator, or trustee of, or successor to, the Company) shall indemnify and hold harmless each EC Member and their respective officers, partners, shareholders, directors, managers, members and employees (each an “Indemnitee”), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, proceedings, costs, expenses and disbursements of any kind or nature whatsoever (“Claims”) (including, without limitation, all reasonable costs and expenses of defense, appeal and settlement of any and all suits, actions and proceedings involving an Indemnitee, and all costs of investigation in connection therewith) that may be imposed on, incurred by, or asserted against an Indemnitee, in any way relating to or arising out of, or alleged to relate to or arise out of the performance of any duties or services by or on behalf of the Company or any action, inaction or omission on the part of an Indemnitee in connection with managing the Company’s business and affairs or otherwise acting as an EC Member pursuant hereto; provided, however, that the indemnification obligations in this Section 3.30 shall not apply to Claims brought by the Members; provided, further, that the indemnification obligations in this Section 3.30 shall not apply to the portion of any liability, obligation, loss, damage, penalty, cost, expense or disbursement that has been finally adjudged in a non-appealable order of court of competent jurisdiction to have resulted from (i) the gross negligence of an EC Member, (ii) the intentional misconduct or actual fraud by the proposed Indemnitee or (iii) any action for which indemnification is prohibited under the Act.

(b)           The Company shall pay expenses as they are incurred by an Indemnitee in connection with any action, claim or proceeding that such Indemnitee asserts in good faith to be subject to the indemnification obligations set forth herein, upon receipt of an undertaking from such Indemnitee to repay all amounts so paid by the Company to the extent that it is finally determined that the Indemnitee is not entitled to be indemnified therefor under the terms hereof.

(c)           The indemnification and expense payments to be provided by the Company hereunder shall be paid only from the assets of the Company, and no Member shall have any personal obligation, or any obligation to make any Capital Contribution, with respect thereto.

ARTICLE IV

Financial Matters

4.1           Initial Capital Contributions.

(a)           GC Capital Contribution.  The terms of GC’s initial Capital Contribution are as set forth on Schedule 4.1(a) (“GC’s Initial Capital Contribution”).

(b)           Station Capital Contribution.  The terms of Station’s initial Capital Contribution are as set forth on Schedule 4.1(b) (“Station’s Initial Capital Contribution”).

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4.2           Additional Capital Contributions.

(a)           Each Member shall make such additional Capital Contributions to the Company at such times and in such amounts as required under this Section 4.2.

(b)           Any additional Capital Contributions required pursuant to this Section 4.2 shall be made by the Members pro rata in accordance with their Membership Interests as of the date that such Capital Contribution is required to be made pursuant to the terms of this Agreement, in such forms and amounts as may be determined by the Executive Committee, and shall be made only after the Initial Capital Contributions have been made in full.

(c)           In connection with any such additional Capital Contributions (other than pro rata Capital Contributions), the Company shall revalue the Members’ Capital Accounts in accordance with Section 1.704-1(b)(2)(iv)(f) of the Regulations.

(d)           Except as expressly provided in this Agreement, no Member shall be entitled to withdraw as a Member or to demand or receive a return of its Capital Contribution.

(e)           No obligation of a Member to make any Capital Contribution hereunder may be enforced by a creditor of the Company unless the Member expressly consents to such enforcement or to the assignment of such obligation to such creditor.

(f)            With respect to Aliante LLC:

(i)            Within five (5) days after the Company receives written notice of a capital call from Aliante LLC pursuant to Section 4.2(b), Section 4.2(c) or Section 4.2(d) of the Aliante Operating Agreement (an “Aliante Additional Capital Call”), the Executive Committee shall notify each Member in writing of (A) the aggregate dollar amount of such Aliante Additional Capital Call, (B) each Member’s share (which shall be in proportion to each Member’s Membership Interest as of the date of the notice from the Executive Committee) of such Aliante Additional Capital Call (which shall be the amount of the Member’s Additional Capital Contribution with respect thereto) and (C) the date on which such Additional Capital Contribution is to be made (which shall be no sooner than ten (10) days, and no later than twenty (20) days, immediately following the date of the notice of such Additional Capital Contribution from the Executive Committee), and the Members shall make such Additional Capital Contributions to the Company within such prescribed time period.

(ii)           Except as otherwise provided in Section 4.3(g), the Company, consistent with prudent business judgment and reasonable reserves, shall promptly distribute to the Members (either as a return of capital contributions or repayment of loans or advances, as the case may be) all proceeds of Construction Financing received by the Company from Aliante LLC to the extent of the Members’ funded shares of the Company’s Excess Construction Contributions up to the date of such distribution.  Distributions pursuant to this Section 4.2(f)(ii) shall be made to the Members in proportion to the Excess Construction Contributions actually funded by them.

(iii)          If an Initial Dilution has occurred under Section 4.3(b)(i) during the one (1) year period immediately preceding the date on which any Additional Capital Contributions required to be made pursuant to this Section 4.2(f) or any of its

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subsections, and the Defaulting Member has not paid the Dilution Interest Payment Amount with respect to such Additional Contribution Default, then the Additional Capital Contribution required by the Non-Defaulting Member as a result of the difference between the Membership Interest of the Non-Defaulting Member immediately prior to the Initial Dilution and the Membership Interest of the Non-Defaulting Member immediately after the Initial Dilution shall be deemed a “Disproportionate Contribution” for all purposes hereunder.

(iv)          The Members acknowledge that the Members, Parent and/or Affiliates of GC (“GC Affiliates”) may execute “make-well” agreements, completion guaranties, pledge agreements, indemnity agreements, or similar surety or guaranty documents in connection with the Construction Financing, any Expansion Financing and/or the Permanent Financing.

(v)           In the event that (A) the Company is required to make a payment to the lender(s) with respect to an applicable Pledge/Guaranty Document, (B) any collateral of the Company that is pledged thereunder is foreclosed or transferred in lieu of foreclosure or (C) any dividends or distributions with respect to any pledged collateral of the Company is used to make a payment to the lender(s) on behalf of Aliante LLC, the Station Pledgors or the GC Pledgors with respect to any Pledge/Guaranty Document, then the amount credited against (or used to reduce) amounts owed by the Company, Aliante LLC, the Station Pledgors or the GC Pledgors under the Construction Loan Documents, Expansion Project Loan Documents, Permanent Loan Documents or the Pledge/Guaranty Documents as a result of the foreclosure or transfer of the collateral shall be deemed an additional capital contribution by the Company to Aliante LLC for purposes of the Aliante Operating Agreement.

(vi)          In the event that (A) any GC Pledgor is required to make a payment to the lender(s) with respect to an applicable Pledge/Guaranty Document, (B) any collateral of a GC Pledgor pledged thereunder is foreclosed or transferred in lieu of foreclosure or (C) any dividends or distributions with respect to any pledged collateral of any GC Pledgor is used to make a payment to the lender(s) on behalf of Aliante LLC, the Company, the Station Pledgors or the GC Pledgors with respect to any Pledge/Guaranty Document, then the amount credited against (or used to reduce) amounts owed by the Company, Aliante LLC, the Station Pledgors or the GC Pledgors under the Construction Loan Documents, Expansion Project Loan Documents, Permanent Loan Documents or the Pledge/Guaranty Documents as a result of the foreclosure or transfer of the collateral shall be deemed an Additional Capital Contribution by GC to the Company and an additional capital contribution by the Company to Aliante LLC for purposes of the Aliante Operating Agreement.

(vii)         In the event that (A) any Station Pledgor is required to make a payment to the lender(s) with respect to an applicable Pledge/Guarantee Document, (B) any collateral of a Station Pledgor pledged thereunder is foreclosed or transferred in lieu of foreclosure or (C) any dividends or distributions with respect to any pledged collateral of a Station Pledgor is used to make a payment to the lender(s) on behalf of Aliante LLC, the Company, a Station Pledgor or a GC Pledgor with respect to any Pledge/Guaranty

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Document, then the amount credited against (or used to reduce) amounts owed by the Company, Aliante LLC, the Station Pledgors or the GC Pledgors under the Construction Loan Documents, Expansion Project Loan Documents, Permanent Loan Documents or the Pledge/Guaranty Documents as a result of the foreclosure or transfer of the collateral shall be deemed an Additional Capital Contribution by Station to the Company and an additional capital contribution by the Company to Aliante LLC for purposes of the Aliante Operating Agreement.

(viii)        In the event that, pursuant to Sections 4.2(f)(v), (vi) or (vii), one (1) Member is deemed to have made an Additional Capital Contribution, and the other Member has not made (or been deemed to have made) an Additional Capital Contribution of equal amount (the difference being a “Disproportionate Guaranty Contribution”), the Member who has made (or is deemed to have made) less of an Additional Capital Contribution shall, within ten (10) days after a Disproportionate Guarantee Contribution, pay the Member who made the Disproportionate Guaranty Contribution an amount equal to one-half (1/2) of the Disproportionate Guaranty Contribution (the  “Required Guaranty Payment”).  Upon the payment of the Required Guaranty Payment, the recipient Member’s Additional Capital Contribution will be deemed reduced by an amount equal to the Required Guaranty Payment and the paying Member’s additional Capital Contribution will be deemed increased by an amount equal to the Required Guaranty Payment.  If the Required Guaranty Payment is not so paid within such ten (10) day period, such failure automatically shall be deemed to be an Additional Contribution Default for all purposes under this Agreement.  The provisions of this Section 4.2(f) shall continue until all of the Company, the Members, Parent and GC Affiliates are released from the documents evidencing the Construction Loan Documents, Expansion Project Loan Documents and Permanent Loan Documents, as the case may be, and the Pledge/Guaranty Documents, and shall not be affected by a release of less than all of the foregoing parties.

(ix)           The Members acknowledge that the Members, Parent or GC Affiliates may, under the Construction Financing, Expansion Financing or Permanent Financing, have the right to pledge additional collateral (including cash) to cure the default (a “Curable Default”) of one (1) of the Members, Parent or GC Affiliates under other loan documents or by reason of Bankruptcy or a similar event (a “Cure Pledge”).  In the event that a Curable Default by Station, Parent, GC or GC Affiliates occurs, then Station and Parent in the case of a Curable Default by Station or Parent, and GC and GC Affiliates in the case of a Curable Default by GC or GC Affiliates, shall have ten (10) days from such Curable Default to make the Cure Pledge.  If they fail to do so, then GC and GC Affiliates in the case of the failure of Station and Parent, and Station and Parent in the case of the failure of GC and GC Affiliates, may make the Cure Pledge (the Member failing to cure being the “Cross-Default Member,” the Person making such pledge being the “Curing Party,” and the collateral pledged being the “Cure Collateral”).  The Cross Default Member shall indemnify and hold harmless the other Member from the cost of curing the Curable Default, such as reasonable attorneys’ fees, escrow costs, and filing fees, but expressly excluding the opportunity cost of such cure (e.g., the lost opportunity for other uses of the Cure Collateral), but expressly including the fair market value of the Cure Collateral valued as of the date of the pledge if the same is foreclosed or conveyed

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in lieu of foreclosure (the “Collateral’s Fair Market Value”).  If the Cure Collateral is foreclosed or otherwise conveyed in lieu of foreclosure, the Member who pledged the Cure Collateral (or on whose behalf the Cure Collateral was pledged) may elect to treat the Collateral’s Fair Market Value as a Default Amount or Default Loan.  In the event that a Curing Party makes a Cure Pledge, then the Cross Default Member shall, for so long as such Cure Pledge is outstanding, on each annual anniversary date of such pledge, pay to the other Curing Party an amount equal to the lesser of (A) ten percent (10%) of the Collateral’s Fair Market Value or (B) the maximum permitted by law (the “Cure Cost of Capital”); such payment shall be prorated for any partial year that the Cure Pledge is outstanding.  In the event the Cure Cost of Capital is not paid when due, it shall, at the election of the Non-Defaulting Member, constitute either a Default Amount or Default Loan under this Agreement.

(g)           With respect to Losee LLC, within two (2) Business Days after the Company receives written notice of a capital call from Losee LLC (a “Losee Additional Capital Call”), the Executive Committee shall notify each of GC and Station in writing of (i) the aggregate dollar amount of such Losee Additional Capital Call, (ii) each Member’s share (which shall be in proportion to each Member’s Membership Interest as of the date of the notice from the Executive Committee) of such Losee Additional Capital Call (which shall be the amount of the Member’s Additional Capital Contribution with respect thereto) and (iii) the date on which such Additional Capital Contribution is to be made (which shall be no sooner than ten (10) days, and no later than twenty (20) days, immediately following the date of the notice of such Additional Capital Contribution from the Executive Committee), and GC and Station shall make such Additional Capital Contributions to the Company within such prescribed time period.

4.3           Default.

(a)           [Reserved].

(b)           Default in Making Additional Capital Contribution.

(i)            Without limiting the additional rights set forth in Section 4.3(g), if any Member fails to timely make all or part of any additional Capital Contribution (an “Additional Contribution Default”) required to be made by such Member pursuant to Section 4.2 (including the failure to pay under any “make-well” or completion guaranty) (the amount of such failed payment referred to herein as a “Default Amount”), the Non-Defaulting Member may elect to contribute to the Company all or a part of the Default Amount (a “Default Contribution”).  The Default Contribution shall be deemed contributed as an additional Capital Contribution by the Non-Defaulting Member and the percentage of Membership Interests of the Non-Defaulting Member shall then be adjusted (an “Initial Dilution”) such that the percentage of such Membership Interests shall be increased to a fraction, the numerator of which equals the aggregate Capital Contributions of the Non-Defaulting Member immediately prior to the payment of the Default Contribution plus one hundred percent (100%) of the Default Contribution, and the denominator of which is the aggregate Capital Contributions of all Members (the resulting increase in the percentage of the Non-Defaulting Member’s Membership Interest is referred to herein as the “Dilution Interest”).  The percentage of the

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Membership Interest of the Defaulting Member shall be reduced accordingly.  Until the Dilution Interest is acquired by the Defaulting Member in accordance with the provisions of this Section 4.3(b) by paying the Dilution Interest Payment Amount (as hereinafter defined), the Non-Defaulting Member shall be entitled to all distributions to which the Defaulting Member would have been entitled in respect of its Membership Interests (each such distribution paid to the Non-Defaulting Member in respect of the Defaulting Member’s Membership Interest is referred to herein as a “Default Distribution”).  Default Distributions shall be credited first against the Twenty Five Percent Payment, second against the Default Contribution itself, and third against the amount of any Disproportionate Contribution.  For a period of one (1) year following the Non-Defaulting Member’s contribution of the Default Contribution, the Defaulting Member shall have the option of acquiring the Dilution Interest by paying the Non-Defaulting Member an amount (the “Dilution Interest Payment Amount”) equal to (w) one hundred percent (100%) of the amount of the Default Contribution, plus (x) the Twenty Five Percent Payment, plus (y) the amount of all Disproportionate Contributions, minus (z) the amount of any Default Distributions, in which case the Default Contribution will be canceled, the dilution of the Defaulting Member’s Membership Interests shall be reversed, and an amount equal to one hundred percent (100%) of the Default Contribution will be added to the Capital Account balance of the Defaulting Member.  If the Dilution Interest is not acquired in full by the Defaulting Member within the foregoing one (1) year period, the percentage of Membership Interests of the Non-Defaulting Member shall then be further adjusted (a “Secondary Dilution”) such that the Non-Defaulting Member’s percentage of the Membership Interests shall be increased to a fraction, the numerator of which equals (A) the aggregate Capital Contribution of the Non-Defaulting Member to date (including the Default Contribution), plus (B) the Twenty Five Percent Payment which is deemed contributed as an additional Capital Contribution solely for purposes of calculating a Member’s percentage of Membership Interests, minus (C) the amount of any Default Distributions, and the denominator of which is the aggregate Capital Contribution of all Members.  The percentage of the Membership Interest of the Defaulting Member shall be reduced accordingly.

(ii)           In the event of an Additional Contribution Default, the Non-Defaulting Member also may elect either to (A) withdraw, no later than five (5) days after such Additional Capital Contribution was made by the Non-Defaulting Member, its Additional Capital Contribution which was made timely (and upon such withdrawal, the Defaulting Member no longer shall be in default, and the requirement to make an Additional Capital Contribution shall be deemed to have been canceled and neither Member shall have been deemed to have made an Additional Capital Contribution), or (B) not make a Default Contribution at all.  In the event that the Non-Defaulting Member elects the foregoing option (B), the Company shall not pay any distribution to the Defaulting Member from the date on which such Additional Capital Contribution was required to be made by the Defaulting Member, and such amounts that otherwise would be distributed to the Defaulting Member shall be retained by the Company and deemed to be a Capital Contribution of the Defaulting Member (“Retained Distributions”), until the earlier of (I) the date on which the Defaulting Member has contributed such Default Amount to the Company (reduced by any Retained Distributions), there are no other unpaid delinquent Capital Contributions required to be made by such Member, and the Defaulting Member

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has paid the Non-Defaulting Member the Twenty Five Percent Payment on the Default Amount and all subsequent delinquent Capital Contributions, or (II) the date on which the aggregate amount of all such Retained Distributions equals the sum of (X) the Default Amount, (Y) all other subsequent delinquent Capital Contributions that remain unpaid as of the date of determination, and (Z) the Twenty Five Percent Payment on the Default Amount and all subsequent delinquent Capital Contributions.  In the event that any of the foregoing (I) or (II) occurs (a “Default Repayment Event”), an amount equal to one hundred percent (100%) of the Default Amount shall be deemed to be contributed to the capital of the Company on behalf of the Defaulting Member and the Defaulting Member’s Capital Account shall be adjusted to reflect such Capital Contribution and the Company shall pay the Non-Defaulting Member the Twenty Five Percent Payment (to the extent such Twenty Five Percent Payment has not been paid previously to the Non-Defaulting Member).

(c)           Disenfranchisement.  At any time after an Additional Contribution Default (except if the Non-Defaulting Member withdraws its Additional Capital Contribution pursuant to Section 4.3(b)(ii)(A)), the Defaulting Member shall have no representatives on the Executive Committee and no vote on any matter coming before the Members, except that such Defaulting Member’s consent still shall be required with respect to the items set forth in Section 5.4.  The disenfranchisement pursuant to this Section 4.3(c) shall end at such time as the Defaulting Member has paid the Dilution Interest Payment Amount or Default Loan (plus Default Loan Interest), as applicable, or a Default Repayment Event has occurred.

(d)           Default Call and Put.

(i)            Within thirty (30) days after the day after a Secondary Dilution occurs (a “Dilution Date”) pursuant to Section 4.3(b), and within thirty (30) days after each of the first five (5) annual anniversaries of a Dilution Date, and on the tenth (10th) and fifteenth (15th) annual anniversaries of a Dilution Date, the Non-Defaulting Member may give written notice to the Defaulting Member that it is considering exercising the right to purchase the Defaulting Member’s Membership Interest (the “Default Call”) and that the Appraised Value should be determined as of the date of such notice.  Within thirty (30) days after the determination of the Appraised Value, the Non-Defaulting Member shall notify the Defaulting Member if it desires to exercise the Default Call.  The purchase and sale thereafter shall occur within ten (10) days following receipt of all necessary third-party consents and approvals for such transfer.  At the closing, the Membership Interest shall be conveyed free and clear of all liens and encumbrances (except this Agreement and the Aliante Operating Agreement), and the selling Member and its Affiliates shall be released from all indebtedness or guaranties incurred on behalf of the Company.  The acquisition price shall be the Appraised Value and, unless the Defaulting Member otherwise agrees, be paid in cash.

(ii)           No later than one (1) year prior to the fifth (5th), tenth (10th) and fifteenth (15th) annual anniversaries of a Dilution Date, the Defaulting Member may give written notice to the Non-Defaulting Member that it is considering exercising the right to sell its Membership Interest to the Non-Defaulting Member (the “Default Put”) and that the Appraised Value should be calculated as of thirty (30) days prior to the applicable

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anniversary of a Dilution Date.  Within thirty (30) days after the determination of the Appraised Value, the Defaulting Member shall notify the Non-Defaulting Member if it desires to exercise the Default Put (the “Default Put Exercise Date”).  The purchase and sale shall occur on the later of within thirty (30) days prior to the fifth (5th), tenth (10th) and fifteenth (15th) annual anniversaries of a Dilution Date, as applicable, or ten (10) days following receipt of all necessary third-party consents and approvals for such transfer.  At the closing, the Membership Interest shall be conveyed free and clear of all liens and encumbrances (except this Agreement and the Aliante Operating Agreement ), and the selling Member and its Affiliates shall be released from all indebtedness or guaranties incurred on behalf of the Company, Aliante LCC or Losee LLC.  The acquisition price shall be the Appraised Value, and, unless the Defaulting Member otherwise agrees, be paid in cash.

In the event a Member defaults on acquiring a Member’s Membership Interest pursuant to a Default Put, or the requisite consents and approvals to Transfer have not (or cannot be) obtained with respect to a Default Put within one (1) year after the Default Put Exercise Date, or the selling Member and its Affiliates cannot be released from all indebtedness or guaranties with respect to a Default Put within one (1) year after the Default Put Exercise Date, then the selling Member can require the Company or its assets to be sold pursuant to actions taken by an investment banker (selected by the selling Member from the list on Exhibit B) in a commercially reasonable time period.

(e)           No Penalty or Forfeiture.   GC and Station acknowledge and agree that the failure of either to make their respective Additional Capital Contributions shall result in damage to the other and the Company, the exact amount of which is impractical or extremely difficult to calculate, and that the remedies set forth in Section 4.3(b)-(d) are a fair and reasonable calculation of damages under the circumstances, and not a penalty or forfeiture.

(f)            [Reserved].

(g)           Disproportionate Guaranty Contribution.  Notwithstanding anything in this Agreement to the contrary, in the event that there is an Additional Contribution Default based on the failure to make a Required Guaranty Payment, the Member who has made (or is deemed to have made) the Disproportionate Guaranty Contribution may elect either to (i) treat the unpaid Required Guaranty Amount as a Default Amount (with such Default Amount being deemed contributed as a Default Contribution by the Non-Defaulting Member) under Section 4.3(b) with all rights and remedies under this Agreement with respect to Default Amounts and Default Contributions, or (ii) if treating the Disproportionate Guaranty Contribution as a Default Amount (or exercising remedies in connection therewith, including, without limitation, dilution or disenfranchisement of the Defaulting Member) would result in a termination of the commitment for or acceleration of the Construction Financing, Expansion Financing or Permanent Financing, or if the Disproportionate Guaranty Contribution is the result of a foreclosure or transfer in lieu of a foreclosure pursuant to the Pledge/Guaranty Documents, treat the Required Guaranty Amount as a loan (the “Default Loan”) to the Defaulting Member which shall accrue interest on the outstanding principal of the Default Loan at an interest rate equal to the prime rate as announced by Bank of America N.A. plus ten percent (10%) per annum, compounded annually (the “Default Loan Interest”).  Notwithstanding anything in this Section 4.3 to the contrary, in the

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event that the Non-Defaulting Member treats the Required Guaranty Amount as a Default Loan, the Defaulting Member shall not be entitled to any distributions whatsoever under this Agreement until such time as the Non-Defaulting Member has received distributions otherwise distributable to the Defaulting Member pursuant to the final paragraph of Section 4.5(a) equal to the Default Loan plus Default Loan Interest.  The provisions of this Section 4.3(g) shall continue until all of the Company, Aliante LLC, the Members, Parent, GC Pledgors and Station Pledgors are released from the Construction Loan Documents, Expansion Project Loan Documents and Permanent Loan Documents, as the case may be, and the Pledge/Guaranty Documents, and shall not be affected by a release of less than all of the foregoing parties.

4.4           Allocation of Profits and Losses.

For purposes of determining Capital Accounts under this Section 4.4: (i) Capital Accounts shall be reduced by distributions with respect to such Fiscal Year, and (ii) a Member’s Capital Account shall be increased by such Member’s share of Minimum Gain and Minimum Gain Attributable to Member Nonrecourse Debt determined as of the end of such Fiscal Year.

(a)           Profits.  After giving effect to the special allocations set forth in Section 4.4(c), Profits shall be allocated as follows: (i) first, to those Members with negative Capital Account balances, that portion of Profits which is equal in amount to, and in proportion to, such Members’ respective negative Capital Accounts in the Company; provided, however, that no such Profits shall be allocated under this paragraph to a Member once such Member’s Capital Account is brought to zero; and (ii) the balance, to those Members in the amount and to the extent necessary to increase the Members’ respective Capital Accounts so that if the proceeds were distributed under Section 6.2(c) at the end of the Fiscal Year, such proceeds would be distributed in accordance with the Members’ respective Capital Account balances.

(b)           Losses.  After giving effect to Section 4.4(c), Losses shall be allocated to each Member as follows: (i) first, to those Members to the extent and in such proportions necessary to decrease the respective positive balances in all Members’ Capital Accounts so that the proceeds distributed under Section 6.2(c) will be distributed in accordance with the Members’ respective adjusted Capital Accounts; and (ii) the balance, to the Members in accordance with the manner in which they bear the economic risk of loss associated with such Loss.

(c)           Special Allocations.  Notwithstanding any provisions of Section 4.4(a) or Section 4.4(b), the following special allocations shall be made in the following order:

(i)            Minimum Gain Chargeback (Nonrecourse Liabilities).  If there is a net decrease in Minimum Gain for any Fiscal Year (except as a result of certain conversions or refinancings of Company indebtedness, certain capital contributions or certain revaluations of property as further outlined in Regulation Sections 1.704-2(d)(4), (f)(2), or (f)(3)), each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Member’s share of the net decrease in Minimum Gain.  The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(f) and (j)(2).  This Section 4.4(c)(i) is intended to comply with the minimum gain chargeback requirement in said section of the Regulations and shall be interpreted consistently therewith.

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Allocations pursuant to this Section 4.4(c)(i) shall be made in proportion to the respective amounts required to be allocated to each Member pursuant hereto.

(ii)           Minimum Gain Attributable to Member Nonrecourse Debt.  If there is a net decrease in Minimum Gain Attributable to Member Nonrecourse Debt during any Fiscal Year (other than due to the conversion, refinancing or other change in the debt instrument causing it to become partially or wholly nonrecourse, certain capital contributions, or certain revaluations of property as further outlined in Regulations Section 1.704-2(i)(4)), each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Member’s share of the net decrease in the Minimum Gain Attributable to Member Nonrecourse Debt.  The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and (j)(2).  This Section 4.4(c)(ii) is intended to comply with the minimum gain chargeback requirement with respect to Member Nonrecourse Debt (as defined in and) contained in said sections of the Regulations and shall be interpreted consistently therewith.

Allocations pursuant to this Section 4.4(c)(ii) shall be made in proportion to the respective amounts required to be allocated to each Member pursuant hereto.

(iii)          Qualified Income Offset.  In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such Member has an Adjusted Capital Account Deficit, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly as possible.  This Section 4.4(c)(iii) is intended to constitute a “qualified income offset” under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

(iv)          Nonrecourse Deductions.  Nonrecourse Deductions for any Fiscal Year or other applicable period shall be allocated to the Members in proportion to their respective Capital Account balances.

(v)           Member Nonrecourse Deductions.  Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member that bears the economic risk of loss for the debt in respect of which such Member Nonrecourse Deductions are attributable (as determined under Regulations Sections 1.704-2(b)(4) and (i)(1)).

(vi)          Curative Allocations.  The Regulatory Allocations (as hereinafter defined) shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the cumulative net amount of allocations of Company items under Section 4.4(a), (b) and (c) hereof shall be equal to the net amount that would have been allocated to each Member if the Regulatory Allocations had not occurred.  This Paragraph (vi) is intended to minimize to the extent possible and to the extent necessary any economic distortions that may result from application of the Regulatory Allocations and shall be interpreted in a manner consistent therewith.  For purposes hereof, “Regulatory Allocations” shall mean all the allocations provided under this Section 4.4(c) other than this Paragraph (vi).

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(d)           Tax Allocations.

(i)            Generally.  Subject to Paragraph (ii) of this Subsection (d), items of income, gain, loss, deduction and credit to be allocated for income tax purposes (collectively, “Tax Items”) shall be allocated among the Members on the same basis as their respective book items.

(ii)           Allocations Respecting Section 704(c) and Revaluations.  Notwithstanding Paragraph (i) of this Subsection (d), Tax Items with respect to Company property that is subject to Code Section 704(c) and/or Regulations Section 1.704-1(b)(2)(iv)(f) shall be allocated in accordance with said Code section and/or Regulations Section 1.704-1(b)(4)(i), as the case may be, using the “traditional method” or, upon unanimous approval of the Members, any other reasonable method permitted in Regulations Section 1.704-3.

4.5           Distributions.

(a)           Distributions of Distributable Cash Prior to Liquidation.  Subject to any limitations in any other applicable agreement or document, all cash received by the Company from Aliante LLC and Losee LLC, less appropriate Reserves as determined by the Executive Committee (“Distributable Cash”), shall be disbursed or distributed immediately to the Members in the following order:

(i)            First, subject to clause (iii) below, to the Members pro rata in accordance with each Member’s share of unreturned Capital Contributions (other than Default Contributions) until each Member shall have received (giving effect to all distributions pursuant to this Section 4.5(a)(i) in the current and previous Fiscal Years) an amount equal to such Member’s Capital Contributions (other than Default Contributions).

(ii)           Second, subject to Clause (iii) below, to the Members, pro rata in accordance with each Member’s percentage of Membership Interests.

(iii)          Notwithstanding the foregoing Clauses (i) and (ii), to the extent there are any Twenty Five Percent Payment amounts or Default Contributions outstanding, any amount that would be distributed to a Defaulting Member pursuant to clause (i) or (ii) above shall instead be distributed (A) first, to Persons to whom Twenty Five Percent Payment amounts are due, in proportion to such amounts due them, until such Persons have received full payments of their Twenty Five Percent amounts and (B) second, to Persons that have made Default Contributions, in proportion to their unreturned Default Contributions until such Persons have received the full return of their Default Contributions

Notwithstanding the foregoing, taking into account distributions made with respect to the Fiscal Year pursuant to Section 4.5(a)(i) and (ii), the Company shall distribute to each Member on an annual basis not later than one hundred twenty (120) days following the end of each Fiscal Year an amount equal to forty percent (40%) of the Profits allocated to such Member for such Fiscal Year pursuant to Section 4.4(a).  Distributions to Members pursuant to the preceding

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sentence shall be an advance of and credited against distributions to be made to Members under this Agreement in the order that such distributions would be made pursuant to Section 4.5(a)(i) and (ii) and Section 6.2(c).  For the avoidance of doubt, amounts distributable pursuant to this Section 4.5(a) may be diverted to pay the Twenty Five Percent Payment and Default Contributions.

(b)           Withholding.  The Company shall withhold and pay over to the Internal Revenue Service or other applicable taxing authority all taxes or withholdings, and all interest, penalties, additions to tax, and similar liabilities in connection therewith or attributable thereto (hereinafter “Withheld Taxes”) to the extent that the Manager reasonably determines that such withholding and/or payment is required by the Code or any other law, rule or regulation.  The Manager shall determine to which Member such Withheld Taxes are attributable in accordance with applicable law.  All amounts withheld pursuant to this Section 4.5(b) with respect to any allocation, payment or distribution to any Member shall be treated as amounts distributed to such Member pursuant to Section 4.5(a) or (b), as the case may be, for all purposes of this Agreement.

(c)           Certain Adjustments.  If an amount payable to the Company is reduced because the Person paying that amount withholds and/or pays over to the Internal Revenue Service or other applicable taxing authority any amount as a result of the status of a Member, the Executive Committee shall make such adjustments to amounts distributed and allocated among Members as the Executive Committee reasonably determines to be appropriate.

ARTICLE V

Members; Transfer of Interests

5.1           Admission.  GC and Station became Members on the Effective Date.  Notwithstanding any contrary provision of the Act, the Company may admit new Members to the Company only with the prior consent of the Executive Committee on such terms as Station and GC mutually agree.  No Person shall be admitted as a Member until all approvals required by the Gaming Laws are obtained.

5.2           Transfer of Interests.

(a)           No Transfer Without Executive Committee Consent.  No Member may Transfer all or any part of its Membership Interest in the Company (other than a Transfer (i) pursuant to Section 4.3(d), Section 5.2(b) or Section 5.3) or (ii) subject to Section 5.2(b), to one (1) or more Greenspun Family Members (or an entity wholly-owned by one (1) or more Greenspun Family Members) in the case of GC and a wholly-owned Subsidiary of Parent in the case of Station which expressly assumes in writing the obligations of the transferor under this Agreement (as long as such Transfer would not adversely affect the classification of the Company as a partnership for federal or state income tax purposes)) or otherwise assign or delegate any of such Member’s rights and obligations as a Member without the prior consent of the Executive Committee.  In the event of a Transfer permitted by Clause (ii) of the preceding sentence, the transferor and transferee(s) shall be treated as a single Member for all purposes of this Agreement.  For purposes of this Section 5.2(a), there shall be a Transfer of GC’s Membership Interest in the Company if one (1) or more Greenspun Family Members do not own one hundred

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percent (100%) of GC; provided, however, that the pledge or other hypothecation of GC’s or Station’s Membership Interest to secure Construction Financing, Expansion Financing or Permanent Financing, or the subsequent foreclosure or transfer in lieu thereof, to the construction or permanent lender or bona fide purchaser or transferee of such lender, shall not be deemed a Transfer.  Notwithstanding anything in this Agreement to the contrary, in the event of any Transfer by GC or Station of any or all of its Membership Interest in contravention of this Section 5.2(a), such as, but not limited to, by operation of law, Bankruptcy or the like, the transferee shall have no rights to vote any matters coming before the Members and the other Member shall have the sole right to vote and appoint members to the Executive Committee.

(b)           Transfer Upon Change in Control.

(i)            Station shall give written notice to GC (a “Change in Control Notice”) no later than thirty (30) days following a Change in Control, which Change in Control Notice shall describe the events or circumstances which constitute such Change in Control in reasonable detail.  Promptly thereafter, the Executive Committee shall determine the Appraised Value of each Member’s Membership Interest as of the date of the Change in Control Notice.

(ii)           Within thirty (30) days after receipt of written notice of the Appraised Value of Station’s Membership Interest, GC shall give Station written notice (the “Change in Control Call Exercise Notice”) of GC’s intention to purchase Station’s Membership Interest (the “Change in Control Call”) if GC elects to exercise the Change in Control Call at such Appraised Value.  GC and Station shall close GC’s purchase of Station’s Membership Interest pursuant to the exercise of a Change in Control Call within ten (10) days following receipt of all necessary third-party consents and approvals for such Transfer, with the purchase price payable in cash at such closing, unless otherwise agreed by Station.  Station shall convey its Membership Interest to GC free and clear of all liens and encumbrances (except this Agreement and the Aliante Operating Agreement), and Station and its Affiliates shall be released from all indebtedness, pledges and guaranties incurred on behalf of the Company.  In the event GC defaults on acquiring Station’s Membership Interest pursuant to this Clause (ii), or the requisite consents and approvals to Transfer have not (or cannot be) obtained with respect to a Change in Control Call within one (1) year after the Change in Control Call Exercise Notice, or Station and its Affiliates cannot be released from all indebtedness, pledges or guaranties with respect to a Change in Control Call within one (1) year after the Change in Control Call Exercise Notice, then Station can require the Company or its assets to be sold pursuant to actions taken by an investment banker (selected by Station from the list on Exhibit B) in a commercially reasonable time frame.

(iii)          If GC does not exercise its Change in Control Call, then at any time during the period commencing on its receipt of written notice of the Appraised Value of GC’s Membership Interest and ending on the twelve (12) month anniversary of the closing of the Change in Control transaction (the “Change in Control Put Period”), GC may give Station (or the acquiror of Station’s Membership Interest in the Change in Control transaction, as the case may be) written notice (the “Change in Control Put Exercise Notice”) of its intention to sell its Membership Interest (the “Change in Control Put”) to

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Station (or the acquirer of Station’s Membership Interest in the Change in Control, as the case may be) if GC elects to exercise its Change in Control Put at such Appraised Value.  GC and Station (or the acquiror of Station’s Membership Interest in the Change in Control transaction, as the case may be) shall close the purchase of GC’s Membership Interest within ten (10) days following receipt of all necessary third-party consents and approvals for such Transfer, with the purchase price payable in cash at such closing, unless otherwise agreed by GC.  GC shall convey its Membership Interest to Station (or the acquiror of Station’s Membership Interest in the Change in Control transaction, as the case may be) free and clear of all liens and encumbrances (except this Agreement and the Aliante Operating Agreement), and GC and its Affiliates shall be released from all indebtedness, pledges and guaranties incurred on behalf of the Company.  In the event Station (or the acquiror of Station’s Membership Interest in the Change in Control transaction, as the case may be) defaults on acquiring GC’s Membership Interest pursuant to this Clause (iii), or the requisite consents and approvals to Transfer have not (or cannot be) obtained with respect to a Change in Control Put within one (1) year after the Change in Control Put Exercise Notice, or GC and its Affiliates cannot be released from all indebtedness, pledges or guaranties with respect to a Change in Control Put within one (1) year after the Change in Control Put Exercise Notice, then GC can require the Company or its assets to be sold pursuant to actions taken by an investment banker (selected by GC from the list on Exhibit B) in a commercially reasonable time frame.

(c)           Special Provisions Applicable to Change in Control Call.  In the event that Station’s Membership Interest is the subject of a Change in Control Call, Station shall, at the option of GC, be obligated to continue to serve as the Manager for a period of up to six (6) months after the consummation of the purchase of Station’s Membership Interest, during which time Station shall continue to perform its obligations hereunder and receive the Incentive Management Fee and the Base Management Fee and will cooperate with Aliante LLC in its efforts to engage a successor Manager.

(d)           Attempted Transfers in Contravention.  Any attempted Transfer in contravention of this Article V shall be void and of no effect and shall not bind or be recognized by the Company.  In the case of an attempted Transfer not permitted hereby, the parties attempting to engage in such Transfer shall indemnify and hold harmless (and hereby agree to indemnify and hold harmless), the Company and the other Members from all costs, liabilities and damages that any of such indemnified Persons may incur (including, without limitation, incremental tax liability and attorneys’ fees and expenses) as a result of such attempted Transfer and efforts to enforce the indemnity granted hereby.

(e)           Distributions and Allocations Upon Transfers.  If during any Fiscal Year there is a Transfer of an interest in the Company in compliance with the provisions of this Article V, Profits and Losses and all other items attributable to the transferred interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Code Section 706(d), using the interim closing of books method or, upon the unanimous approval of the Members, any other conventions permitted by law and selected by the Executive Committee.  All distributions with respect to the transferred interest on or before the date of the Transfer shall be made to the transferor, and all distributions thereafter with respect to the transferred interest shall be made to

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the transferee.  Neither the Company nor the Executive Committee shall incur any liability for making allocations and distributions in accordance with the provisions of this Article V.

(f)            Compliance with Gaming Laws.  Notwithstanding anything to the contrary set forth herein, no Membership Interest or other ownership interest in the Company shall be issued or Transferred in any manner whatsoever except in compliance with all Gaming Laws and only after the receipt of all necessary Gaming Licenses.

5.3           Gaming Licensing.  Each Member agrees to promptly and diligently, at its own cost, file for and seek to obtain it and its Affiliates’ Gaming Licenses for the Aliante Project and any gaming project to be developed on the Losee Property or a New Property by the Company, Losee LLC, Aliante LLC or any other subsidiary of the Company.

(a)           In the event that any Member (the “Problem Member”) has not received its Gaming License for the Aliante Project by the time of the Opening or, by virtue of its pending gaming application, is substantially impairing or impeding the receipt by the Company of the Gaming Licenses necessary for the Opening, then the other Member shall acquire the Problem Member’s Membership Interest, free and clear of all liens and encumbrances (other than this Agreement), for a purchase price equal to one hundred percent (100%) of the Problem Member’s unreturned Capital Contribution, payable in cash, and the Problem Member and its Affiliates shall be released from all indebtedness, pledges and guaranties incurred on behalf of the Company.  For a period of one (1) year after such purchase, if the Problem Member obtains its Gaming License, it shall have the option, subject to the approval of the applicable Gaming Authorities, to repurchase its Membership Interest, free and clear of all liens and encumbrances (other than this Agreement), for a purchase price equal to the purchase price paid for such Membership Interest by the non-Problem Member, payable in cash, and assumption of one-half (1/2) of all indebtedness, pledges or guaranties outstanding by the other Member or its Affiliates on behalf of the Company.  For a period of one (1) year after the purchase of the Problem Member’s Membership Interest or such time as the Problem Member repurchases its Membership Interest, whichever is shorter, the Company shall not make any distributions to its Members (other than the payment of fees and reimbursement of costs in the ordinary course of business).

(b)           If, subsequent to Opening and the initial licensing of a Member, a Member (also, a “Problem Member”) is substantially impeding or impairing the ability of the Company to maintain its Gaming License for the Project, or is resulting in the imposition of significantly burdensome terms and conditions on any such Gaming Licenses (a “Gaming Problem”), then the other Member may give written notice to the Problem Member and the Problem Member shall have the lesser of that time required by the Gaming Authorities or ninety (90) days to correct such Gaming Problem.  If such Gaming Problem is not corrected within the shorter of the above time periods, then the non-Problem Member may give written notice that it shall acquire the Problem Member’s Membership Interest, free and clear of all liens and encumbrances (other than those imposed by this Agreement) for an amount equal to the Problem Member’s unreturned Capital Contributions, and the Problem Member shall be released from all indebtedness, pledges and guaranties incurred on behalf of the Company.  The closing on such acquisition shall occur upon the lesser of the time required by applicable Gaming Authority or ninety (90) days after the

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notice of intent to acquire the Problem Member’s Membership Interest.  The purchase price shall be paid in cash.

5.4           Required Member Approvals.  Notwithstanding any other provision herein to the contrary, the prior unanimous affirmative approval of the Members of the Company shall be required with respect to each of the following:

(a)           Approval of a Restricted Activity;

(b)           Approval of an Affiliate Transaction by a Member which is not an arms-length bona fide fair market value transaction;

(c)           Amendments to the Articles and, except as set forth in Section 7.2, any amendment of this Agreement;

(d)           Any sale of the business or substantially all of the assets of the Company, a sale of all or any portion of the Company’s membership interest(s) in Losee LLC, a sale of all or any portion of the Company’s membership interest(s) in Aliante LLC, or merger of the Company in which the Company is not the surviving entity and the Members of the Company immediately prior to such transaction do not hold a majority of the Voting Stock of the entity surviving such merger, which sale or merger is not an arms-length bona fide fair market value transaction;

(e)           Admission of new Member(s) pursuant to Section 5.1 or Transfers pursuant to Section 5.2(a)(iii); or

(f)            Dissolution of the Company pursuant to Section 6.1(a).

5.5           Place of Meetings and Meetings by Telephone.  Meetings of Members shall be held at any place designated by the Executive Committee.  In the absence of any such designation, meetings of Members shall be held at the principal place of business of the Company.  Any meeting of the Members may be held by conference telephone or similar communications equipment so long as all Members participating in the meeting can hear one another, and all Members participating by telephone or similar communications equipment shall be deemed to be present in person at the meeting.

5.6           Annual Meeting.  No annual meeting of the Members shall be required.

5.7           Special Call of Meetings.  Special meetings of the Members may be called at any time by any Member owning twenty five percent (25%) or more of the Membership Interests of the Company or by the Executive Committee for the purpose of taking action upon any matter requiring the vote or authority of the Members as provided in this Agreement or the Act or upon any other matter as to which such vote or authority is deemed by the Members or the Executive Committee to be necessary or desirable; provided, however, in no event may any Member call a special meeting of the Members more than once in any four (4) week period.

5.8           Notice of Meetings of Members.  All notices of meetings of Members shall be sent or otherwise given in accordance with Section 8.1 not fewer than five (5) nor more than

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ninety (90) days before the date of the meeting.  The notice shall specify (a) the place, date, and hour of the meeting, and (b) the general nature of the business to be transacted.

5.9           Manner of Giving Notice.  Notice of any meeting of the Members shall be given pursuant to Section 8.1.

5.10         Adjourned Meeting; Notice.  Any meeting of Members, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the Membership Interests represented at that meeting, either in person or by proxy.  When any meeting of Members is adjourned to another time or place, notice need not be given of the adjourned meeting, unless a new record date of the adjourned meeting is fixed or unless the adjournment is for more than sixty (60) days from the date set for the original meeting, in which case the Executive Committee shall set a new record date and shall give notice in accordance with the provisions of Sections 5.8 and 5.9.  At any adjourned meeting, the Company may transact any business that might have been transacted at the original meeting.

5.11         Quorum; Voting.  At any meeting of the Members, a majority of the Membership Interests of the Company, present in person or by proxy, shall constitute a quorum for all purposes.  Except as otherwise required by this Agreement (including, without limitation, Section 5.4) or the Act, all matters shall be determined by an affirmative vote of Members holding at least a majority of the Membership’s Interests of the Company when a quorum is present.

5.12         Waiver of Notice by Consent of Absent Members.  The transactions of a meeting of Members however called and noticed and wherever held, shall be as valid as though taken at a meeting duly held after regular call and notice if a quorum is present either in person or by proxy and if either before or after the meeting, each Person entitled to vote who was not present in person or by proxy signs a written waiver of notice or a consent to a holding of the meeting or an approval of the minutes.  The waiver of notice or consent need not specify either the business to be transacted or the purpose of any meeting of Members.  Attendance by a Person at a meeting shall also constitute a waiver of notice of that meeting, except when the Person objects at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters not included in the notice of the meeting if that objection is expressly made at the beginning of the meeting.

5.13         Member Action by Written Consent Without a Meeting.  Except as provided in this Agreement or the Act, any action that may be taken at any meeting of Members may be taken without a meeting and without prior notice if a consent in writing setting forth the action so taken is signed by Members holding at least a majority of the Membership Interests of the Company, or such greater number as is required by this Agreement or the Act with respect to a particular issue.  Any such written consent may be executed and given by telecopy or similar electronic means.  Such consents shall be filed with the Company and shall be maintained in the Company’s records.

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5.14         Record Date for Member Notice, Voting, and Giving Consents.

(a)           For purposes of determining the Members entitled to vote or act at any meeting or adjournment thereof, the record date for determining Members entitled to notice of or to vote at a meeting of Members shall be at the close of business on the business day immediately preceding the day on which notice is given, or if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(b)           The record date for determining Members entitled to give consent to action in writing without a meeting, (i) when no prior action of the Executive Committee has been taken, shall be the day on which the first written consent is given or (ii) when prior action of the Executive Committee has been taken, shall be (A) such date as determined for that purpose by the Executive Committee, which record date shall not precede the date upon which the resolution fixing it is adopted by the Executive Committee and shall not be more than twenty (20) days after the date of such resolution or (B) if no record date is fixed by the Executive Committee, the record date shall be the close of business on the day on which the Executive Committee adopts the resolution relating to that action.

(c)           Only Members of record on the record date as herein determined shall have any right to vote or to act at any meeting or give consent to any action relating to such record date, provided, however, that no Member who Transfers all or part of such Member’s Membership Interest after a record date (and no transferee of such Membership Interest) shall have the right to vote or act with respect to the transferred Membership Interest as regards the matter for which the record date was set.

5.15In General.

(a)           As of the Effective Date.    As of the Effective Date, each of the Members hereby makes each of the representations, warranties and covenants applicable to such Member as set forth in this Section 5.15(a) (which shall survive the execution of this Agreement) which shall be for the benefit of the Company and other Members:

(i)            Due Incorporation or Formation; Authorization of Agreement.  Such Person is a limited liability company, it is duly organized or duly formed, validly existing, and in good standing under the laws of the jurisdiction of its formation and has the limited liability company power and authority to own its property and carry on its business as owned and carried on the Effective Date and as contemplated hereby.  Such Person is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder.  Such Person has the limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery, and performance of this Agreement has been duly authorized by all necessary limited liability company action.  This Agreement constitutes the legal, valid, and binding obligation of such Person enforceable in accordance with its respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency or other similar laws affecting creditor’s rights generally, and except that the availability of equitable remedies is subject to judicial discretion).

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(ii)           No Conflict With Restrictions; No Default.  Neither the execution, delivery, and performance of this Agreement nor the consummation by such Person of the transactions contemplated hereby (A) will conflict with, violate, or result in a breach of any of the terms, conditions, or provisions of any law, regulation, order, writ, injunction, decree, determination, or award of any court, any governmental department, board, agency, or instrumentality, domestic or foreign, or any arbitrator, applicable to such Person, (B) will conflict with, violate, result in a breach of, or constitute a default under any of the terms, conditions, or provisions of the articles of organization or operating agreement of such Person or of any material agreement or instrument to which such Person is a party or by which such Person is or may be bound or to which any of its material properties or assets is subject, (C) will  conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, give to others any material interests or rights, or require any consent, authorization, or approval under any indenture, mortgage, lease agreement, or instrument to which such Person is a party or by which such Person is or may be bound, or (D) will result in the creation or imposition of any lien upon any of the material properties or assets of such Person.

(iii)          Governmental Authorizations.  Any registration, declaration or filing with or consent, approval, license, permit or other authorization or order by, any governmental or regulatory authority, domestic or foreign, that is required in connection with the valid execution, delivery, acceptance, and performance by such Person under this Agreement or the consummation by such Person of any transaction contemplated hereby has been completed, made, or obtained on or before the Effective Date, except as set forth in this Agreement.

(iv)          Litigation.  There are no actions, suits, proceedings, or investigations pending or, to the knowledge of such Person, threatened against or affecting such Person or any of its properties, assets, or businesses in any court or before or by any                 governmental department, board, agency, or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit, or proceeding, which if adversely determined could) reasonably be expected to materially impair such Person’s ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Person; and such Person has not received any currently effective notice of any default, and such Person is not in default, under any applicable order, writ, injunction, decree, permit, determination, or award of any court, any governmental department, board, agency, or instrumentality, domestic or foreign, or any arbitrator which could reasonably be expected to materially impair such Person’s ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Person.

(v)           Investigation.  Such Person is acquiring its Membership Interest based upon its own investigation, and the exercise by such Person of its rights and the performance of its obligations under this Agreement will be based upon its own investigation, analysis, and expertise.  Such Person’s acquisition of its Membership

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Interest is being made for its own account for investment, and not with a view to the sale or distribution thereof.

(vi)          Accredited Investor.  Such Person is an “accredited investor” within the meaning of applicable state and federal securities laws.  The Person’s overall commitment to investments that are not readily marketable is not disproportionate to its net worth, and the purchase of the Membership Interest will not cause such overall commitment to become excessive.

(vi)          No Statute of Limitations Defense.  The Company, the Members and Parent agree that during any period under the Construction Loan Documents, Expansion Project Loan Documents or Permanent Loan Documents, including any Pledge/Guaranty Documents, the Members, Parent, the Station Pledgors or the GC Pledgors are required to “stand still” with respect to claims against one another, each Party agrees not to assert the statute of limitations as a defense to any action brought by another Party to the extent such statute of limitations applies solely because of such “stand still” and the Parties agree that any such statute of limitations period shall be tolled for the period of time that any such Party is required to “stand still.”

(b)           As of the Contribution Date.  As of the Contribution Date, each of the Members hereby makes each of the representations, warranties and covenants applicable to such Member as set forth in this Section 5.15(b) (which shall survive the execution of this Agreement), and as set forth on Exhibit C-1 in the case of GC, or as set forth on Exhibit C-2 in the case of Station (each of which shall survive the execution of this Agreement for the period set forth therein), which shall be for the benefit of the Company and other Members:

(i)            Solely with respect to GC, GC is the lawful owner of the Aliante Membership Interests and all of such Aliante Membership Interests being contributed to the Company are (A) duly authorized, validly issued, fully paid and nonassessable, and constitute one hundred percent (100%) of the issued and outstanding membership interests in Aliante LLC and (B) free and clear of all liens and encumbrances.  Neither GC nor any of its Affiliates has assigned, conveyed or transferred, or attempted or purported to assign, convey or transfer, in any manner or degree whatsoever, to any person or entity, any rights, title, present interest, future interest or claim in or to any portion of the Aliante Membership Interests, and no other person or entity has the right to assert any claim in or to any portion thereof or any option, warrant or other right to purchase or acquire a member interest in Aliante LLC.  No licenses, permits, consents, approvals, authorizations or waivers must be obtained from, and no notices given to or filings made with any governmental or regulatory authority or third person, for GC to transfer the Aliante Membership Interests to the Company as provided in this Agreement, or for the performance by GC of its obligations under this Agreement.  Aliante LLC has no assets other than title to the Resort Property, together with rights and appurtenances relating thereto.  Aliante LLC has no liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due) other than the costs and expenses incurred in the ordinary course of the ownership of the Resort Property.  There are no pending or, to the knowledge of GC, threatened legal proceedings or actions of any kind or character affecting the Resort Property or Aliante LLC’s interest therein.  Other than

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those previously disclosed to Station, there are no leases, or occupancy agreements of any kind affecting the Resort Property.  Notwithstanding anything herein to the contrary, GC covenants and agrees that it will not, and it will not permit Aliante LLC, to acquire any assets other than the Resort Property (together with appurtenant interests and related intangible rights and interests), incur any liabilities or obligations other than costs and expenses incurred in the ordinary course of the ownership of the Resort Property, after the Effective Date and on or before the Contribution Date without the prior written consent of Station.

(ii)           Solely with respect to Station, Station is the lawful owner of the Losee Membership Interests all of the Losee Membership Interests being contributed to the Company are (A) duly authorized, validly issued, fully paid and nonassessable, and constitute one hundred percent (100%) of the issued and outstanding membership interests in Losee LLC and (B) free and clear of all liens and encumbrances.  Neither Station nor any of its Affiliates has assigned, conveyed or transferred, or attempted or purported to assign, convey or transfer, in any manner or degree whatsoever, to any person or entity, any rights, title, present interest, future interest or claim in or to any portion of the Losee Membership Interest, and no other person or entity has the right to assert any claim in or to any portion thereof or any option, warrant or other right to purchase or acquire a member interest in Losee LLC.  No licenses, permits, consents, approvals, authorizations or waivers must be obtained from, and no notices given to or filings made with any governmental or regulatory authority or third person, for Station to transfer the Losee Membership Interests to the Company as provided in this Agreement, or for the performance by Station of its obligations under this Agreement.  Losee LLC has no assets other than title to the Losee Property, together with rights and appurtenances relating thereto.  Losee LLC has no liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due) other than the costs and expenses incurred in the ordinary course of the ownership of the Losee Property.  There are no pending or, to the knowledge of Station, threatened legal proceedings or actions of any kind or character affecting the Losee Property or Losee’s LLC’s interest therein.  There are no leases, or occupancy agreements of any kind affecting the Losee Property.  Notwithstanding anything herein to the contrary, Station covenants and agrees that it will not, and it will not permit Losee LLC, to acquire any assets other than the Losee Property (together with appurtenant interests and related intangible rights and interests), incur any liabilities or obligations other than costs and expenses incurred in the ordinary course of the ownership of the Losee Property, after the Effective Date and on or before the Contribution Date without the prior written consent of GC.

5.16         Compliance with the Aliante Operating Agreement and the Losee Operating Agreement.  Each Member agrees to abide by, comply with any and all provisions of and perform each and all of its duties, responsibilities and obligations pursuant hereto, the Aliante Operating Agreement and the Losee Operating Agreement in accordance herewith and therewith, to the extent applicable to such Member.

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ARTICLE VI

Dissolution, Liquidation and Termination

6.1           Dissolution.  The Company shall dissolve and its affairs shall be wound up upon the occurrence of any of the following:

(a)           the mutual consent of all Members at any time; or

(b)           the occurrence of any other event that effects a dissolution of the Company under the Act.

6.2           Liquidation and Termination.  On dissolution of the Company, the Executive Committee shall act as liquidating trustee.  The liquidating trustee shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act.  The costs of liquidation shall be borne by the Company.  Until final distribution, the liquidating trustee shall continue to operate the Company properties with all of the power and authority of the Executive Committee.  The steps to be accomplished by the liquidating trustee are as follows:

(a)           as promptly as possible after dissolution and again after final liquidation, the liquidating trustee shall cause an accounting to be made by a firm of independent public accountants of the Company’s assets, liabilities and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable;

(b)           the liquidating trustee shall pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of the Company (including, without limitation, all expenses incurred in liquidation) or otherwise make adequate provision for payment and discharge thereof (including, without limitation, the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidating trustee may reasonably determine); and

(c)           all remaining assets of the Company shall be distributed to the Members in accordance with Section 4.5(a).

6.3           Articles of Dissolution.  On completion of the distribution of Company assets as provided herein, the Company’s existence shall be terminated, and the Executive Committee (or such other person or persons as the Act may require or permit) shall file Articles of Dissolution with the Secretary of State of Nevada under the Act and take such other actions as may be necessary to terminate the existence of the Company.

6.4           Negative Capital Accounts.  No Member with a deficit balance in its Capital Account shall have any obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever.

6.5           Deemed Distribution and Recontribution.  Notwithstanding any other provision of this Article VI, in the event the Company is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no event described in Section 6.1 has occurred, such liquidation shall not cause a dissolution of the Company for purposes of the Act and the Company’s assets shall not be liquidated, the Company’s liabilities shall not be paid or discharged, and the Company’s affairs shall not be wound up.  Instead, the assets and liabilities of the Company shall

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be deemed to have been contributed to a new company and the interests in the new company shall be deemed distributed to members of the former Company, which shall be operated and governed by this Agreement.

6.6           Limitations on Rights of Members.  Each Member shall look solely to the assets of the Company for the return of its Capital Contribution, and except as expressly provided herein, no Member shall have priority over any other Member as to the return of its Capital Contribution or as to any distributions or allocations.

ARTICLE VII

Amendments

7.1           Amendments Generally.  Except as otherwise provided in this Article VII, and notwithstanding any contrary provision of the Act, any amendments to this Agreement and to the Articles may be adopted with the unanimous written consent of all the Members.

7.2           Amendments by the Executive Committee.  Without limiting the power to amend this Agreement granted by Section 7.1 hereof, this Agreement may be amended by the Executive Committee, by executing an instrument of amendment and giving each Member notice thereof, without the consent of any of the Members, (a) to effect changes of a ministerial nature that do not adversely affect the rights, duties or obligations of the Members; (b) to give effect to the admission of Members in accordance with the terms hereof; (c) to conform the terms of this Agreement with any Regulations issued under Code Section 704; or (d) with respect to the Company’s status as a partnership (and not as an association taxable as a corporation) for federal or state income tax purposes (i) to comply with the requirements of the Regulations, or (ii) to ensure the continuation of partnership status; provided, however, that in the opinion of counsel of the Company any of such amendments do not adversely affect the rights or interests of any of the Members.  Notwithstanding the foregoing, no amendment shall be adopted pursuant to this Section 7.2 if such amendment would adversely affect the limited liability of the Members or the status of the Company as a partnership for federal or state income tax purposes.

ARTICLE VIII

Miscellaneous

8.1           Notices.  All notices, requests, consents and other formal communication between the Members, the Manager, the members of the Executive Committee and the Company that are required or permitted under this Agreement (“Notices”) shall be in writing and shall be sent to the address for the respective addressee provided on Exhibit F (each a “Notice Address”).  Notices shall be (a) delivered personally with a written receipt of delivery, (b) sent by a recognized overnight courier requiring a written acknowledgment of receipt or providing a certification of delivery or attempted deliver (e.g., Federal Express, Airborne, UPS), (c) sent by certified or registered mail, postage prepaid, return receipt requested, or (d) transmitted by facsimile machine provided that the facsimile transmission is received between 8:00 a.m. and 5:00 p.m. (as determined by the time zone of the addressee), Monday through Friday but excluding holidays on which the primary office of the addressee is closed, and provided, further,

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that a duplicate copy of the Notice is delivered to the respective Notice Address on the first regular business day following the date of facsimile transmission.  Notices shall be deemed delivered when actually received by the addressee at the respective Notice Address; provided, however, that if the Notice was sent by overnight courier or mail as aforesaid and is affirmatively refused or cannot be delivered during customary business hours by reason of the absence of a signatory to acknowledge receipt, or by reason of a change of address with respect to which the addressor did not have either knowledge or written notice delivered in accordance with this Section, then the first attempted delivery shall be deemed to constitute delivery.

Each Member and the Company shall be entitled to change its Notice Address from time to time, and to add up to two (2) additional notice addressees, by delivering to all Members and the Company notice thereof in the manner herein provided for the delivery of Notices.

8.2           Binding Effect.  Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement shall be binding upon and inure to the benefit of the Members and their respective successors, transferees and (subject to the limitations in Article V hereof) assigns.

8.3           Headings.  Section and other headings contained in this Agreement (except for the definitions in Section 1.1) are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

8.4           Severability.  Every provision of this Agreement is intended to be severable.  If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement.

8.5           Further Action.  Each Member, upon the request of the Executive Committee, agrees to perform all further acts and execute, acknowledge and deliver any documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement.

8.6           Governing Law.  The laws of the State of Nevada shall govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the Members.

8.7           Waiver of Action for Partition.  Each of the Members irrevocably waives any right that it may have to maintain any action for partition with respect to any of the Company’s assets.

8.8           Counterpart Execution.  This Agreement may be executed in any number of counterparts with the same effect as if all of the Members had signed the same document.  All counterparts shall be construed together and shall constitute one agreement.

8.9           Publicity.  Neither GC nor Station shall make any formal public statement(s) or announcements regarding the other Member, the Aliante Project, the Aliante Property, Aliante LLC, the Losee Property or Losee LLC, or this Agreement without the prior consent of the other, which consent shall not be unreasonably withheld; provided, however, that if either party is unable to obtain the prior consent of the other with respect to a formal announcement that is, on

44

the advice of legal counsel, believed to be required by law, then such party may make or issue such legally required statement or announcement and promptly furnish the other party with a copy thereof.

8.10         Third Party Beneficiaries.  Aliante LLC shall be an express third party beneficiary, and may rely on, the representations, warranties and covenants of GC contained in this Agreement with respect to the Aliante Property, the Aliante Project and the Aliante Membership Interests.  Losee LLC shall be an express third party beneficiary, and may rely on, the representations, warranties and covenants of Station contained in this Agreement with respect to the Losee Property and the Losee Membership Interests.  Except as otherwise provided in the immediately preceding two sentences, no Person is intended to be, or shall be, a third party beneficiary of this Agreement.

8.11         Broker Fees.  Station represents and warrants that upon the formation of the Company or transfer of the Losee Membership Interest to the Company, there will be no brokerage fees or commissions or other compensation due or payable on an absolute or contingent basis to any person, firm, corporation, or other entity, with respect to or on account of the formation of the Company or transfer of the Losee Membership Interest, arising by, through or under Station.  GC represents and warrants that upon the formation of the Company or transfer of the Aliante Membership Interest to the Company, there will be no brokerage fees or commissions or other compensation due or payable on an absolute or contingent basis to any person, firm, corporation, or other entity, with respect to or on account of the formation of the Company or transfer of the Aliante Membership Interest, arising by, through or under GC.

8.12         Securities under the UCC.  Notwithstanding any rule or construction to the contrary, the Membership Interest owned by each Member is hereby deemed to be a “security” as that term is defined in Article 8 of the Uniform Commercial Code in effect on this date in the State of Nevada and as such the Membership Interests shall be governed thereby, and any certificate issued to evidence any Membership Interest shall bear a legend to that effect.

[The remainder of this page is left blank intentionally.]

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the Effective Date.

COMPANY:
ALIANTE HOLDING, LLC
By:		Aliante Station, LLC, a Member
		By:	Station Casinos, Inc., its Manager
		By:	/s/ RICHARD J. HASKINS
			Richard J. Haskins
			Secretary
By:	G.C. Aliante, LLC, a Member
By:	/s/ BRIAN L. GREENSPUN
	Brian L. Greenspun
	Manager
MEMBERS:
G.C. ALIANTE, LLC
By:		/s/ BRIAN L. GREENSPUN
		Brian L. Greenspun
		Manager
ALIANTE STATION, LLC
By:		Station Casinos, Inc., its Manager
By:		/s/ RICHARD J. HASKINS
		Richard J. Haskins
		Secretary

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EXHIBIT A

Legal Description of Aliante Property

ALL OF PARCEL 34 AS SHOWN ON THE FINAL MAP OF ALIANTE NORTH, RECORDED IN BOOK 110 OF PLATS, PAGE 72, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA

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EXHIBIT B

List of Investment Banking Firms

1.             Credit Suisse First Boston

2.             Bear, Stearns & Co., Inc.

3.             CIBC

4.             Lehman Brothers

5.             Merrill Lynch & Co., Inc.

6.             J.P. Morgan

7.             Banc of America Securities LLC

8.             Citigroup

9.             Jefferies & Company, Inc.

10.           The Goldman Sachs Group, Inc.

11.           Deutsche Bank

12.or any other international investment banking firm of comparable reputation and experience to the investment banking firms listed in items 1- 11 above that has qualified analysts  who “follow” gaming companies.

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EXHIBIT C-1

Aliante Property Representations by GC

1.             GC represents and warrants to the Company and Station that the following matters are true and correct as of the Contribution Date:

(a)           With respect to the Aliante Property, and except as contained in the Aliante Property Documents (defined below) as of the Contribution Date, neither GC nor any Affiliate thereof has received written notice from any governmental authority advising GC or any Affiliate thereof (i) a violation of any laws or regulations (whether now existing or which will exist with the passage of time) or (ii) any action which must be taken to avoid a violation thereof.

(b)           GC has delivered to the Station copies of all of the following documents which are in its or its Affiliates’ possession and of which GC has actual knowledge as of the Contribution Date, including those which have been submitted by GC or any Affiliate thereof to the City of North Las Vegas, Nevada (collectively, the “Aliante Property Documents”):

(i)            Copies of all surveys of the Aliante Property and all plans and specifications for improvements to be constructed on the Aliante Property, which surveys, plans and specifications first were created by GC or its Affiliates or delivered to GC or its Affiliates on or after February 1, 2002;

(ii)           Copies of any inspection, engineering, environmental or architectural studies or reports which relate to the physical condition of the Aliante Property, which studies or reports were first created by GC or its Affiliates or delivered to GC or its Affiliates on or after February 1, 2002;

(iii)          A copy of the bill or bills issued for the most recent year for which bills have been issued for all real estate taxes or assessments currently applicable to the Aliante Property and a copy of any and all real estate tax or assessment notices currently applicable to the Aliante Property (collectively, the “Tax Bills”);

(iv)          A copy of all outstanding management, maintenance, repair, service and supply contracts (including, without limitation, grading, quarry and landscaping agreements), equipment rental agreements, all contracts for repair or capital replacement to be performed at the Aliante Property, and any other contracts relating to or affecting the Aliante Property (other than Leases (defined below)), any of the foregoing of which has a remaining payment obligation in excess of $100,000 and which will be binding upon the Aliante Property or the Company subsequent to the transfer of the Aliante Membership Interest to the Company (collectively, the “Contracts”);

(v)           A copy of all leases and any other agreements which are in effect with the tenants of the Aliante Property (the “Leases”);

(vi)          Copies of all licenses, permits, authorizations and approvals obtained by GC or its Affiliates that currently apply to the improvement of the Aliante Property

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or any portion thereof, occupancy thereof or any present use thereof (the “Governmental Permits”);

(vii)         A copy of all outstanding guarantees and warranties covering the Aliante Property; and

(viii)        Copies of pending insurance claims or litigation documents relating to the Aliante Property.

(c)           Upon the formation of the Company or transfer of the Aliante Membership Interests to the Company, there will be no brokerage fees or commissions or other compensation due or payable on an absolute or contingent basis to any Person, with respect to or on account of the formation of the Company or transfer of the Aliante Membership Interests, arising by, through or under GC or its Affiliates.

(d)           Except as set forth in the Aliante Property Documents or disclosed in writing to the Company and Station, to GC’s actual knowledge, there are no condemnation, environmental, zoning or other land-use regulation proceedings with respect to the Aliante Property, either instituted or overtly threatened, which would materially detrimentally affect the value of the Aliante Property.

(e)           Except as contained in the Aliante Property Documents, to GC’s actual knowledge, no Hazardous Materials are used, generated, transported, treated, constructed, deposited, stored, dispensed, placed or located in, on or under the Aliante Property including, without limitation, the groundwater located thereunder, except for those quantities of Hazardous Materials which do not violate applicable environmental laws.  For the purpose of the Agreement, “Hazardous Materials” shall include, but not be limited to (i) substances defined as “hazardous materials,” “hazardous substances,” “hazardous wastes,” or “toxic substances” in the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §9601, et seq.; the Materials Transportation Act, 49 U.S.C. §1801, et seq.; the Resource Conservation and Recovery Act 42 U.S.C. §6901 et seq.; applicable state and local statutes and regulations; and in the regulations adopted and publications promulgated pursuant to said laws from time to time, and (ii) any chemical, material, substance or other matter of any kind whatsoever which is prohibited, regulated or limited by any federal, state, local, county or regional authority or legislation, including, without limitation, that enumerated above in Clause (i).  Except as set forth in the Aliante Property Documents, to GC’s actual knowledge, there is no asbestos or PCB contained in or stored on the Aliante Property.

(f)            Except as set forth in the Aliante Property Documents or disclosed to the Company, neither GC nor any Affiliate thereof has received any written notice from any insurance carrier or any of the tenants under the Leases of any material defects in the Aliante Property, or in any portion thereof, which would materially adversely affect the insurability thereof or the cost of such insurance.

(g)           Except as set forth in Attachment C-1(A) attached hereto or as set forth in the Aliante Property Documents, there are no pending, or, to GC’s actual knowledge, overtly threatened legal proceedings or actions of any kind or character with respect to the Aliante

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Property which would materially adversely affect the Aliante Property or Aliante LLC’s interest therein.

(h)           GC is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code, and GC will furnish to the Company and Station, prior to the transfer of the Aliante Membership Interest, an affidavit to that effect in form reasonably satisfactory to Station and the Company.

(i)            Except as contained in the Property Documents, to GC’s actual knowledge, there are no Leases, tenancy or occupancy agreements binding upon all or any portion of the Aliante Property.

2.             The representations and warranties made in Paragraph 1 of this Exhibit C-1 shall be continuing and shall not merge into any instrument or conveyance delivered at the transfer of the Aliante Membership Interest to the Company, but shall survive the transfer of the Aliante Membership Interest to the Company for a period of twelve (12) months.  Notwithstanding anything to the contrary herein, to the extent Scott Nielson, Bill Warner, Frank J. Fertitta III, Glenn Christenson or Joe Haley have actual knowledge (as of the time any such representation or warranty is made) of any incorrect statement in any representation or warranty made by GC, neither Station nor the Company can rely on such representation or warranty.  As used herein, “Station’s actual knowledge,” or similar phrases, means the current, actual personal knowledge Scott Nielson, Bill Warner, Frank J. Fertitta III, Glenn Christenson or Joe Haley, without investigation and without imputation of any other person’s knowledge.  As used herein, “GC’s actual knowledge,” or similar phrases, means the current, actual personal knowledge of only Robert Solomon, John Kilduff and Jon Legarza, without investigation and without imputation of any other person’s knowledge.  The fact that reference is made to the personal knowledge of named individuals shall not render such individuals personally liable for any breach of any of the foregoing representations and warranties.

                3.             Notwithstanding anything herein to the contrary, GC expressly disclaims any representations and warranties regarding any contracts, leases, governmental approvals, studies or other documents executed, approved or commissioned by GC, either directly or on behalf of the Company.

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EXHIBIT C-2

Losee Property Representations by Station and Parent

1.             Station represents and warrants to the Company and GC that the following matters are true and correct as of the Contribution Date:

(a)           With respect to the Losee Property, and except as contained in the Losee Property Documents (defined below) as of the Contribution Date, neither Station nor any Affiliate thereof has received written notice from any governmental authority advising Station or any Affiliate thereof (i) a violation of any laws or regulations (whether now existing or which will exist with the passage of time) or (ii) any action which must be taken to avoid a violation thereof.

(b)           Station has delivered to GC copies of all of the following documents which are in its or its Affiliates’ possession and of which Station has actual knowledge as of the Contribution Date, including those which have been submitted by Station or any Affiliate thereof to the City of North Las Vegas, Nevada (collectively, the “Losee Property Documents”):

(i)            A copy of an ALTA survey of the Losee Property;

(ii)           A copy of a Phase I Environmental Report for the Losee Property;

(iii)          A copy of the bill or bills issued for the most recent year for which bills have been issued for all real estate taxes or assessments currently applicable to the Losee Property and a copy of any and all real estate tax or assessment notices currently applicable to the Losee Property (collectively, the “Losee Tax Bills”);

(iv)          A copy of all outstanding management, maintenance, repair, service and supply contracts (including, without limitation, grading, quarry and landscaping agreements), equipment rental agreements, all contracts for repair or capital replacement to be performed at the Losee Property, and any other contracts relating to or affecting the Losee Property (other than Leases (defined below)), any of the foregoing of which has a remaining payment obligation in excess of $100,000 and which will be binding upon the Losee Property or the Company subsequent to the transfer of the Losee Membership Interest to the Company (collectively, the “Losee Contracts”);

(v)           A copy of all leases and any other agreements which are in effect with the tenants of the Losee Property (the “Losee Leases”);

(vi)          Copies of all licenses, permits, authorizations and approvals obtained by Station, Parent or their Affiliates that currently apply to the improvement of the Losee Property or any portion thereof, occupancy thereof or any present use thereof (the “Losee Governmental Permits”);

(vii)         A copy of all outstanding guarantees and warranties covering the Losee Property; and

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(viii)        Copies of pending insurance claims or litigation documents relating to the Losee Property.

(c)           Upon the formation of the Company or transfer of the Losee Membership Interest to the Company, there will be no brokerage fees or commissions or other compensation due or payable on an absolute or contingent basis to any Person, with respect to or on account of the formation of the Company or transfer of the Losee Membership Interest, arising by, through or under Station, Parent or their Affiliates.

(d)           Except as set forth in the Losee Property Documents or disclosed in writing to the Company and GC, to Station’s actual knowledge, there are no condemnation, environmental, zoning or other land-use regulation proceedings with respect to the Losee Property, either instituted or overtly threatened, which would materially detrimentally affect the value of the Losee Property.

(e)           Except as contained in the Losee Property Documents, to Station’s  actual knowledge, no Hazardous Materials are used, generated, transported, treated, constructed, deposited, stored, dispensed, placed or located in, on or under the Losee Property including, without limitation, the groundwater located thereunder, except for those quantities of Hazardous Materials which do not violate applicable environmental laws.  For the purpose of the Agreement, “Hazardous Materials” shall include, but not be limited to (i) substances defined as “hazardous materials,” “hazardous substances,” “hazardous wastes,” or “toxic substances” in the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §9601, et seq.; the Materials Transportation Act, 49 U.S.C. §1801, et seq.; the Resource Conservation and Recovery Act 42 U.S.C. §6901 et seq.; applicable state and local statutes and regulations; and in the regulations adopted and publications promulgated pursuant to said laws from time to time, and (ii) any chemical, material, substance or other matter of any kind whatsoever which is prohibited, regulated or limited by any federal, state, local, county or regional authority or legislation, including, without limitation, that enumerated above in Clause (i).  Except as set forth in the Losee Property Documents, to Station’s actual knowledge, there is no asbestos or PCB contained in or stored on the Losee Property.

(f)            Except as set forth in the Losee Property Documents or disclosed to the Company and GC, neither Station nor any Affiliate thereof has received any written notice from any insurance carrier or any of the tenants under the Leases of any material defects in the Losee Property, or in any portion thereof, which would materially adversely affect the insurability thereof or the cost of such insurance.

(g)           Except as set forth in Attachment C-2(A) attached hereto or as set forth in the Losee Property Documents, there are no pending, or, to Station’s actual knowledge, overtly threatened legal proceedings or actions of any kind or character with respect to the Losee Property which would materially adversely affect the Losee Property or Losee LLC’s interest therein.

(h)           Station is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code, and Station will furnish to the Company and GC, prior to the transfer of the Losee

2

Membership Interest, an affidavit to that effect in form reasonably satisfactory to GC and the  Company.

(i)            Except as contained in the Losee Property Documents, to Station’s actual knowledge, there are no Leases, tenancy or occupancy agreements binding upon all or any portion of the Losee Property.

2.             The representations and warranties made in Paragraph 1 of this Exhibit C-2 shall be continuing and shall not merge into any instrument or conveyance delivered at the transfer of the Losee Membership Interest to the Company, but shall survive the transfer of the Losee Membership Interest to the Company for a period of twelve (12) months.  Notwithstanding anything to the contrary herein, to the extent Robert Solomon, John Kilduff and Jon Legarza, have actual knowledge (as of the time any such representation or warranty is made) of any incorrect statement in any representation or warranty made by Station or Parent, neither GC nor the Company can rely on such representation or warranty.  As used herein, “GC’s actual knowledge,” or similar phrases, means the current, actual personal knowledge of only Robert Solomon, John Kilduff and Jon Legarza, without investigation and without imputation of any other person’s knowledge.  As used herein, “Station’s actual knowledge,” or similar phrases, means the current, actual personal knowledge Scott Nielson, Bill Warner, Frank J. Fertitta III, Glenn Christenson or Joe Haley, without investigation and without imputation of any other person’s knowledge.  The fact that reference is made to the personal knowledge of named individuals shall not render such individuals personally liable for any breach of any of the foregoing representations and warranties.

                3.             Notwithstanding anything herein to the contrary, Station and Parent expressly disclaim any representations and warranties regarding any contracts, leases, governmental approvals, studies or other documents executed, approved or commissioned by Station, either directly or on behalf of the Company, or by Parent.

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EXHIBIT D

New Property(ies)

1.If, during the Restricted Period, a Fertitta Person or a Greenspun Person acquires or intends to acquire an interest, directly or indirectly, in whole or in part, in real property (or a direct or indirect interest in an entity that owns or acquires an interest, directly or indirectly, in whole or in part, in real property) located in whole or in part within the Restricted Area other than an Exempt Property (a “New Property”), then no later than forty five (45) days after the first to occur of the date of acquisition of such interest or the date of acquisition of a right to acquire such interest, Station (for itself or on behalf of the Fertitta Persons, if one or more Fertitta Persons other than Station is/are acquiring the interest in the New Property) or GC (for itself or on behalf of the Greenspun Persons, if one (1) or more Greenspun Persons other than GC is/are acquiring the interest in the New Property) (the “Offering Member”) shall notify the other Member (the “Other Member”) in writing of the acquisition or the right to acquire such interest (an “Acquisition Notice”), which Acquisition Notice shall (a) describe in detail the New Property and the nature and extent of the entire interest in the New Property acquired or to be acquired by the Offering Member (the “Offering Member’s Interest”), (b) describe in detail the total costs and expenses incurred or expected to be incurred by the Offering Member (and its affiliates) in acquiring and owning the New Property, including, without limitation, (i) the purchase price of the New Property or the Offering Member’s Interest, (ii) all direct carrying costs relative to the New Property or Offering Member’s Interest actually paid or incurred by the Offering Member (including, without limitation, interest on advanced amounts at such Offering Member’s then current cost of funds, insurance and property taxes) and (iii) all transaction costs (including, without limitation, closing costs, attorneys’ fees, accountants’ fees, fees of other professionals, due diligence costs, transfer taxes and prorations) (collectively, “New Property Costs”) and (c) identify the actual or contemplated date of acquisition of the Offering Member’s Interest by the Offering Member.

2.The Other Member shall have the right for a period of forty five (45) days following the date of delivery of the Acquisition Notice (the “Participation Election Period”) to notify the Offering Member in writing (a “Notice to Participate”) of such Other Member’s binding, irrevocable election (a “Participation Election”) to acquire a fifty percent (50%) interest in the Offering Member’s Interest for an amount equal to fifty percent (50%) of New Property Costs, which election shall be binding on the Parties.

3.If the Other Member (a) fails, for any reason, to deliver a Notice to Participate within the Participation Election Period or (b) notifies the Offering Member in writing before the expiration of the Participation Election Period of such Offering Member’s decision not to exercise its Participation Election (which notification shall be irrevocable), then the Other Member shall have no rights with respect to the New Property or the Offering Member’s Interest, except that (i) such New Property shall be subject to the Section 3.8(a) Restrictions and (ii) the Offering Member shall not (either directly or indirectly) own, develop, manage or operate such New Property as a hotel and/or gaming activity during

1

the Restricted Period.  For purposes of clarity, it shall not be deemed to be a breach of this Exhibit D,  the Agreement or the Aliante Operating Agreement for a Fertitta Person, alone or with other Fertitta Persons and/or other Persons, or a Greenspun Person, alone or with other Greenspun Persons and/or with other Persons, to acquire an interest, directly or indirectly, in whole or in part, in any such New Property in compliance with this Exhibit D which is thereafter developed during the Restricted Period with a hotel and/or casino use if and so long as such hotel and/or casino use does not open for business during the Restricted Period.

4.If the Other Member timely delivers a Notice to Participate to the Offering Member, then within thirty (30) days after the date on which the Other Member so notifies the Offering Member, (i) the Members shall cause the Company to acquire the New Property or Offering Member’s Interest through a newly formed limited liability company that will be wholly-owned by the Company or equally by the Members, (ii) the terms of the operating agreement of such newly-formed limited liability company (the “New Property Operating Agreement”) shall be as mutually agreed to by the Members or, in the event the Members are unable to agree on the definitive terms and conditions thereof during such thirty (30)-day period, then on substantially the same terms and conditions as set forth in the Losee Operating Agreement (modified, as necessary, to reflect the differences between the New Property and the Losee Property and the terms and conditions of its purchase); provided, however, that (a) all decisions regarding the development of the New Property shall require the joint approval of both Members (or their Affiliates or representatives in the executive committee of such new limited liability company, as the case may be) and (b) there shall be no “conflict of interest” provision analogous to Section 3.8 of the Aliante Operating Agreement or other non-competition provision. GC and Station shall jointly fund the acquisition cost of such New Property with Additional Capital Contributions to the Company, which the Company shall, in turn, contribute to the new limited liability company for such purpose.

5.If the Other Member timely delivers a Notice to Participate to the Offering Member but the Other Member fails to fund its share of the Additional Capital Contributions necessary to fund the purchase price of the New Property of Offering Member’s Interest (or 50% of the New Property Costs attributable thereto) in accordance with the terms set forth in Paragraph 4 above, the Offering Member may elect either (a) to treat such failure as a failure of the Other Member to deliver a Notice to Participate within the Participation Election Period as provided in Paragraph 4 above or (b) to exercise all rights and remedies under applicable law for breach of the agreements set forth in this Exhibit D.

6.If the Other Member timely delivers a Notice to Participate to the Offering Member but the Offering Member fails to transfer the Offered Member’s Interest (or New Property, as applicable) or to fund its share of the Additional Capital Contributions necessary to fund the purchase price of the Offering Member’s Interest or the New Property in accordance with the terms set forth in Paragraph 4 above, the Other Member may elect either (a) to require specific performance by the Offering Member of its Additional Capital Contribution obligations in accordance with the term set forth in Paragraph 4 above and the Offering Member hereby consents to such remedy, if so elected by the Other

2

Member, or (b) to exercise all rights and remedies under applicable law for breach of the agreements set forth in this Exhibit D.

7.             The Members acknowledge and agree that money damages would not be an adequate remedy for any breach of this Exhibit D and that a Member, may in its sole discretion, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond) in order to enforce or prevent any violation of the provisions of this Exhibit D, and both Members acknowledge the right of the other Member to obtain specific performance and or injunctive relief (without posting a bond) in accordance with this Exhibit D.

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EXHIBIT E

Legal Description of Losee Property

PARCEL ONE (1):

THAT PORTION OF THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M, DESCRIBED AS FOLLOWS:

LOT ONE (1) AND TWO (2) OF THAT CERTAIN PARCEL MAP ON FILE IN FILE 71, PAGE 75 IN THE OFFICE OF THE COUNTY RECORDER, CLARK COUNTY, NEVADA.

PARCEL TWO (2):

THE NORTHEAST QUARTER (NE ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.

BEING FURTHER DESCRIBED AS LOT ONE (1) OF THAT CERTAIN CERTIFICATE OF LAND DIVISION NO. 91-80 RECORDED JULY 18, 1980 IN BOOK 1250 AS DOCUMENT NO. 1209181, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

EXCEPTING THEREFROM THE NORTH THIRTY (30) FEET, THE EAST FORTY (40) FEET, AND THAT CERTAIN SPANDREL AREA LOCATED IN THE NORTHEAST CORNER (NE COR.) AS CONVEYED TO THE COUNTY OF CLARK FOR ROAD PURPOSES BY DEED RECORDED JULY 8, 1980 IN  BOOK 1250 AS DOCUMENT NO. 1209182, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

PARCEL THREE (3):

THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.

EXCEPTING THEREFROM THE SOUTH FIFTY (50) FEET AND THE EAST 40 FEET, AS CONVEYED TO THE COUNTY OF CLARK FOR ROAD PURPOSES BY DEED RECORDED JULY 8, 1980 AS DOCUMENT NO. 1201982 IN BOOK 1250 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

BEING FURTHER DESCRIBED AS LOT 2 OF THAT CERTAIN CERTIFICATE OF LAND DIVISION RECORDED JULY 8, 1980 AS DOCUMENT NO. 1209181 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

PARCEL FOUR (4):

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THE SOUTHWEST QUARTER (SW ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.;

ALSO KNOWN AS LOT THREE (3) OF CERTIFICATE OF LAND DIVISION NO. 91-80, RECORDED JULY 8, 1980 IN BOOK 1250 AS DOCUMENT NO. 1209181, OFFICIAL RECORDS, CLARK COUNTY, NEVADA;

EXCEPTING THEREFROM THE WEST 30.00 FEET, THE SOUTH 50.00 FEET, AND THAT CERTAIN SPANDREL AREA LOCATED IN THE SOUTHWEST CORNER (SW COR.) THEREOF AS CONVEYED TO CLARK COUNTY FOR ROAD PURPOSES BY THAT CERTAIN DEED RECORDED JULY 8, 1980 IN BOOK 1250 AS DOCUMENT NO. 1209182, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

PARCEL FIVE (5):

THE NORTHWEST QUARTER (NW ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.

EXCEPTING THEREFROM THE NORTH 30 FEET AND WEST 30 FEET, AS CONVEYED TO THE COUNTY OF CLARK FOR ROAD PURPOSES BY DEED RECORDED JULY 8, 1980, IN BOOK 1250, AS INSTRUMENT/FILE NO. 1209182, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

BEING FURTHER DESCRIBED AS LOT 4 OF THAT CERTAIN CERTIFICATE OF LAND DIVISION RECORDED JULY 8, 1980 AS INSTRUMENT/FILE NO. 1209181, CLARK COUNTY, NEVADA

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EXHIBIT F

NOTICE ADDRESSES

Company:	Aliante Holding, LLC
	c/o Aliante Station, LLC
	c/o Station Casinos, Inc.
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Frank J. Fertitta III
	and
	G.C. Aliante, LLC
	c/o The Greenspun Corporation
	901 North Green Valley Parkway, Suite 210
	Henderson, NV 89074
	Attention: Brian L. Greenspun
GC:	G.C. Aliante, LLC
	c/o The Greenspun Corporation
	901 North Green Valley Parkway, Suite 210
	Henderson, NV 89074
	Attention: Brian L. Greenspun
with a copy to:	The Greenspun Corporation
	901 North Green Valley Parkway
	Suite 210
	Henderson, NV 89014
	Attention: Key Reid
Station:	Aliante Station, LLC
	c/o Station Casinos, Inc.
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Frank J. Fertitta III
with a copy to:	Aliante Station, LLC
	c/o Station Casinos, Inc.
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Richard J. Haskins, Esq.

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EXHIBIT G

Initial Members and Membership Interests

G.C. Aliante, LLC, a Nevada limited liability company	50%
Aliante Station, LLC, a Nevada limited liability company	50%

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TO BE UPDATED BASED ON

THE UPDATED TITLE COMMITMENT, EFFECTIVE DATE 11/7/05

EXHIBIT H-1

Permitted Exceptions (Aliante Property)

1.The matters listed on Schedule B of the Title Commitment, No. 05-09-1341-DTL (1st Amendment), issued by the Nevada Title Company, dated as of November 17, 2005, at 7:30 a.m.(the “TC”), except:

(a)the real property taxes covered by Exception No. 1 on Schedule B-Section II of the TC shall be shown as current  as of the Contribution Date;

(b)the Special Assessment for Improvement District No. 60 covered by Exception No. 2 on Schedule B-Section II of the TC shall be shown as current as of the Contribution Date NOTE:  The Special Assessment against the Aliante Property is subject to adjustment based upon a final allocation by the assessment engineer not to exceed $1,604,543.68;

(c)Title Policy to include affirmative insurance that as of the date of the policy there are no supplemental or recapture taxes;

(d)the cell tower agreement reflected on Exception No.15 on Schedule B-Section II of the TC shall be deemed to be a Permitted Exception only if all rights, titles, and interests of the licensor/grantor thereunder shall be assigned by the Company as of the Contribution Date.  If such agreement shall be terminated or replaced with a permanent or relocated cell tower license, lease or easement, then such Exception No. 15 shall not be deemed to be a Permitted Exception, and the replacement cell tower license, lease or easement approved by the Executive Committee shall be deemed to be a Permitted Exception;

(e)if the drainage easement shown as Exception No. 16 on Schedule B-Section II of the TC shall be relocated as provided in Section 3.2 of the Agreement, such Exception No. 16 shall not be deemed to be a Permitted Exception and the relocated easement shall be deemed to be a Permitted Exception; and

(f)Exception No. 18 shall not be deemed Permitted Exceptions.

2.Matters to be identified on a survey of the Aliante Property to be delivered prior to the Contribution Date, except for those matters set forth as exceptions (a) through (e) under paragraph no. 1 with respect to the TC.

3.Declaration of Covenants, Conditions and Restrictions in substantially the form as attached hereto.

4.Unrecorded license agreements in form and substance approved by the Executive Committee with respect to the temporary placement of construction trailers and spoils

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(including caliche) stockpile on portions of the Aliante Property by an affiliate of GC and by a third party.

5.Those matters affecting title, created by, through and under the Company or the Manager, or with the prior written approval of the Company, the Manager or the Executive Committee, as the case may be

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EXHIBIT H-2

Permitted Exceptions (Losee Property)

1.Those matters shown as exceptions in that certain Owner’s Policy of Title Insurance No. A60-0527944 issued by Commonwealth Land Title Insurance Company, dated October 11, 2005, naming Losee LLC as insured.

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EXHIBIT I

Articles of Organization

See attached.

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SCHEDULE 4.1(a)

GC’s Initial Capital Contribution

1.             As its Initial Capital Contribution, on the Contribution Date, GC shall contribute to the Company one hundred (100%) of the issued and outstanding membership interests in Aliante LLC (the “Aliante Membership Interests”) pursuant to an Assignment of Membership Interest in the form attached as Attachment III. Prior to such conveyance, GC shall assign or cause its affiliate to assign to Aliante LLC all rights of Developer under Section 6.05 of the Development Agreement, recorded on April 8, 2002 in Book 20020408 as Document No. 00884 of the Clark County Official Records, to be granted permits to install two (2) Billboards (as defined in such Development Agreement) on the Resort Property.

2.             Prior to or concurrently with making its Initial Capital Contribution, GC shall, at its sole cost and expense, (a) take all steps necessary to transfer all transferable land use permits and approvals theretofore issued with respect to the Aliante Property to Aliante LLC and (b) provide Aliante LLC with, or cause Aliante LLC to obtain, a 1970 ALTA extended coverage owner’s policy of title insurance (the “Aliante Owner’s Policy”) issued by Nevada Title in the amount of $50,000,000 insuring Aliante LLC’s title in and to the Aliante Property, subject only to the Permitted Exceptions set forth on Exhibit H-1 to the Agreement and those additional encumbrances approved by the Executive Committee.

3.             Upon the making of its Initial Capital Contribution, GC shall be entitled to a credit to its Capital Account in the amount of $50,000,000.  Real estate taxes, assessments, and other taxes, fees, and costs customarily prorated in commercial real estate transactions in the Las Vegas, Nevada area, shall be prorated between GC and Aliante LLC as on the Contribution Date.

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SCHEDULE 4.1(b)

Station’s Initial Capital Contribution

1.             As its Initial Capital Contribution, on the Contribution Date, Station shall contribute to the Company (a) one hundred percent (100%) of the issued and outstanding membership interests in Losee LLC (the “Losee Membership Interests”) pursuant to an Assignment of Membership Interest in the form attached as Attachment IV and (b) $2,190,330.00 in immediately available funds.

2.             Prior to or concurrently with making its Initial Capital Contribution,  Station shall, at its sole cost and expense, (a) take all steps necessary to transfer all transferable land use permits and approvals theretofore issued with respect to the Losee Property to Losee LLC  and (b) provide Losee LLC with, or cause Losee LLC to obtain, a 1970 ALTA extended coverage owner’s policy of title insurance (the “Losee Owner’s Policy”) issued by Nevada Title in the amount of $47,000,000 insuring Losee LLC’s title in and to the Losee Property, subject only to the Permitted Exceptions set forth on Exhibit H-2 to the Agreement and those additional encumbrances approved by the Executive Committee.

3.             Upon the making of its Initial Capital Contribution, Station shall be entitled to a credit to its Capital Account in the amount of $50,000,000.  Real estate taxes, assessments, and other taxes, fees, and costs customarily prorated in commercial real estate transactions in the Las Vegas, Nevada area, shall be prorated between Station and Losee LLC as on the Contribution Date.

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ATTACHMENT I

Form of Aliante Operating Agreement

See attached.

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ATTACHMENT II

Form of Losee Operating Agreement

See attached

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ATTACHMENT III

Form of GC Assignment of Membership Interest

See attached

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ATTACHMENT IV

Form of Station Assignment of Membership Interest

See Attached

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EX-10.42

Exhibit 10.42

FINAL

AMENDED AND RESTATED OPERATING AGREEMENT

OF

ALIANTE GAMING, LLC

JANUARY 6, 2006

TABLE OF CONTENTS

ARTICLE I	DEFINITIONS
1.1	Definitions	2
ARTICLE II	FORMATION
2.1	Formation	17
2.2	Name; Licenses	17
2.3	Purposes and Powers	18
2.4	Registered Agent and Registered Office	18
ARTICLE III	MANAGEMENT
3.1	The Manager	18
3.2	Expense of Construction; Matters Relating to Construction and Development; Matters Relating to Financing the Construction of the Project	19
3.3	Manager’s Duties During Pre-Opening Period	20
3.4	Manager’s Duties During Operating Period and With Respect to Expansion Projects	20
3.5	Compensation of the Manager	20
3.6	Removal of the Manager	21
3.7	Officers	22
3.8	Conflicts of Interest; Right to Participate	23
3.9	Tax Matters Partner	24
3.10	Liability of Holding, as a Member, and Station, as Manager	25
3.11	Prohibition Against Publicly Traded Partnership	25
3.12	The Executive Committee	25
3.13	Decisions Subject to Executive Committee Approval	25
3.14	Place of Meetings and Meetings by Telephone	30
3.15	Regular Meetings	30
3.16	Special Meetings	30
3.17	Quorum	30
3.18	Manner of Acting	30
3.19	Waiver of Notice	30
3.20	Adjournment	30
3.21	Action Without a Meeting	30
3.22	Resignation	30
3.23	Removal	31
3.24	Vacancies	31
3.25	Compensation to EC Members	31
3.26	Liability to Third Parties	31
3.27	No Guarantee of Return by EC Members	31
3.28	Transactions with Company or Otherwise	31
3.29	Indemnification	31
ARTICLE IV	FINANCIAL MATTERS
4.1	Initial Capital Contributions	32
4.2	Additional Capital Contributions	32

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4.3	[Reserved]	35
4.4	Allocation of Profits and Losses	35
4.5	Distributions	36
ARTICLE V	MEMBERS; TRANSFER OF INTERESTS
5.1	Admission	36
5.2	Transfer of Interests	36
5.3	Gaming Licensing	37
5.4	Required Member Approvals	37
5.5	Meetings	37
5.6	In General	38
ARTICLE VI	DISSOLUTION, LIQUIDATION AND TERMINATION
6.1	Dissolution	40
6.2	Liquidation and Termination	40
6.3	Articles of Dissolution	41
6.4	Negative Capital Accounts	41
6.5	Limitations on Rights of Holding	41
ARTICLE VII	AMENDMENTS
7.1	Amendments	41
ARTICLE VIII	MISCELLANEOUS
8.1	Notices	41
8.2	Binding Effect	42
8.3	Headings	42
8.4	Severability	42
8.5	Further Action	42
8.6	Governing Law	42
8.7	Waiver of Action for Partition	42
8.8	Counterpart Execution	42
8.9	Publicity	43
8.10	Transition as Manager	43
8.11	Broker Fees	43
8.12	Securities Under the UCC	43

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LIST OF EXHIBITS
Exhibit A	Articles of Organization
Exhibit B	Original Operating Agreement
Exhibit C	Additional Property
Exhibit D	Example of Shared Expenses
Exhibit E	Legal Description of Losee Property
Exhibit F	Legal Description of Resort Property
Exhibit G	Restricted Area
Exhibit H	Location of Relocated Drainage Easement
Exhibit I	Notice Addresses
LIST OF SCHEDULES
Schedule 3.3		Manager’s Duties During Pre-Opening Period
Schedule 3.4		Manager’s Duties During Operating Period
ATTACHMENTS
Attachment I		Form of License and Support Agreement
Attachment II		Form of License Agreement

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AMENDED AND RESTATED OPERATING AGREEMENT

OF

ALIANTE GAMING, LLC

This AMENDED AND RESTATED OPERATING AGREEMENT OF ALIANTE GAMING, LLC, dated as of January 6, 2006 (the “Effective Date”), is entered into by and among (1) ALIANTE GAMING, LLC, a Nevada limited liability company (the “Company”); (2) ALIANTE HOLDING, LLC, a Nevada limited liability company, the sole Member following the Effective Date (“Holding”); and (3) ALIANTE STATION, LLC, a Nevada limited liability company (“Station”), a wholly-owned subsidiary of Station Casinos, Inc., a Nevada corporation (“Parent”), and the Manager (as hereinafter defined); and acknowledged and agreed to by G.C. ALIANTE, LLC, a Nevada limited liability company, as a member of Holding (“GC”), and Station, as a member of Holding.  Each of the Company, Holding and the Manager is sometimes referred to herein as a “Party” and, all of them, together, are sometimes collectively referred to herein as the “Parties.”  All references to Holding in this Agreement are to Holding, in its capacity as the sole Member, unless the context clearly indicates otherwise.

RECITALS

WHEREAS, the Company was formed by the filing of the Articles of Organization with the Nevada Secretary of State on December 16, 2005, a copy of which is attached hereto as Exhibit A (the “Articles”); and

WHEREAS, immediately prior to the GC Contribution (as defined below), the Company and GC, the then sole member of the Company, were parties to that certain Operating Agreement of Aliante Gaming, LLC, a copy of which is attached hereto as Exhibit B (the “Original Operating Agreement”); and

WHEREAS, (a) on the Effective Date, GC contributed one hundred percent (100%) of the issued and outstanding membership interests in the Company to Holding in exchange for a fifty percent (50%) membership interest in Holding (the “GC Contribution”), and Station contributedone hundred percent (100%) of the issued and outstanding membership interests in Losee Elkhorn Properties, LLC, a Nevada limited liability company (“Losee LLC”) to Holding in exchange for a fifty percent (50%) membership interest in Holding (the “Station Contribution”); and (b) immediately following the GC Contribution and the Station Contribution, Holding became the sole Member; and

WHEREAS, the Parties now desire to enter into this Agreement in order to amend and restate the Original Operating Agreement, in its entirety, on the terms and subject to the conditions set forth herein.

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

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AGREEMENT

ARTICLE I

Definitions

1.1           Definitions.  The following capitalized words and phrases have the indicated meanings in this Agreement:

“Act” means Chapter 86 of the Nevada Revised Statutes, as amended from time to time (and any corresponding provisions of succeeding law).

“Additional Property” means the additional real property generally depicted on Exhibit C.

“Additional Reserve” shall equal $5,000,000, in the aggregate, which shall be a reserve above and beyond the Reserve Fund to be funded pursuant to Paragraph (b)(ii) of Schedule 3.4; provided, however, that the Additional Reserve need not be a “cash” reserve, but rather the Manager may, to the maximum extent permitted under the terms and conditions of each and all of the Construction Financing, Expansion Financing(s) and/or Permanent Financing, maintain unencumbered funds from such credit facility to be used in lieu of such “cash-funded” Additional Reserve.

“Affiliate” means, with respect to any Person, (i) any other Person directly or indirectly controlling, controlled by, or under common control with, such Person (excluding employees of a Person, other than executive officers and board members of such Person), (ii) any Person who is an officer or director of any Person described in Clause (i) of this definition, (iii) with respect to GC, any Greenspun Family Member, and with respect to either Parent or Station, any Fertitta Family Member, or (iv) any family member of any Person described in Clause (iii) of this definition.  For purposes of this definition, the term “family member” shall be deemed to be the spouses and lineal descendants of the Persons described in Clause (iii) of this definition.

“Affiliate Transaction” has the meaning set forth in Section 3.8(c).

“Agreement” means this Amended and Restated Operating Agreement of Aliante Gaming, LLC, together with all exhibits and schedules hereto, as amended from time to time in accordance herewith.  Words such as “herein,” “hereinafter,” “hereof,” “hereto,” and “hereunder” refer to this Agreement as a whole, unless the context otherwise requires.

“Annual Plan and Operating Budget” means the operating plan and budget for each Fiscal Year during the Operating Period, as proposed by the Manager and approved by the Executive Committee pursuant to the terms of this Agreement, setting forth in reasonable detail the Company’s projected Gross Revenues, Operating Costs, debt service requirements and capital expenditures and working capital requirements, including in each case the components thereof.  The Annual Plan and Operating Budget also shall include a concise written narrative regarding any material changes to the Project’s operating standards, policies and procedures or to the Company’s projections regarding the components of Gross Revenues or Operating Costs.  With respect to any Expansion Projects, until such time as such Expansion Project is completed, the Annual Plan and Operating Budget shall break out separately the Expansion Project Budget for

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such Expansion Project with comparable line items to those included in the Annual Plan and Operating Budget, to the extent applicable.

“Articles” has the meaning set forth in the Recitals.

“Bank Accounts” means those bank or financial institution accounts as are necessary for the construction, day-to-day and long-term management and operation of the Project, including the Operating Bank Account and the Reserve Fund.

“Bankrupt” means, with respect to any Person, the occurrence of any of the following:

(i)            Filing of a voluntary petition in bankruptcy or for reorganization or for adoption of an arrangement under the United States Bankruptcy Code, as amended from time to time (or any corresponding provisions of succeeding law);

(ii)           Making a general assignment for the benefit of creditors;

(iii)          The appointment by a court of a receiver for all or substantially all of the assets of such Member;

(iv)          The entry of an order for relief in the case of an involuntary petition in bankruptcy; or

(v)           The assumption of custody or sequestration by a court of competent jurisdiction of all or substantially all of such Person’s assets.

“Base Management Fee” means the base management fee to be paid to the Manager pursuant to Section 3.5(a).

“Capital Account” means the capital account maintained for Holding in accordance with the following provisions:

(i)            To Holding’s Capital Account there shall be credited Holding’s Capital Contributions, Holding’s distributive share of Profits and any items in the nature of income or gain that are specially allocated to Holding hereunder, and the amount of any Company liabilities assumed by Holding or that are secured by any Company property distributed to Holding;

(ii)           To Holding’s Capital Account there shall be debited the amount of cash and the Gross Asset Value of any property other than money distributed to Holding pursuant to any provision of this Agreement (other than payments made pursuant to Section 3.5 hereof), Holding’s distributive share of Losses and any items in the nature of expenses or losses that are specially allocated to Holding hereunder;

(iii)          In the event that all or any part of a Holding’s Membership Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to Holding’s Capital Account; and

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(iv)          In determining the amount of any liability for purposes of the foregoing Clauses (i) and (ii) of this definition, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations.  The Manager, with the consent of the Executive Committee, shall make any appropriate modifications to Holding’s Capital Account in the event unanticipated events might otherwise cause this Agreement not to comply with Section 1.704-1(b) of the Regulations.

“Capital Contribution” means, as of any date, the amount of money and other property actually contributed to the Company by Holding through such date.  The amount of a Capital Contribution made in property other than money shall be the fair market value, net of assumed liabilities, of the contributed property as determined in good faith by the Executive Committee; provided, however, that Holding’s opening Capital Account balance on the Effective Date shall be $50,000,000.00.

“Capital Improvements and Replacements” means a capital expenditure, as defined under GAAP, for a modification, refurbishment, alteration, addition, improvement or renovation to any portion of the Project, including the Furniture, Fixtures and Equipment associated with the Project.

“Claims” has the meaning set forth in Section 3.29(a).

“Code” means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law).

“Collateral’s Fair Market Value” has the meaning set forth in Section 4.2(g).

“Company” has the meaning set forth in the introductory paragraph.

“Construction Financing” means third-party debt financing for the construction of the Project (not including any Expansion Project).

“Construction Loan Documents” means any and all documents executed in connection with the Construction Financing.

“Construction Manager” means the individual selected and appointed by the Manager with the prior approval of the Executive Committee to manage and supervise the construction activities of the Project (not including any Expansion Project) on a day-to-day basis.

“Construction Plan” means the comprehensive construction plan for the Project (not including any Expansion Project) submitted by a construction firm selected by the Executive Committee, including the estimated time frame for completion and implementation of such plan, which Construction Plan shall be approved by the Executive Committee.  The Construction Plan may be approved as a whole or in segments or by components by the Executive Committee.

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“Cross-Default Party” has the meaning set forth in Section 4.2(g).

“Curable Default” has the meaning set forth in Section 4.2(g).

“Cure Collateral” has the meaning set forth in Section 4.2(g).

“Cure Cost of Capital” has the meaning set forth in Section 4.2(g).

“Cure Pledge” has the meaning set forth in Section 4.2(g).

“Curing Party” has the meaning set forth in Section 4.2(g).

“Default Amount” has the meaning set forth in Section 4.2(g).

“Default Loan” has the meaning set forth in Section 4.2(g).

“Design, Development and Construction Budget” means the aggregate hard and soft costs of construction of the Project (not including any Expansion Project), proposed by the Manager and approved by the Executive Committee, including real estate costs, all costs associated with the Resort Property, Improvements, allowances for Furniture, Fixtures and Equipment attached or used within the Project, construction and design fees, permits and licenses, Pre-Opening Plan costs, capitalized interest, and all associated financing fees through the date that the Project receives a final certificate of occupancy from the applicable governmental authority.  The Design, Development and Construction Budget may be approved as a whole or in segments or by components by the Executive Committee (e.g., the components of the Improvements, such as interior furnishings as compared to the foundation and exterior facade, etc.).

“Design Plan” means the architectural, interior design and landscaping plans for the Project (not including any Expansion Project) submitted by architectural, interior design and landscaping firms selected by the Manager and approved by the Executive Committee, which Design Plan shall be approved by the Executive Committee.  The Design Plan may be approved as a whole or in segments or by components by the Executive Committee.

“Dilution Date” has the meaning set forth in Section 4.3(d)(i) of the Aliante Operating Agreement.

“Distributable Cash” has the meaning set forth in Schedule 3.4, paragraph (k)(viii).

“EBITDA” for any period means the Company’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) plus, to the extent deducted in determining such net income, the Company’s interest, income tax, depreciation and amortization expenses (including pre-opening expenses) for such period, in accordance with GAAP consistently applied and excluding in such calculation non-operating, non-recurring gains and losses.

“EC Member” means either of the GC EC Member and the Station EC Member.

“Effective Date” has the meaning set forth in the introductory paragraph hereof.

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“Entitlements” has the meaning set forth in Section 5.6(h).

“Entitlements Claims/Proceedings” has the meaning set forth in Section 5.6(h).

“Excess Construction Contributions” has the meaning set forth in Section 4.2(b).

“Executive Committee” has the meaning set forth in Section 3.12.

“Exempt Affiliate” means a Person who is not a Fertitta Family Member, but who is an Affiliate solely because such Person is an investor in Parent or an investor in a successor to Parent by merger, consolidation, acquisition or similar manner, for a bona fide business purpose other than to evade the prohibition set forth in Section 3.8(a).

“Exempt Property” means a hotel and/or casino owned, operated, or managed by an investor in Parent (other than a Fertitta Family Member) or a successor to Parent (by merger, consolidation, acquisition or similar manner which is undertaken for an independent, bona fide business purpose other than to evade the prohibition set forth in Section 3.8(a)) which was owned, operated or managed by such an investor in Parent (other than a Fertitta Family Member) or a successor to Parent prior to such merger, consolidation, acquisition or similar transaction.

“Expansion Financing” means third-party debt financing for the construction of each Expansion Project and to refinance the previous construction financing therefor, as approved by the Executive Committee at any time and from time to time pursuant to the terms of this Agreement.

“Expansion Project” means each additional construction project at the Project after the initial construction project if and as approved by the Executive Committee at any time and from time to time pursuant to the terms of this Agreement.

“Expansion Project Budget” means the budget for each Expansion Project, which includes the aggregate hard and soft costs of construction of such Expansion Project, as approved by the Executive Committee at any time and from time to time pursuant to the terms of this Agreement.

“Expansion Project Construction Manager” means the individual selected by the Manager and approved by the Executive Committee to manage and supervise the construction activities of each Expansion Project on a day-to-day basis.

“Expansion Project Construction Plan” means the comprehensive construction plan for each Expansion Project, including the estimated time frame for completion and implementation thereof, as approved by the Executive Committee at any time and from time to time pursuant to the terms of this Agreement.

“Expansion Project Design Plan” means the architectural, interior design and landscaping plans for each Expansion Project submitted by architectural, interior design and landscaping firms, as approved by the Executive Committee at any time and from time to time pursuant to the terms of this Agreement.

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“Expansion Project Loan Documents” means any and all documents, agreements and instruments evidencing the terms and conditions of an Expansion Financing, as approved by the Executive Committee at any time and from time to time pursuant to the terms of this Agreement.

“Fertitta Family Members” means Frank J. Fertitta III and Lorenzo J. Fertitta, and such Persons’ spouses and lineal descendants or trusts for the benefit of such Persons or their spouses or lineal descendants.

“Fertitta Person” means each of the Manager, Station, Parent, the Fertitta Family Members or any Affiliate of the foregoing (excluding any Exempt Affiliate).

“Fiscal Month” means an individual monthly accounting period of the Company ending on the close of business on the last day of each calendar month.

“Fiscal Year” means the Company’s fiscal year ending on December 31 of each year (or, if earlier, the date on which the Company is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g)).  The first Fiscal Year of the Company shall commence on the Effective Date, and subsequent Fiscal Years shall commence on January 1.

“Force Majeure” means war, insurrection, strikes, walkouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions, laws, rules, regulations, ordinances and/or proceedings (including, without limitation, those relating to building, zoning and land use and litigation brought by unrelated third parties, including eminent domain), unusually severe weather, inability to secure necessary labor, materials or tools, delays of any contractor, subcontractor or supplier outside the reasonable control of the affected Party, acts or failures to act (including the failure to issue Governmental Approvals or other approvals, consents, permits or licenses) of an unaffiliated party, acts or failures to act of any public or governmental agency, private or public utility or other entity (including GC with regard to Station, and Station with regard to GC) not due to the delay or fault of the affected Party, or any other causes beyond the reasonable control or without the fault of the Party claiming an extension of time to perform; provided, however, that such event actually affects such Party’s ability to perform and only for so long as it does affect such Party’s ability to perform.

“Furniture, Fixtures and Equipment” means all furniture, fixtures and equipment reasonably required for the operation of the Project, including but not limited to office furniture, computer and communications systems, specialized hotel equipment necessary for the operation of the hotel/casino, food and beverage equipment, laundries and recreational facilities, but not including any such furniture, fixtures or equipment owned by Parent, the Manager or their Subsidiaries (other than the Company) and used in the operation of the Project.  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.

“GAAP” means United States generally accepted accounting principles, as in effect from time to time.

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“Gaming Authority” means those federal, state and local governmental, regulatory and administrative authorities, agencies, boards and officials responsible for or involved in the regulation of gaming or gaming activities in any jurisdiction, including within the State of Nevada, specifically, the Nevada Gaming Commission, the Nevada State Gaming Control Board, and applicable local authorities.

“Gaming Laws” means those laws pursuant to which any Gaming Authority possesses regulatory, licensing or permit authority over gaming within any jurisdiction and, within the State of Nevada, specifically, the Nevada Gaming Control Act, as codified in the Chapter 463 of the Nevada Revised Statutes, and the regulations of the Nevada Gaming Commission and Nevada State Gaming Control Board promulgated thereunder, as amended from time to time.

“Gaming Licenses” shall mean all licenses, consents, permits, approvals, authorizations, registrations, findings of suitability, franchises and entitlements issued by any Gaming Authority necessary for or relating to the conduct of activities under the Gaming Laws.

“Gaming Problem” has the meaning set forth in Section 5.3(b).

“GC” has the meaning set forth in the introductory paragraph.

“GC Affiliates” has the meaning set forth in Section 4.2(f).

“GC Contribution” has the meaning set forth in the Recitals.

“GC EC Member” has the meaning set forth in Section 3.12.

“GC/Holding Capital Contribution” means each capital contribution that (a) GC is required to make to Holding pursuant to the terms of the Holding Operating Agreement and (b) which is designated in writing by Holding, at the time it makes the capital contribution call therefor, as an “Aliante Additional Capital Call” in accordance with the terms and conditions of the Holding Operating Agreement.

“GC Pledgors” has the meaning set forth in Section 4.2(f).

“General Manager” means the individual selected and appointed by the Manager with the prior approval of the Executive Committee to manage and supervise the activities of the Project on a day-to-day basis during the Operating Period.

“Governmental Approvals” means all permits, licenses, consents and approvals of agencies of the City of North Las Vegas, Nevada, Clark County, Nevada, the State of Nevada   and the United States necessary for the construction of the Project (including the Improvements) in accordance with the Master Development Plan, and operation of the Project, excluding any Gaming Licenses or liquor licenses, permits or approvals required to be obtained by the Member(s).  The material terms and conditions of all Governmental Approvals (excluding Gaming Licenses and liquor licenses) shall be subject to the prior approval of the Executive Committee; provided, however, that if neither EC Member notifies the Manager within seven (7) calendar days after such written request for approval of a material term that he objects to such term, the Executive Committee shall be deemed to have approved such material term.

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“Greenspun Family Member” means any of the following people: Susan Fine, Daniel Greenspun, Jane Greenspun Gayle, Brian Greenspun, and Phillip Peckman, and each of such Persons’ spouses and lineal descendants or trusts for the benefit of any such Persons or their spouses and lineal descendants.

“Greenspun Person” means each of GC, the Greenspun Family Members or any Affiliate of the foregoing (excluding any Exempt Affiliate).

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(i)            The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined in good faith by the Executive Committee, as of the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; and the distribution by the Company to Holding of more than a de minimis amount of property as consideration for Holding’s Membership Interest;

(ii)           The Gross Asset Value of any Company asset distributed to Holding shall be the gross fair market value of such asset, as determined in good faith by the Executive Committee, on the date of distribution;

(iii)          The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this Clause (iii) to the extent that an adjustment pursuant to the foregoing Clause (i) is made in connection with a transaction that would otherwise result in an adjustment pursuant to this Clause (iii); and

(iv)          The Gross Asset Value of any asset contributed to the Company shall be its agreed-upon fair-market value, adjusted for book depreciation, amortization or other cost recovery deductions for periods subsequent to its contribution in the manner provided in Clause (vi) of the definitions of “Profit” and “Loss.”

“Gross Revenues” means all cash revenues and income (excluding interest income) of any kind derived from the use or operation of the Project determined in accordance with GAAP consistently applied, including without limitation, income from gaming activities; income from rental of guest rooms; 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 Project (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

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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 Project and without duplication, (i) any proceeds from the sale, financing or refinancing or other disposition of the Project or substantially all of the assets of the Company; (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 the Company 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 Project 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 the Company or the Manager 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.

“Holding” has the meaning set forth in the introductory paragraph.

“Holding Operating Agreement” means that certain Operating Agreement of Aliante Holding, LLC, dated as of December 16, 2005, by and among Holding, GC and Station (together with all exhibits and schedules thereto), as amended from time to time.

“Hotel/Casinos” has the meaning set forth in Exhibit D.

“Improvements” means (i) all buildings, structures and improvements to be constructed on the Resort Property and all Furniture, Fixtures and Equipment attached to or forming a part thereof (including, without limitation, heating, lighting, plumbing, sanitation, air conditioning, laundry, refrigeration, kitchen, elevator and similar items or systems, guest rooms, restaurants, bars and banquet, meeting and other public areas, commercial space, including concessions and shops, garage and parking space, storage and service areas, recreational facilities and areas, public grounds and gardens, permanently affixed signage, aquatic facilities, and other facilities and appurtenances) in accordance with the Master Development Plan and (ii) all grading of the Resort Property.

“Incentive Management Fee” means the incentive management fee payable to the Manager pursuant to Section 3.5(b).

“Indemnitee” has the meaning set forth in Section 3.29(a).

“License Party” has the meaning set forth in Section 5.3.

“Losee Property” means the real property owned by Losee LLC.  The Losee Property is legally described on Exhibit E.

“Losee LLC” has the meaning set forth in the Recitals.

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“Manager” means Station or any successor to Station approved by the Executive Committee pursuant to the terms of this Agreement.

“Master Development Plan” means the comprehensive development plan (including estimated time lines therefor) for the Project, including the Design Plan, the Construction Plan, and the Design, Development and Construction Budget, each as may be amended from time to time in accordance with the terms of this Agreement, and all as approved by the Executive Committee at any time and from time to time pursuant to this Agreement.  The components of the Master Development Plan may be approved as a whole or in segments or by components by the Executive Committee.  The Master Development Plan shall be amended from time to time to include comparable information for any and all Expansion Projects.

“Member” means Holding and any other Person that is or becomes a party to this Agreement as a member of the Company. The sole Member of the Company on the Effective Date is Holding.

“Membership Interest” means a Member’s undivided percentage interest in the Company.  Such interest includes any and all rights to which such Member may be entitled as provided in this Agreement or the Act, including such Member’s Capital Account, together with all obligations of such Member under this Agreement or the Act.  Holding’s initial percentage Membership Interest is 100%

“Minimum Gain” shall mean “partnership minimum gain” as determined in accordance with Regulations Section 1.704-2(d)(1).

“Minimum Gain Attributable to Member Nonrecourse Debt” shall mean “partner nonrecourse debt minimum gain” as determined in accordance with Regulations Section 1.704-2(i)(3).

“Notice Address” has the meaning set forth in Section 8.1.

“Notices” has the meaning set forth in Section 8.1.

“NVE” has the meaning set forth in Section 2.2(c).

“Opening” means the date on which the casino portion of the Project is first opened to the public and commences business.

“Operating Bank Account” means the Bank Account maintained by and in the name of the Company for the payment of Operating Costs and the deposit of monies related to the business, which account shall be separate and distinct from any other accounts, reserves or deposits required by this Agreement.  The Operating Bank Account shall be an interest bearing account if such an account is reasonably available and all interest earned shall be retained in the Operating Bank Account.

“Operating Consumables” means all food, beverages and other immediately consumable items utilized in operating the Project, such as soap, cleaning materials, matches, stationary, brochures, folios, and other similar items.

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“Operating Costs” means, to the extent included within the Design, Development and Construction Budget, each Expansion Project Budget, or the then-current Annual Plan and Operating Budget, or to the extent otherwise approved by the Executive Committee at any time and from time to time pursuant to the terms of this Agreement, all costs and expenses of constructing, maintaining, conducting and supervising the operation of the Project which are properly attributable to the Fiscal Month or Fiscal Year under consideration in accordance with GAAP, including without limitation:

(i)            the cost of all food and beverages sold or consumed by the Company and of all Operating Supplies and Operating Consumables, with the exception of the cost of food and beverages and other items sold or consumed by lessees and sublessees;

(ii)           salaries, wages and other benefits of the Company’s personnel employed with respect to the Project, including costs of payroll taxes and employee benefits, the salaries, wages, benefits, and expenses, including travel expenses, of third-party consultants;

(iii)          the cost of all other materials, supplies, goods and services used in connection with the operation of the Project including, without limitation, heat and utilities, trash removal, office supplies, security and all other services performed by third parties, telephone and data processing equipment and other equipment;

(iv)          the cost of repairs to and maintenance of the Project to the extent not paid for from the Reserve Fund or by the actual cash proceeds of any fire or casualty insurance after deducting necessary expenses in connection with the adjustment or collection of such proceeds;

(v)           insurance and bonding premiums with respect to the Project, including, without limitation, property damage insurance, public liability insurance, workers’ compensation insurance, or insurance required by similar employee benefits acts and such business interruption or other insurance as may be provided for protection against claims, liabilities and losses incurred with respect to deductibles applicable to the foregoing types of insurance;

(vi)          all taxes, assessments, water/sewer charges, and other fees and charges (other than federal, state or local income taxes and franchise taxes or the equivalent) payable by or assessed against the Company with respect to the operation of the Project;

(vii)         legal, consulting, lobbying, political and charitable contributions, accounting and other fees for professionals for services related to the development or operation of the Project;

(viii)        all expenses for marketing the Project, including all expenses of advertising, sales, promotion and public relations activities; and

(ix)           all excise, sales, gross receipts, admission, entertainment, tourist or use taxes, gaming taxes and device fees, real estate taxes, ad valorem taxes, personal property

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taxes, utility taxes and other taxes (as those terms are defined by GAAP), assessments for public improvements, and municipal, county and state license and permit fees.

Operating Costs shall include Shared Expenses.  The type and estimated amount of Shared Expenses and method for calculation of the same shall be approved by the Executive Committee to fairly distribute the costs of such services when it considers the Annual Plan and Operating Budget; provided, however, that such allocation will not discriminate against the Company as compared with the allocation of such expenses among other properties operated by Parent, Manager or their Subsidiaries.  For example, subject to the prior sentence, Shared Expenses may include the costs incurred by the Manager, Parent or their respective Subsidiaries for direct salary and wages (including, without limitation, employer’s contributions under FICA, unemployment compensation or other employment taxes, and Manager’s, Parent’s or their respective Subsidiaries’ regular pension fund contributions, worker’s compensation, group life, accident, health and other health insurance premiums, profit sharing, and retirement plans, disability and other similar benefits) paid to or accrued for the benefit of employees of the Manager, Parent or their respective Subsidiaries that are assigned to perform a function for the Company that otherwise would be filled by an employee of, or third-party provider to, the Company, prorated to the extent actually attributable to each such employee’s actual time incurred for the benefit of the Company.

Operating Costs and Shared Expenses will not include (i) any costs incurred by the Manager, Parent, or Manager’s or Parent’s Subsidiaries, or GC or GC’s Affiliates that are not expressly reimbursable by the Company pursuant to the terms of this Agreement or the then-current Annual Plan and Operating Budget, such as general overhead expenses of Station, Manager, or Parent or Manager’s or Parent’s Subsidiaries, or (ii) the Base Management Fee or Incentive Management Fee.

“Operating Period” means that time period from the Opening until the liquidation of the Company.

“Operating Supplies” means all non-capital equipment necessary for the day-to-day operation of the Project, including but not limited to chips, tokens, uniforms, playing cards, glassware, linens, silverware, utensils and dishware.

“Original Operating Agreement” has the meaning set forth in the Recitals.

“Parent” has the meaning set forth in the introductory paragraph.

“Party” and “Parties” have the meanings set forth in the introductory paragraph.

“Permanent Financing” means any debt financing incurred by the Company for refinancing or replacing, in whole or in part, the Construction Financing, any Expansion Financing or prior Permanent Financing on terms and conditions approved by the Executive Committee.

“Permanent Loan Documents” means any and all documents executed in connection with any Permanent Financing.

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“Person” means any individual, corporation, limited liability company, partnership, trust or other entity.

“Pledge/Guaranty Document” and “Pledge/Guaranty Documents” have the meanings set forth in Section 4.2(f).

“Pre-Opening Period” means that time period from the Effective Date to the Opening.

“Pre-Opening Plan” means a written action plan and budget delineating the key actions (with estimated timelines) to be taken by the Manager on behalf of the Company to prepare the Project for the Opening, including recruitment, training, marketing, advertising, operations planning and cost estimates, in each case consistent with the Design, Development and Construction Budget, which Pre-Opening Plan shall be subject to approval by the Executive Committee.

“Problem Party” has the meaning set forth in Section 5.3(a) and (b).

“Profits” and “Losses” for each Fiscal Year (or other period) means an amount equal to the Company’s taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(i)            Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss;

(ii)           Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss;

(iii)          In the event the Gross Asset Value of any Company asset is adjusted pursuant to Clause (i) or Clause (ii) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

(iv)          Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(v)           Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to this Agreement shall be excluded from such taxable income or loss; and

(vi)          If the Gross Asset Value of any Company asset is different from its adjusted tax basis at the beginning of the Fiscal Year, then, in lieu of the depreciation,

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amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction bears to such beginning adjusted tax basis; provided, however, that if such beginning adjusted tax basis is zero, such amount shall be determined with reference to such beginning Gross Asset Value using any reasonable method determined by the Manager.

“Project” means, collectively, the Improvements, including all Improvements included as part of each Expansion Project.

“Regulations” means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“Reserve Fund” means a Bank Account maintained by and in the name of the Company for the payment of Capital Improvements and Replacements for the Project, which account shall be separate and distinct from any other accounts, reserves or deposits required by this Agreement.  The Reserve Fund shall be an interest bearing account if such an account is reasonably available and all interest earned shall be retained in the Reserve Fund.

“Resort Property” means the real property upon which the Project is to be developed.  The Resort Property is legally described on Exhibit F.  The Resort Property shall include the Additional Property following its acquisition by the Company.

“Restricted Activity” has the meaning set forth in Section 3.8(a).

“Restricted Area” means the property area set forth on Exhibit G.

“Restricted Period” has the meaning set forth in Section 3.8(a).

“Return on Total Project Cost” means, with respect to any Fiscal Year of the Company, the percentage determined by dividing the Company’s EBITDA for such Fiscal Year by the quotient resulting from dividing (i) the Total Project Cost as of the beginning of such Fiscal Year (excluding any Project cost associated with any unopened portion of the Project), plus the Total Project Cost as of the end of such Fiscal Year (excluding any Project cost associated with any unopened portion of the Project), by (ii) the integer two (2).  (In the event that the Incentive Management Fee is payable in any year in which there are less than twelve (12) calendar months, then the Incentive Management Fee shall be calculated in such year utilizing the EBITDA for the actual months (or portions thereof) on an annualized basis, with the Return on Total Project Costs similarly being determined based on the first and last day of the applicable period, rather than a Fiscal Year).

“Section 3.8(a) Restrictions” has the meaning set forth in Section 3.8(a).

“Shared Expenses” means Parent’s, the Manager’s or their respective Subsidiaries’ (as the case may be) allocated out-of-pocket costs (not including any mark-up or other profit margin) for shared employees and for shared services related to the Project as approved by the Executive

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Committee (examples of Shared Expenses and method for allocating the same are set forth on Exhibit D).

“Station” has the meaning set forth in the introductory paragraph.

“Station Contribution” has the meaning set forth in the Recitals.

“Station EC Member” has the meaning set forth in Section 3.12.

“Station Officer” means the Chief Executive Officer, the President or any Executive Vice President of Parent.

“Station Pledgors” has the meaning set forth in Section 4.2(f).

“Station/Holding Capital Contribution” means each capital contribution that (a) Station is required to make to Holding pursuant to the terms of the Holding Operating Agreement and (b) which is designated in writing by Holding, at the time it makes the capital contribution call therefor, as an “Aliante Additional Capital Call” in accordance with the terms and conditions of the Holding Operating Agreement.

“Subsidiary” means, with respect to any Person, any other Person at least fifty percent (50%) of the economic or voting interest of which is owned by such Person.

“Tax Matters Member” has the meaning set forth in Section 3.9.

“TC” means that certain Title Commitment, No. 05-09-1341-DTL (1st Amendment), issued by the Nevada Title Company, dated as of November 17, 2005, at 7:30 a.m.

“Temporary Cell Tower Leases” means those temporary cell tower leases that encumber the Resort Property.

“Timetable” has the meaning set forth in Section 3.13(tt).

“Total Project Costs” means the total investment in the land, property, improvements, plant and equipment of the Project, in accordance with GAAP, plus pre-opening expenses, but excluding amortization and depreciation.

“Transfer” means, as a noun, any voluntary or involuntary transfer, sale, assignment, pledge, hypothecation or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell, assign, pledge, hypothecate or otherwise dispose of.

“Transition Period” has the meaning set forth in Section 4.2(h).

“Unsuitable Person” means the Company, Holding, Manager or an officer or EC Member of the Company, Parent, GC or an Affiliate of any such Persons, (i) who is denied or refused a Gaming License by any Gaming Authority in the State of Nevada, disqualified from eligibility for a Gaming License necessary for the ownership of or participation in non-restricted gaming in the State of Nevada, determined to be unsuitable to own or control a Membership Interest or

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determined to be unsuitable to be connected with a Person engaged in gaming activities in the State of Nevada by a Gaming Authority or otherwise fails to obtain a Gaming License necessary for the ownership of or participation in non-restricted gaming in the State of Nevada, or (ii) whose continued involvement in the business of the Company as a Member, Manager, officer, employee or otherwise, (A) causes the Company to lose or to be threatened with the reasonably likely loss of any Gaming License, or (B) is deemed likely, in the reasonable discretion of the EC Members and based on verifiable information or information received from the Gaming Authorities, to jeopardize or adversely affect the likelihood that the Gaming Authorities will issue a Gaming License to the Company or to adversely affect the Company’s use of or entitlement to any Gaming License or that of Holding, GC, Station or Parent, or any of their Affiliates.

“Voting Stock” means all issued and outstanding shares of a Person’s stock of any type, or class or any other security issued by such Person, entitling the holder of such stock or other security to vote for any member of such Person’s board of directors or otherwise with respect to the control and affairs of such Person.

“Withheld Taxes” has the meaning set forth in Section 4.5(b).

ARTICLE II

Formation

2.1           Formation.  The Company was formed by the filing of the Articles with the Nevada Secretary of State on December 16, 2005.

2.2           Name; Licenses.

(a)           Name.  The name of the Company is “Aliante Gaming, LLC,” and all business of the Company shall be conducted in such name or in any other name or names that are selected by the Manager with the prior approval of the Executive Committee.

(b)           License from Parent.  Subject to Executive Committee approval, the name of various portions of the Project may include some variation of the words “Station Casino,” and Parent shall license to the Company such name and all associated trademarks, logos and systems necessary for use in connection with the operation of the Project pursuant to a license agreement executed contemporaneously with this Agreement. On the Effective Date, Parent and the Company shall enter into a License and Support Agreement in substantially the form attached hereto as Attachment I. 

(c)           License from NVE.  Subject to Executive Committee approval, the name of various portions of the Project may include some variation of the word “Aliante,” and GC or its affiliate(s) shall license to the Company such name and all associated trademarks and logos necessary for use in connection with the operation of the Project pursuant to a license agreement executed contemporaneously with this Agreement.  On the Effective Date, GC shall cause North Valley Enterprises, LLC, an affiliate of GC (“NVE”), to enter into with the Company, and the Company shall enter into with NVE, a License Agreement in substantially the form attached hereto as Attachment II, or as otherwise agreed by the Executive Committee.

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2.3           Purposes and Powers.  The purpose of the Company is to develop and operate the Project.  In connection therewith, the Company shall have authority to engage in any lawful business, purpose or activity permitted by the Act, and it shall possess and may exercise all of the powers and privileges granted by the Act or which may be exercised by any limited liability company organized pursuant to the Act, together with any powers incidental thereto, so far as such powers or privileges are necessary or convenient to the conduct, promotion or attainment of the business, purposes or activities of the Company.

2.4           Registered Agent and Registered Office.  The Manager shall constitute the Company’s registered agent for purposes of the Act and the Manager shall maintain the registered office of the Company as required by the Act.  The address of the Company’s initial registered office shall be 2411 Sahara Avenue, Las Vegas, Nevada 89102.  In addition to any records required by the Act, the Manager shall maintain the following records at the registered office: (a) a current list of the full name and last known business address of Holding, as the sole Member, and the Manager; (b) a copy of the filed Articles and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any document has been executed; (c) copies of the Company’s federal, foreign, state and local income tax returns and reports, if any, for the three (3) most recent years; (d) copies of this Agreement and any amendments thereto; and (e) any financial statements of the Company for the three (3) most recent years.  The Company’s registered agent and office may be changed by the Executive Committee.

ARTICLE III

Management

3.1           The Manager.  Subject to this Agreement, the approval rights vested in the Executive Committee and Holding pursuant to this Agreement and any approval rights vested in the members of Holding, the sole responsibility and authority for the management of the Company is vested in the Manager, and the Manager shall have the complete right and authority to manage the business and affairs of the Company.  The rights, duties and obligations of Station as Manager are personal to Station based on Station and Parent’s unique experience and, except as expressly set forth in this Agreement, may not be transferred, assigned or delegated without the prior approval of the Executive Committee.  Except as limited in Section 3.7, any duly authorized officer of the Manager shall have the authority to act on behalf of the Manager.  Except as set forth in this Agreement, the Manager may not resign without the approval of the Executive Committee and may be removed only as expressly set forth in this Agreement.  Holding, in its capacity as the sole Member, shall not constitute an agent of the Company or have any authority to act for or bind the Company.  The EC Members agree that they shall use commercially reasonable efforts to cooperate with the Manager as reasonably requested by the Manager in carrying out its duties under this Agreement and in complying with any restrictions placed on Holding, the EC Members or the Company by any Gaming Authority.  Notwithstanding the foregoing, the Manager shall not have the authority to dissolve or liquidate the Company except in compliance with Article VI.

(a)           Standard of Care.  In conducting the management of the Company, the Manager shall (i) comply with the provisions of this Agreement, and (ii) act in good faith in a manner

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reasonably believed to be in the best interests of the Company and with the same care as a prudent person would exercise in the management of its own hotel and gaming properties.  Subject to the foregoing, the Manager may reasonably rely on information, opinions, reports or statements prepared or presented by officers, employees or other agents of the Company acting within the scope of their employment or by counsel, public accountants or other advisors to the Company.

(b)           Standard of Operation.  The Manager shall operate the Project (in its respective constituent components and taken as a whole) to a standard of operation at least as high as the standard of operations at the Parent’s or the Parent’s Subsidiaries’ larger, higher quality resorts (in their respective components and each taken as a whole) as of the Effective Date (such as Santa Fe Station Hotel & Casino and Sunset Station Hotel & Casino, but not including Green Valley Ranch Station Casino or Red Rock Resort Spa Casino), unless the Annual Plan and Operating Budget would not reasonably allow the maintenance of such standard of operation.

3.2           Expense of Construction; Matters Relating to Construction and Development; Matters Relating to Financing the Construction of the Project.

(a)             Subject to the Design, Development and Construction Budget approved by the Executive Committee, the Company shall pay the fees, costs and expenses of planning, constructing, financing, designing, equipping, decorating and furnishing the Project; provided, however, that all fees, costs and expenses of relocating the drainage easement on the Resort Property shall be the sole obligation, liability and responsibility of, and shall be paid solely by, GC and/or its Affiliates and shall not be an obligation, liability or the responsibility of Holding, the Company, Parent or Station.  The Parties agree that if the design of the Project does not accommodate the existing drainage easement at either its present location or an alternative location requested by GC and approved by the Executive Committee, such easement shall be relocated to the area designated on Exhibit H.

(b)           The Parties further agree as follows:

(i)            [Reserved.]

(ii)           Upon not less than thirty (30) days prior notice, the Manager, at the direction of the Executive Committee, may terminate the Temporary Cell Tower Leases at such time as the temporary cell tower facilities interfere with the development of the Project.  Following such termination, the Company shall enter into a permanent cell tower leases on commercially reasonable terms for the placement of permanent cell tower facilities at a location on the Resort Property reasonably approved by the Executive Committee.

(iii)          The Company shall assume such obligations, if any, to construct the extension of Elkhorn Road from Valley Drive to Clayton Street as were imposed on NVE as a condition to approval of the Master Transportation Study for the Aliante Master Development Planned Community which such condition was set forth as Item 5 in correspondence dated November 13, 2001, from the City of North Las Vegas, Nevada, to G.C. Wallace.

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(iv)          The Company shall enter into one or more unrecorded license agreements in form and substance approved by the Executive Committee with respect to the temporary placement of construction trailers and spoils (including caliche) stockpile on portions of the Resort Property by an Affiliate of GC and third parties.

(v)           Upon the expiration of the license agreements (or, if no such license agreements are entered into, upon not less than ninety (90) days’ prior written notice provided by the Company), GC shall cause all loose construction and other debris that is on the Resort Property on the Effective Date or placed thereon thereafter pursuant to such license agreements to be removed therefrom at the sole expense of GC.

3.3           Manager’s Duties During Pre-Opening Period.  During the Pre-Opening Period, the Manager shall make available to the Company and the EC Members its unique experience in the design and planning of modern hotels and casinos.  The Manager shall supervise the planning, designing, construction, equipping, decorating and furnishing of the Project.  Without limiting the foregoing, the Manager shall have the duties and responsibilities set forth on Schedule 3.3 during the Pre-Opening Period.

3.4           Manager’s Duties During Operating Period and With Respect to Expansion Projects.  During the Operating Period, the Manager shall provide to the Company all services customarily provided by Parent, Station or their respective Subsidiaries or Affiliates to other casinos owned or controlled by Parent, including financial, accounting, marketing, reservations, human resources and risk management services, shall afford the Company the benefit of group purchasing and similar services, and shall, subject to the Annual Plan and Operating Budget, take commercially reasonable steps to include the Company in such promotions being offered through Parent’s (or its Subsidiaries’ or Affiliates’) other casinos in the Las Vegas area.  In addition, the Manager shall provide the Company with the services of senior management personnel of Parent to the extent required to enable the Company to conduct its operations in accordance with Section 3.1(b).  Without limiting the foregoing, during the Operating Period, and, to the extent applicable, prior to the Operating Period, and for each Expansion Project, the Manager shall have the responsibilities and duties set forth on Schedule 3.4.

3.5           Compensation of the Manager.  In addition to other reimbursements expressly provided for in this Agreement, during the Operating Period but except for any period occurring after Station has been removed as Manager pursuant to Section 3.6(a), and subject to Section 3.6(b) and paragraph (k) of Schedule 3.4, the Company shall pay to Station when it is the Manager the amounts set forth below in this Section 3.5.

(a)           Base Management Fee.  The Company shall pay the Manager a Base Management Fee equal to two percent (2%) of the Company’s Gross Revenues for the applicable period.  The Base Management Fee for each Fiscal Year during the Operating Period will be paid in monthly installments in arrears immediately following the delivery of the Company’s financial statements for each Fiscal Month.  After the delivery of the Company’s audited financial statements for each Fiscal Year, appropriate adjustments shall be made for any overpayment or

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underpayment of Base Management Fees during such Fiscal Year on the next monthly installment of Base Management Fees due.

(b)           Incentive Management Fee.  In addition to the Base Management Fee, the Company shall pay the Manager an Incentive Management Fee in an amount equal to the sum (determined without duplication) of (i) five percent (5.0%) of the Company’s EBITDA during the Operating Period for the applicable Fiscal Year to the extent such EBITDA is positive and represents a Return on Total Project Cost of up to fifteen percent (15.0%), and (ii) ten percent  (10.0%) on that portion of the Company’s EBITDA during the Operating Period for such Fiscal Year that exceeds a fifteen percent (15.0%) Return on Total Project Costs; provided, however, that the Incentive Management Fee for any Fiscal Year shall not exceed an amount equal to five and four tenths percent (5.4%) of the Company’s EBITDA for the applicable Fiscal Year.  Five percent (5.0%) of the Company’s monthly EBITDA shall be paid monthly in arrears immediately following delivery of the Company’s financial statements for each Fiscal Month as a partial payment on the annual Incentive Management Fee.  After the delivery of the Company’s audited financial statements for each Fiscal Year, appropriate adjustments shall be made for any overpayment or underpayment of the Incentive Management Fees during such Fiscal Year on the next monthly installment of Incentive Management Fees due.

(c)           Expense Reimbursement.  The Company shall be responsible for all Operating Costs incurred in accordance with the terms and provisions of this Agreement, including the Annual Plan and Operating Budget, and will reimburse all such Operating Costs incurred thereby by or on behalf of the Manager, Holding, Parent, Station or GC pursuant to an approved Annual Plan and Operating Budget.

3.6           Removal of the Manager.

(a)           So long as GC is not in material breach of the provisions of the Holding Operating Agreement or this Agreement, the GC EC Member may give notice to the Manager that it desires to remove Station as the Manager:

(i)            upon thirty (30) days prior written notice in the event that Station defaults upon the making of any required Station/Holding Capital Contribution to Holding, if Station has not made such Station/Holding Capital Contribution within the time period required therefor under the Holding Operating Agreement, including any applicable cure period;

(ii)           upon not fewer than ten (10) days prior written notice in the event (A) Station’s Gaming License is revoked or is suspended for more than thirty (30) days in any calendar year (provided, however, that Station shall not act as Manager during any such period of revocation or suspension), (B) Station becomes Bankrupt, or (C) a trustee in bankruptcy is appointed for Parent, a receiver is appointed for substantially all of the assets of Parent, or Parent is Bankrupt and because of such Bankruptcy Station is unable to fulfill the material terms of its obligations as Manager; provided, however, that, in no event may the GC EC Member remove Station as Manager upon a determination that Station is an Unsuitable Person until the conditions contained in Clause (A) of this Clause

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(ii) have been satisfied; provided, further, for the time that Station is not acting as Manager, it shall not receive the compensation set forth in Section 3.5;

(iii)          upon thirty (30) days prior written notice in the event that Station engages in an act or omission that is grossly negligent, reckless or constitutes intentional misconduct, and such action or omission has a material adverse effect on the Company (including, but not limited to, the failure to comply with the covenant set forth in Paragraph (k) of Schedule 3.3); provided, however, that such termination shall be effective with respect to any such action or omission that is susceptible to complete cure (i.e., as if there has been no such action or failure to act) only if such action or failure to act has remained uncured at the end of such thirty (30) day period; or

(iv)          if Station no longer is a member of Holding.

The GC EC Member shall give Station notice of its desire to remove Station as Manager pursuant to Section 3.6(a) within sixty (60) days after the GC EC Member has actual knowledge of the events giving rise to the right to remove Station.  If the GC EC Member does not give such written notice within such sixty (60) day period, then the GC EC Member shall not have a right to remove Station based on the grounds for which it had such actual knowledge; provided, however, that nothing herein shall prevent the GC EC Member from removing Station if it subsequently has actual knowledge of further ground(s) for removal.

(b)           Notwithstanding that the GC EC Member may not have grounds to remove Station as the Manager pursuant to Section 3.6(a), the GC EC Member nonetheless may bring an action on its own behalf or on behalf of the Company, at law, equity or pursuant to other available remedies against Station as the Manager for breach of its material obligations hereunder (including, but not limited to material breach of the standards of care and operation) as the Manager and for any damages or other costs incurred by the GC EC Member or the Company as a result of such breach, including, but not limited to, during the design and construction phase of the Project.  The Company may offset any final non-appealable judgment against the Manager against any fees owed Manager pursuant to Section 3.5.

(c)           In the event that Station is removed as Manager, Station shall have the right to require GC to acquire Station’s entire membership interest in Holding as provided for in the Holding Operating Agreement.

3.7           Officers.  Subject to applicable provisions of the Gaming Laws, the Manager shall have the authority to appoint and remove, in its sole discretion, Persons serving as operating (as opposed to corporate) officers of the Company subordinate to the General Manager and to delegate to such Persons such duties and responsibilities as the Manager shall deem to be in the best interests of the Company (except that the Manager shall not be permitted to delegate the essential management and supervisory functions of the General Manager).  All such appointments and delegations may be revocable at will by the Manager.  Notwithstanding the foregoing, the Company shall engage a Construction Manager approved by the Executive Committee at all times during the Pre-Opening Period, an Expansion Project Construction Manager during the period of the construction of any Expansion Project and a General Manager approved by the Executive Committee at all times during the Operating Period.  Either EC

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Member may require the Manager to discharge the Construction Manager, Expansion Project Construction Manager or the General Manager in the event that, after notice from the Manager to such Person and a sixty (60) day opportunity to cure, such Person’s performance is unsatisfactory to such EC Member.  The second request by the same EC Member to discharge the Construction Manager, Expansion Project Construction Manager or the General Manager shall result in termination of such Person by the Manager without further notice or opportunity to cure.  If any Person appointed to serve as an officer of the Company is found to be an Unsuitable Person, the Manager shall immediately remove such person as an officer and such Person shall thereupon automatically cease to be an officer.

3.8           Conflicts of Interest; Right to Participate.

(a)           Until the fifth (5th) anniversary of the date of the Opening (the “Restricted Period”), (i) none of the Fertitta Persons, whether alone or with other Persons, shall, directly or indirectly, own, develop, manage or operate all or any portion of any hotel and/or casino (other than an Exempt Property) within the Restricted Area and (ii) none of the Greenspun Persons, whether alone or with other Persons, shall, directly or indirectly, own, develop, manage or operate all or any portion of any hotel and/or casino (other than an Exempt Property) within the Restricted Area (either of the foregoing (i) or (ii) being referred to herein as a “Restricted Activity”) (the restrictions set forth in this Section 3.8(a) are referred to herein as the “Section 3.8(a) Restrictions”); provided, however, that:

(A)          the Section 3.8(a) Restrictions shall not apply to the Losee Property;

(B)           the Section 3.8(a) Restrictions shall not apply to any New Property (as defined in and) subject to the Holding Operating Agreement; and

(C)           the Section 3.8(a) Restrictions shall not prohibit the Greenspun Persons from collectively and in the aggregate owning less than five percent (5%) of the publicly traded Voting Stock of a company involved in a Restricted Activity, or prohibit Parent, and the Fertitta Persons from collectively and in the aggregate owning less than five percent (5%) of the publicly traded Voting Stock of a company involved in a Restricted Activity, in both cases only so long as such investment is passive and without any ability or intent to exercise influence or control over the management or direction of the entity in which the Voting Stock is owned.

(b)           Subject to the Section 3.8(a) Restrictions, during the Restricted Period, a Fertitta Person, alone or with other Fertittta Persons and/or with other Persons, or a Greenspun Person, alone or with other Greenspun Persons and/or with other Persons, may acquire an interest, directly or indirectly, in whole or in part, in real property located entirely or partially within the Restricted Area, only if such Fertitta Person(s) or Greenspun Person(s), as the case may be, comply(ies) with each and all of the requirements with respect thereto set forth in the Holding Operating Agreement.

(c)           Subject to Sections 3.8(a) and 3.8(b) and any restrictions or conditions set forth in the Holding Operating Agreement, each Fertitta Person and each Greenspun Person shall be entitled to enter into any transaction that may be considered to be competitive with, or a business

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opportunity that may be beneficial to, the Company or to Holding.  Any transactions or agreements (other than transactions or agreements expressly contemplated by this Agreement, including reimbursement of Shared Expenses, as long as such transactions are otherwise in compliance with this Agreement) between the Fertitta Persons and the Greenspun Persons (on the one hand) and the Company (on the other) (any such transaction referred to herein as an “Affiliate Transaction”) shall be disclosed to the EC Members and members of Holding in advance and shall be on commercially reasonable, arms-length terms that are no less favorable to the Company or Holding than could be obtained from an independent third party.  No transaction with the Company shall be voidable solely because a Fertitta Person or a Greenspun Person has a direct or indirect interest in the transaction if either (i) the transaction is fair to the Company or (ii) the disinterested Manager or the disinterested EC Member, in either case knowing the material facts of the transaction and the Fertitta Person’s or Greenspun Person’s interest, authorize, approve or ratify the transaction.  Notwithstanding the foregoing, any loans to the Company by a Fertitta Person, a Greenspun Person or one or more of their Affiliates shall require the approval of the Executive Committee pursuant to the terms of this Agreement.

(d)           The Parties acknowledge that an Affiliate of GC shall be the “declarant” under the declaration of covenants, conditions and restrictions affecting the Resort Property, and that the “declarant” may take actions that are inconsistent with this Agreement, or not in the best interest of the Company, and Holding and GC shall not be in breach hereof by reason of such actions and “declarant” shall not have any duty under this Agreement to Station, Parent, Holding or the Company; provided, however, that nothing in this Section 3.8(d) shall permit such Affiliate “declarant” to engage in a Restricted Activity.

(e)           The Section 3.8(a) Restrictions shall survive the withdrawal, expulsion or other termination of GC or Station as a member of Holding, through the earlier to occur of the date that is five (5) years after the date of the Opening or three (3) years after the withdrawal, expulsion, buyout or termination of GC or Station as a member of Holding.  The rights afforded the parties in Section 3.8(b) hereto and the applicable provisions of the Holding Operating Agreement shall not apply to any real property acquired by a Fertitta Person or a Greenspun Person after the date of withdrawal, expulsion, buy-out or other termination of GC or Station as a member of Holding; provided, that any such real property shall remain subject to the Section 3.8(a) Restrictions as provided in the preceding sentence.

3.9           Tax Matters Partner.  Holding is hereby designated as the “tax matters partner” of the Company under Code Section 6231(a)(7) (the “Tax Matters Member”).  The Tax Matters Member shall give prompt notice to Holding of (i) the receipt by the Tax Matters Member of written notice that a federal, state or local taxing authority intends to examine the Company’s income tax returns for any year; (ii) receipt by the Tax Matters Member of written notice of a final partnership administrative adjustment under Code Section 6223; and (iii) receipt by the Tax Matters Member of any request from the Internal Revenue Service for waiver of any applicable statute of limitations with respect to any tax return of the Company.  The Tax Matters Member may not extend or waive the statute of limitations or take any other action that would compromise any tax position of the Company or Holding, without the approval of the Holding, GC or Station.

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3.10         Liability of Holding, as a Member, and Station, as Manager.  Except as otherwise provided by the Act, (a) Holding (and its members) shall not be obligated personally for any debt, obligation or liability of the Company, solely by reason of being the sole Member, and (b) Station, as the Manager, shall not be obligated personally for any debt, obligation or liability of the Company or any Member solely by reason of being the Manager.  Except as otherwise provided in this Agreement or by applicable law, neither Holding, as the sole Member, nor the Manager shall have any fiduciary or other duty to the Company or Holding with respect to the business and affairs of the Company.  The Company shall indemnify Holding (and each of its members) and hold Holding (and its members) harmless from and against any and all debts, obligations, and liabilities of the Company, if any, to which Holding(or any of its members) becomes subject solely by reason of being a Member (or a member of Holdings), whether arising in contract, tort or otherwise; provided, however, that the indemnification obligation of the Company under this Section 3.10 shall be paid only from the assets of the Company .

3.11         Prohibition Against Publicly Traded Partnership.  The Manager shall take all action necessary to prevent the Company from qualifying as a publicly traded partnership within the meaning of Section 7704 of the Code.

3.12         The Executive Committee.  There shall be an executive committee (the “Executive Committee”) of the Company comprised of one (1) representative of each of Station (the “Station EC Member”)  and GC (the “GC EC Member”), so long as such Persons remain as members of Holding.  The initial Station EC Member designated by Station shall be Frank J. Fertitta III, and the initial GC EC Member designated by GC shall be Brian L. Greenspun so long as they are alive and not disabled and are not found to be Unsuitable Persons.  Station and GC shall designate their respective replacement appointees to the Executive Committee in writing to the Company and Holding and, except as set forth in the immediately preceding sentence, GC and Station may remove their respective EC Members at any time by written notice to the other parties.  Subject to Section 4.3(c) of the Holding Operating Agreement, at all times the GC EC Member shall be a Greenspun Family Member, and the Station EC Member shall be either a Fertitta Family Member or a Station Officer.  Subject to Section 4.3(c) of the Holding Operating Agreement, at any time a vacancy is created on the Executive Committee by death, removal (with or without cause) or resignation, no action shall be taken by the Executive Committee until the Executive Committee is reconstituted in accordance with the provisions of this Section 3.12, unless the member of Holding that is entitled to nominate such replacement member of the Executive Committee shall consent to the taking of such action.  In the event of a Transfer permitted pursuant to Section 5.2(a) of Holding’s entire Membership Interest, the transferee shall have the power to remove the existing EC Member(s) and appoint one (1) or more replacement EC Members; provided, however, that if Station continues to serve as the Manager following such transfer, the transferee’s proposed replacement EC Member(s) must be approved, in advance, by Station.  If any Person appointed to serve as an EC Member is found to be an Unsuitable Person, such Person shall immediately be removed as an EC Member and shall thereupon automatically cease to be an EC Member.

3.13         Decisions Subject to Executive Committee Approval.  Notwithstanding the powers of the Manager pursuant to Section 3.1, the following matters shall require the prior unanimous approval of the Executive Committee:

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(a)           Any contracts, agreements (whether written or oral) or commitments (including leases of Furniture, Fixtures and Equipment) which (i) obligate the Company for a period of more than one (1) year, and (ii) subject to the Company to potential liability or payments of $250,000 or more (including any extensions thereof);

(b)           Any sale of any portion of the assets of the Company having a fair market value of $500,000 or more;

(c)           The terms of the Construction Financing, any Expansion Financing and Permanent Financing, together with the terms of any other financing for the improvement, construction or operation of the Project (including lease/purchase or similar financing transactions) which subjects the Company to principal and interest payment obligations equaling or exceeding $1,000,000 in any Fiscal Year;

(d)           Any decision (i) to approve an Expansion Project Loan Document, (ii) to amend or waive any material provisions of Construction Loan Documents, Expansion Project Loan Documents or Permanent Loan Documents, (iii) that is reasonably likely to cause an event of default under the Construction Loan Documents, Expansion Project Loan Documents or Permanent Loan Documents, (iv) that is reasonably likely to materially expand the liability of, or materially diminish the rights of, the Company under the Construction Loan Documents, Expansion Project Loan Documents or Permanent Loan Documents, (v) to acquire any portion of the loans (whether revolving or term) under the Construction Financing, Expansion Financing or Permanent Financing, whether by assignment, purchase, participation or otherwise, (vi) to engage in an acquisition (as such term may be defined in any financing documents), or (vii) that has the effect of extending the maturity of any of the obligations under any financing documents;

(e)           If any Construction Financing, Expansion Financing or Permanent Financing permits the Company to increase the aggregate amount of the facility beyond the dollar amount determined by the Executive Committee at the time it approves such Construction Financing, Expansion Financing or Permanent Financing, then the Company may not draw upon any amount in excess of such specified dollar amount without Executive Committee approval;

(f)            The Company shall not permanently reduce any portion of any Construction Financing, Expansion Financing or Permanent Financing more quickly than the required payment and amortization schedule stated in the Construction Loan Documents, Expansion Project Loan Documents or Permanent Loan Documents without the prior written approval of the Executive Committee;

(g)           Any lease termination or acquisition of a tenant’s business that exceeds $250,000;

(h)           Each Annual Plan and Operating Budget and any amendments thereto;

(i)            The value of any Capital Contribution made in property other than money;

(j)            The individual to be retained as the Construction Manager;

(k)           The general contractor, and the construction, architectural, interior design and landscaping firms for the Project;

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(l)            The Construction Plan (which may be approved as a whole or in segments or by components);

(m)          The Design Plan and the Design, Development and Construction Budget (each of which may be approved as a whole or in segments or by components);

(n)           With respect to each and every Expansion Project, the Expansion Project Budget, Expansion Project Construction Manager, Expansion Project Construction Plan and Expansion Project Design Plan;

(o)           The individual to be retained as the General Manager;

(p)           The material terms and conditions of all Governmental Approvals (other than Gaming Licenses and liquor licenses); provided, however, that if neither EC Member notifies the Manager within seven (7) calendar days after receipt of a written request for approval of a material term of any Governmental Approval that he objects to such term, the Executive Committee shall be deemed to have approved such material term;

(q)           Approval of the resignation of the Manager required pursuant to Section 3.1, and  appointment of a successor Manager;

(r)            The Master Development Plan (which may be approved as a whole or in segments or by components);

(s)           The type and estimated amount of Shared Expenses and method for calculation of such Shared Expenses;

(t)            The adoption of and any amendments to the Pre-Opening Plan;

(u)           The name(s) under which the Company will conduct business;

(v)           Any change to the registered agent and/or office;

(w)          Any loans to the Company by Holding or an Affiliate of Holding;

(x)            The form, amount and timing of any additional Capital Contributions;

(y)           [Reserved];

(z)            Subject to first obtaining the prior approval of all of the members of Holding, admission of a new Member pursuant to Section 5.1, Transfers pursuant to Section 5.2(a) and each and all of the amendments to this Agreement required, necessary or desirable to give effect to the admission of such new Member or such Transfer;

(aa)         The time, date, location, matters to be addressed, manner and effectiveness of notices, quorum requirements, voting requirements, waiver of notice of, the rules regarding written consents in lieu of and all other matters relating to meetings of EC Members and the Members;

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(bb)         [Reserved];

(cc)         Any change order that materially changes the Design Plan, Construction Plan, Design, Development and Construction Budget or Master Development Plan; provided, however, that if neither EC Member notifies the Manager within seven (7) calendar days after receipt of a written request for approval of such change order that he objects to such change order, the Executive Committee shall be deemed to have approved such change order;

(dd)         Capital Improvements and Replacements and expenditures therefor;

(ee)         Any decision to contest the validity or application of any governmental requirement;

(ff)           Entering into any union contracts;

(gg)         Any decision to contest any tax payment or assessment or any governmental or regulatory order or requirements;

(hh)         The accounting firm to be retained to perform the audits of the Company’s annual financial statements;

(ii)           Establishment of reserve funds in addition to the Reserve Fund;

(jj)           Any tenant, licensee or concessionaire and the terms of the leases, licenses or other occupancy agreements with respect thereto;

(kk)         The decision to commence or defend any legal action (or settlement thereof) where there is a reasonable possibility of exposure to the Company in excess of $250,000 or that could have a material adverse effect on the operation of the Project; provided, however, that if neither EC Member notifies the Manager within seven (7) calendar days after receipt of a written request for approval of the institution of such action or defense (or settlement thereof), the Executive Committee shall be deemed to have approved such action;

(ll)           Retaining legal counsel with respect to such actions described in Clause (kk);

(mm)       The establishment of parameters within which the Manager may make change orders with respect to any Expansion Project without the approval of the Executive Committee;

(nn)         Subject to first obtaining the prior approval of all of the members of Holding, dissolution of the Company pursuant to Section 6.1(a);

(oo)         Any permitted encumbrances in addition to the Permitted Exceptions (as defined in the Holding Operating Agreement);

(pp)         Any material change to the interior or exterior use, operation, functionality or appearance of the Project; provided, however, that if neither EC Member notifies the Manager within seven (7) calendar days after receipt of a written request for approval of such material

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change that the EC Member objects to such material change, the Executive Committee shall be deemed to have approved such material change;

(qq)         (i) Filing or causing to be filed any petition, action or an assignment by or on behalf of the Company for the benefit of creditors or in Bankruptcy or for similar relief under any statute, law or regulation, (ii) admitting or failing to contest the material allegations of a petition filed against the Company in any proceeding for reorganization, involuntary Bankruptcy or other similar proceeding or (iii) appointing, consenting to or acquiescing to the appointment of a trustee, receiver or liquidator of the Company;

(rr)           The terms and conditions of the acquisition, and the acquisition, of the Additional Property;

(ss)         The preliminary conceptual architectural design for the Project (not including any Expansion Projects), which the EC Members shall use their best efforts to agree on within six (6) months of the Effective Date;

(tt)           The preliminary timetable for construction and opening of the Project (the “Timetable”) (not including any Expansion Projects), which the EC Members agree to use best efforts to agree on within six (6) months of the Effective Date;

(uu)         The preliminary construction budget for the Project (not including any Expansion Projects), which the EC Members shall use their best efforts to agree on within six (6) months of the Effective Date;

(vv)         The term sheet for the Construction Financing and Permanent Financing for the Project, which the EC Members shall use their best efforts to agree upon, and to obtain written expressions of interest from one or more lenders interested in providing such financing to the Company, within six (6) months of the Effective Date; and

(ww)       Subject to first obtaining the prior approval of all of the members of Holding, approval of a Restricted Activity by a Person;

(xx)          Subject to first obtaining the prior approval of all of the members of Holding, approval of an Affiliate Transaction which is not on commercially reasonable terms no less favorable to the Company than could be obtained from an independent third party;

(yy)         Subject to first obtaining the prior approval of all of the members of Holding, amendments to the Articles and any amendment of this Agreement;

(zz)          Subject to first obtaining the prior approval of all of the members of Holding, any sale of the business or substantially all of the assets of the Company, or merger of the Company in which the Company is not the surviving entity and Holding does not hold a majority of the Voting Stock of the entity surviving such merger, which sale or merger is not an arms-length bona fide fair market value transaction; and

(aaa) Any other decision reserved to, or approval required by, the Executive Committee pursuant to this Agreement.

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3.14         Place of Meetings and Meetings by Telephone.  All meetings of the Executive Committee may be held at any place that has been designated from time to time by resolution of the EC Members.   In the absence of such a designation, regular meetings shall be held at the principal place of business of the Company.  Any meeting, regular or special, may be held by conference telephone or similar communications equipment so long as all EC Members participating in the meeting can hear one another, and all EC Members participating by telephone or similar communications equipment shall be deemed to be present in person at the meeting.

3.15         Regular Meetings.  The Executive Committee shall not be required to have regular meetings, except as otherwise determined by the Executive Committee.

3.16         Special Meetings.  Special meetings of the Executive Committee for any purpose or purposes may be called at any time by one (1) EC Member.  Notice of the time and place of a special meeting shall be given and deemed received pursuant to Section 8.1.

3.17         Quorum.  All of the EC Members shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.20.

3.18         Manner of Acting.  Every act or decision of the Executive Committee shall require the affirmative unanimous approval of all of the EC Members.

3.19         Waiver of Notice.  Notice of any meeting of the Executive Committee need not be given to any EC Member who either before or after the meeting signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes.  The waiver of notice or consent need not specify the purpose of the meeting.  All such waivers, consents, and approvals shall be filed with the records of the Company or made a part of the minutes of the meeting.  Notice of a meeting shall also be deemed given to any EC Member who attends the meeting without protesting before or at its commencement the lack of notice to that EC Member.

3.20         Adjournment.  If a quorum is not present, any EC Member present (including all EC Members participating as permitted by Section 3.14), whether or not constituting a quorum, may adjourn any meeting to another time and place.  Notice of the time and place of holding an adjourned meeting need not be given unless the meeting is adjourned for more than forty eight (48) hours, in which case notice of the time and place shall be given before the time of the adjourned meeting in the manner specified in Section 3.16.

3.21         Action Without a Meeting.  Any action to be taken by the Executive Committee at a meeting may be taken without such meeting by the written consent of all of the EC Members.  Any such written consent may be executed and given by telecopy or similar electronic means.

3.22         Resignation.  Any EC Member may resign at any time by giving written notice to the other EC Member, the Company, Holding, Station and GC.  The resignation of any EC Member shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

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3.23         Removal.  An EC Member may only be removed pursuant to Section 3.12 or as provided for in the Holding Operating Agreement.

3.24         Vacancies.  A vacancy on the Executive Committee may only be filled in accordance with Section 3.12.

3.25         Compensation to EC Members.  The EC Members shall receive no compensation, but shall be reimbursed for their reasonable and customary expenses incurred in attending meetings of the Executive Committee.

3.26         Liability to Third Parties.  The debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the Company, and no EC Member or the Manager shall be obligated personally for any such debt, obligation, or liability by reason of his or her acting as an EC Member or, except as otherwise provided in this Agreement, as the Manager.

3.27         No Guarantee of Return by EC Members.  The EC Members and the Manager do not, in any way, guarantee the return of any Capital Contributions or a profit for Holding from the operations of the Company.  Except as set forth in Section 3.8, the EC Members shall incur no liability to the Company or to Holding as a result of engaging in any other business or venture.  The EC Members shall be entitled to any other protection afforded to such EC Members under the Act.

3.28         Transactions with Company or Otherwise.  Subject to Section 3.8, the EC Members, or any agent, servant, or employee of the EC Members, may engage in and possess any interest in other businesses or ventures of every nature and description, independently or with other Persons, and neither the Company nor Holding shall have any rights, by virtue of this Agreement or otherwise, in and to such independent ventures or the income or profits derived therefrom, or any rights, duties, or obligations in respect thereof.

3.29         Indemnification.  To the fullest extent permitted by the Act:

(a)           The Company (and any receiver, liquidator, or trustee of, or successor to, the Company) shall indemnify and hold harmless the Manager and each EC Member, as well as each Affiliate of the Manager and the EC Members and their respective officers, partners, shareholders, directors, managers, members and employees (each an “Indemnitee”), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, proceedings, costs, expenses and disbursements of any kind or nature whatsoever (“Claims”) (including, without limitation, all reasonable costs and expenses of defense, appeal and settlement of any and all suits, actions and proceedings involving an Indemnitee, and all costs of investigation in connection therewith) that may be imposed on, incurred by, or asserted against an Indemnitee, in any way relating to or arising out of, or alleged to relate to or arise out of the performance of any duties or services by or on behalf of the Company or any action, inaction or omission on the part of an Indemnitee in connection with managing the Company’s business and affairs or otherwise acting as Manager or the EC Members pursuant hereto; provided, however, that the indemnification obligations in this Section 3.29 shall not apply to Claims brought by Holding or the Manager; provided, further, that the indemnification

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obligations in this Section 3.29 shall not apply to the portion of any liability, obligation, loss, damage, penalty, cost, expense or disbursement that has been finally adjudged in a non-appealable order of court of competent jurisdiction to have resulted from (i) the gross negligence of the Manager, (ii) the intentional misconduct or actual fraud by the proposed Indemnitee or (iii) any action for which indemnification is prohibited under the Act.

(b)           The Company shall pay expenses as they are incurred by an Indemnitee in connection with any action, claim or proceeding that such Indemnitee asserts in good faith to be subject to the indemnification obligations set forth herein, upon receipt of an undertaking from such Indemnitee to repay all amounts so paid by the Company to the extent that it is finally determined that the Indemnitee is not entitled to be indemnified therefor under the terms hereof.

(c)           The indemnification and expense payments to be provided by the Company hereunder shall be paid only from the assets of the Company, and Holding shall not have any personal obligation, or any obligation to make any Capital Contribution, with respect thereto.

ARTICLE IV

Financial Matters

4.1           Initial Capital Contributions.  Holding will not be required to make an initial Capital Contribution to the Company on the Effective Date.  Holding’s opening Capital Account balance on the Effective Date shall be $50,000,000.

4.2           Additional Capital Contributions.

(a)           Except as set forth in this Section 4.2, as determined by the Executive Committee (after using commercially reasonable efforts to obtain third-party loans) or as set forth in any “make-well,” completion guaranty or similar obligation to which Holding becomes subject pursuant to the terms of the Construction Financing, Expansion Financing or Permanent Financing, Holding shall not be required to make any Capital Contribution.  Any additional Capital Contributions pursuant to this Section 4.2 shall be made by Holding as of the date that such Capital Contribution is required to be made pursuant to the terms of this Agreement, in such form and amount as may be determined by the Executive Committee.  In connection with any such additional Capital Contribution, the Company may revalue Holding’s Capital Account in accordance with Section 1.704-1(b)(2)(iv)(f) of the Regulations.  Except as expressly provided in this Agreement, Holding shall not be entitled to withdraw as a Member or to demand or receive a return of its Capital Contribution.  No obligation of Holding to make any Capital Contribution hereunder may be enforced by a creditor of the Company unless Holding expressly consents to such enforcement or to the assignment of such obligation to such creditor.

(b)           Holding shall make such additional Capital Contributions to the Company as are required to be made pursuant to the terms of this Agreement upon thirty (30) days’ prior written notice from the Executive Committee specifying (i) the amount and intended use of such Capital Contribution and (ii) the date on which such Capital Contribution is to be made.  The EC Members agree to use their best efforts to agree, within nine (9) months of the Effective Date, on the amounts of Holding’s additional Capital Contribution obligations for the construction of the

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Project, based on the preliminary construction budget, and, subject to reaching such agreement, Holding acknowledges and agrees that, until the Construction Financing closes, it will make additional Capital Contributions, loans or advances, or any combination thereof, to fund construction of the Project in excess of its initial Capital Contribution.  Loans, advances and capital contributions in excess of Holding’s initial Capital Contribution are collectively referred to herein as the “Excess Construction Contributions.”  In the event the Company obtains Construction Financing and such Construction Financing permits the Company to distribute money from the proceeds of such Construction Financing to Holding, then, notwithstanding anything in this Agreement to the contrary (but subject to the terms of the Holding Operating Agreement)), the Executive Committee will cause the Company, to the maximum extent permitted by the Construction Financing (consistent with prudent business judgment and reasonable reserves), to distribute to Holding (either as a return of capital contributions or repayment of loans or advances, as the case may be) amounts of Distributable Cash equal to the aggregate amount of Excess Construction Contributions.

(c)           If any EC Member determines that reasonable financing is unavailable to meet the requirements of the current approved Annual Plan and Operating Budget, then the Executive Committee, upon thirty (30) days’ prior written notice specifying the amount of such Capital Contribution and the date on which such Capital Contribution is to be made, may demand an additional Capital Contribution from Holding to fund such current requirements, which shall be made by Holding as of the date that such Capital Contribution is required to be made pursuant to the terms of this Agreement; provided, however, the aggregate amount of such additional Capital Contributions pursuant to this Section 4.2(c) shall not exceed $20,000,000, in the aggregate, over the term of this Agreement.

(d)           If the revenues of the Project are insufficient to fund the Reserve Fund during any Fiscal Month, then any EC Member, upon thirty (30) days’ prior written notice specifying the amount of such Capital Contribution and the date on which such Capital Contribution is to be made, may demand an additional Capital Contribution from Holding to fund such Reserve Fund shortfall, which shall be made by Holding as of the date that such Capital Contribution is required to be made pursuant to the terms of this Agreement; provided, however, the aggregate amount of such additional Capital Contributions pursuant to this Section 4.2(d) shall not exceed in any Fiscal Year the difference between three percent (3%) of Gross Revenues for such Fiscal Year (or partial Fiscal Year to date) less the Reserve Fund previously funded in such Fiscal Year.  Within one hundred twenty (120) days after the end of the applicable Fiscal Year, if any additional Capital Contributions were made pursuant to this Section 4.2(d) in such Fiscal Year, the Company shall distribute to Holding the positive amount, if any, equal to the difference between (x) the sum of (I) the amounts reserved from revenues by the Company for the Reserve Fund plus (II) all additional Capital Contributions made pursuant to this Section 4.2(d) in such Fiscal Year, less (y) an amount equal to three percent (3%) of Gross Revenues for such Fiscal Year.

(e)           The Company acknowledges and understands that it is Holding’s intent to fund all additional Capital Contributions to the Company, if any, solely with and from GC/Holding Capital Contributions and Station/Holding Capital Contributions to Holding and that, if GC or Station fails to fund its GC/Holding Capital

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Contributions or Station/Holding Capital Contributions, Holding may not have sufficient funds from other sources to fund its Additional Capital Contributions.

(f)            Holding acknowledges that it, Parent, Station, GC and/or Affiliates of GC (“GC Affiliates”) may execute “make-well” agreements, completion guaranties, pledge agreements, indemnity agreements, or similar surety or guaranty documents in connection with the Construction Financing, any Expansion Financing, and/or the Permanent Financing (individually a “Pledge/Guaranty Document” and collectively the “Pledge/Guaranty Documents”; GC and GC Affiliates collectively hereinafter may be referred to as the “GC Pledgors;” and Station and Parent together hereinafter may be referred to as the “Station Pledgors”).

In the event that (i) Holding is required to make a payment to the lender(s) with respect to an applicable Pledge/Guaranty Document, (ii) any collateral of Holding is pledged thereunder is foreclosed or transferred in lieu of foreclosure or (iii) any dividends or distributions with respect to any pledged collateral of Holding is used to make a payment to the lender(s) on behalf of the Company, the Station Pledgors or the GC Pledgors with respect to any Pledge/Guaranty Document, then the amount credited against (or used to reduce) amounts owed by the Company, Holding, the Station Pledgors or the GC Affiliates under the Construction Loan Documents, Expansion Project Loan Documents, Permanent Loan Documents or the Pledge/Guaranty Documents as a result of the foreclosure or transfer of the collateral shall be deemed an additional Capital Contribution by Holding to the Company for purposes of this Agreement.

In the event that (i) any GC Pledgor is required to make a payment to the lender(s) with respect to an applicable Pledge/Guaranty Document, (ii) any collateral of a GC Pledgor pledged thereunder is foreclosed or transferred in lieu of foreclosure or (iii) any dividends or distributions with respect to any pledged collateral of any GC Pledgor is used to make a payment to the lender(s) on behalf of the Company, Holding, the Station Pledgors or the GC Pledgors with respect to any Pledge/Guaranty Document, then the amount credited against (or used to reduce) amounts owed by the Company, Holding, the Station Pledgors or the GC Pledgors under the Construction Loan Documents, Expansion Project Loan Documents, Permanent Loan Documents or the Pledge/Guaranty Documents as a result of the foreclosure or transfer of the collateral shall be deemed an additional Capital Contribution by GC to Holding and then by Holding to the Company for purposes of this Agreement.

In the event that (i) any Station Pledgor is required to make a payment to the lender(s) with respect to an applicable Pledge/Guarantee Document, (ii) any collateral of a Station Pledgor pledged thereunder is foreclosed or transferred in lieu of foreclosure or (iii) any dividends or distributions with respect to any pledged collateral of a Station Pledgor is used to make a payment to the lender(s) on behalf of the Company, Holding, a Station Pledgor or a GC Pledgor with respect to any Pledge/Guaranty Document, then the amount credited against (or used to reduce) amounts owed by the Company, Holding, the Station Pledgors or the GC Pledgors under the Construction Loan Documents, Expansion Project Loan Documents, Permanent Loan Documents or the Pledge/Guaranty Documents as a result of the foreclosure or transfer of the collateral shall be deemed an additional Capital Contribution by Station to Holding and then by Holding to the Company for purposes of this Agreement.

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(g)           Holding acknowledges that it, the Company, the Station Pledgors or the GC Pledgors may, under the Construction Financing, Expansion Financing or Permanent Financing, have the right to pledge additional collateral (including cash) to cure the default (a “Curable Default”) of one (1) of the Company, Holding, the Station Pledgors or the GC Pledgors under other loan documents or by reason of Bankruptcy or a similar event (a “Cure Pledge”).  In the event that a Curable Default by the Company, Holding, the Station Pledgors or the GC Pledgors occurs, then Station and Parent in the case of a Curable Default by a Station Pledgor, and GC and the GC Affiliates in the case of a Curable Default by a GC Pledgor, shall have ten (10) days from such Curable Default to make the Cure Pledge.  If they fail to do so, then the GC Pledgors in the case of the failure by a Station Pledgor, and the Station Pledgors in the case of the failure by a GC Pledgor, may make the Cure Pledge (the party failing to cure being the “Cross-Default Party,” the party making such pledge being the “Curing Party,” and the collateral pledged being the “Cure Collateral”). The Cross-Default Party shall indemnify and hold harmless the other parties from the cost of curing the Curable Default, such as reasonable attorneys’ fees, escrow costs, and filing fees, but expressly excluding the opportunity cost of such cure (e.g., the lost opportunity for other uses of the Cure Collateral), but expressly including the fair market value of the Cure Collateral valued as of the date of the pledge if the same is foreclosed or conveyed in lieu of foreclosure (the “Collateral’s Fair Market Value”).  If the Cure Collateral is foreclosed or otherwise conveyed in lieu of foreclosure, the party who pledged the Cure Collateral (or on whose behalf the Cure Collateral was pledged) may elect to treat the Collateral’s Fair Market Value as a Default Amount (as defined in the Holding Operating Agreement) or Default Loan (as defined in the Holding Operating Agreement).  In the event that a Curing Party makes a Cure Pledge, then the Cross-Default Party shall, for so long as such Cure Pledge is outstanding, on each annual anniversary date of such pledge, pay to the other Curing Party an amount equal to the lesser of (i) ten percent (10%) of the Collateral’s Fair Market Value, or (ii) the maximum permitted by law (the “Cure Cost of Capital”); such payment shall be prorated for any partial year that the Cure Pledge is outstanding.  In the event the Cure Cost of Capital is not paid when due, it shall, at the election of the non-defaulting party, constitute either a Default Amount or Default Loan under this Agreement.

(h)           In the event of the expulsion of Station as a member of Holding, or a dilution of Station under Section 4.2(f) of the Holding Operating Agreement, Station may give written notice to GC that it desires to resign as Manager; provided, however, Station shall, if requested by GC, be obligated to serve as the Manager for a period of up to thirty six (36) months (the “Transition Period”) after the expulsion or Dilution Date, during which time Station shall continue to perform its obligations hereunder and continue to receive compensation and expense reimbursement pursuant to Section 3.5, and will cooperate with GC in its efforts to engage a successor Manager of the Project.  Notwithstanding the foregoing to the contrary, Station may not resign as Manager without GC’s prior written consent (which may be given or withheld in GC’s sole discretion) if such resignation would cause a termination of the commitment for or an acceleration of the Construction Financing, Expansion Financing or Permanent Financing.

4.3           [Reserved.]

4.4           Allocation of Profits and Losses.   As long as the Company has only one Member, the Company shall be treated as a “disregarded entity” for federal income tax purposes and the sole Member shall be treating as recognizing directly the Company’s Profits and Losses and all

35

items entering into the computation thereof.  If the Company has more than one (1) Member, this Agreement will be appropriately amended including, inter alia, as reasonably necessary to comply with the requirements for allocations being equivalent to allocations that have substantial economic effect under Treasury Regulations 1.704-1(b) and 1.704-2.

4.5           Distributions.

(a)           Distributions Prior to Liquidation.  Subject to any limitations in the Construction Financing, Expansion Financing or Permanent Financing, Distributable Cash shall be disbursed or distributed entirely to Holding twenty five (25) days after the end of each calendar quarter in an amount equal to Distributable Cash less Additional Reserves (which Additional Reserves may include unencumbered funds from the Construction Financing, Expansion Financing or Permanent Financing, as the case may be, to the maximum extent permitted under such financing).

(b)           Withholding.  The Company shall withhold and pay over to the Internal Revenue Service or other applicable taxing authority all taxes or withholdings, and all interest, penalties, additions to tax, and similar liabilities in connection therewith or attributable thereto (hereinafter “Withheld Taxes”) to the extent that the Manager reasonably determines that such withholding and/or payment is required by the Code or any other law, rule or regulation.  All amounts withheld pursuant to this Section 4.5(b) with respect to any allocation, payment or distribution to Holding shall be treated as amounts distributed to Holding pursuant to Section 4.5(a) hereof for all purposes of this Agreement.

ARTICLE V

Members; Transfer of Interests

5.1           Admission.  Holding became the sole Member as of the Effective Date.  Notwithstanding any contrary provision of the Act, the Company may admit new Members to the Company only with the prior consent of the Executive Committee on such terms and conditions as the Executive Committee approves.  No Person shall be admitted as a Member until all approvals required by the Gaming Laws are obtained.  The Parties agree to cooperate with each other and the Executive Committee in adopting and implementing each and all of the amendments to this Agreement that will be required, necessary or desirable to give effect to the admission of a new Member.

5.2           Transfer of Interests.

(a)           No Transfer Without Executive Committee Consent.  Holding may not Transfer all or any part of its Membership Interest or otherwise assign or delegate any of Holding’s rights and obligations as a Member without the prior consent of the Executive Committee.  Notwithstanding anything in this Agreement to the contrary, in the event of any Transfer by Station or GC of any or all of its membership interest in Holding in contravention of the Holding Operating Agreement, such as, but not limited to, by operation of law, Bankruptcy or the like, the transferee shall have no rights with respect to the Company, and the other member of Holding shall have the sole right to vote and appoint all EC Members.  The Parties agree to

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cooperate with each other and the Executive Committee in adopting and implementing each and all of the amendments to this Agreement that will be required, necessary or desirable to give effect to a Transfer.

(b)           Attempted Transfers in Contravention.  Any attempted Transfer in contravention of this Article V shall be void and of no effect and shall not bind or be recognized by the Company.  In the case of an attempted Transfer not permitted hereby, the parties attempting to engage in such Transfer shall indemnify and hold harmless (and hereby agree to indemnify and hold harmless), the Company from all costs, liabilities and damages that any of such indemnified Person may incur (including, without limitation, incremental tax liability and attorneys’ fees and expenses) as a result of such attempted Transfer and efforts to enforce the indemnity granted hereby.

(c)           Compliance with Gaming Laws.  Notwithstanding anything to the contrary set forth herein, no Membership Interest or other ownership interest in the Company shall be issued or Transferred in any manner whatsoever except in compliance with all Gaming Laws and only after the receipt of all necessary Gaming Licenses.

5.3           Gaming Licensing.  The Company, Holding, Station, Parent and GC (each a “License Party”) each shall promptly and diligently, at its own cost, file for and seek to obtain all required Gaming Licenses for the Project.

(a)           In the event that any License Party (the “Problem Party”) has not received its Gaming License for the Project by the time of the Opening or, by virtue of its pending gaming application, is substantially impairing or impeding the receipt by the Company of the Gaming Licenses necessary for the Opening, then the Company, Holding and the members of Holding shall have the rights and obligations set forth in the Holding Operating Agreement.

(b)           If, subsequent to Opening and the initial licensing of each License Party, a Licensing Party (also, a “Problem Party”) is substantially impeding or impairing the ability of the Company to maintain its Gaming License for the Project, or is resulting in the imposition of significantly burdensome terms and conditions on any such Gaming Licenses (a “Gaming Problem”), then the Company, Holding and the members of Holding shall have the rights and obligations set forth in the Holding Operating Agreement.

5.4           Required Member Approvals.  The only matters requiring the approval of Holding, in its capacity as the sole Member, shall be those matters that are required to be submitted to Holding for its approval hereunder, if any, or by the Act.

5.5           Meetings.  No meetings of Members shall be required, except that upon the written request of Holding, the Executive Committee shall convene a meeting of Members to be held at such time and date and to address such matters as agreed to by Holding and the Executive Committee.  Meetings of Members shall be held at any place designated by the Executive Committee.  In the absence of any such designation, meetings of Members shall be held at the principal place of business of the Company.  Any meeting of Members may be held by conference telephone or similar communications equipment so long as all Members participating

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in the meeting can hear one another, and all Members participating by telephone or similar communications equipment shall be deemed to be present in person at the meeting.

5.6           In General.  As of the Effective Date, Holding and the Manager (other than the Manager with respect to Sections 5.6(e) and (f)), hereby make each of the representations, warranties and covenants applicable to Holding or Manager as set forth in this Section 5.6, and such representations, warranties and covenants shall survive the execution of this Agreement, and be for the benefit of the Company, Holding and Manager:

(a)           Due Incorporation or Formation; Authorization of Agreement.  Such Person is a limited liability company, it is duly organized or duly formed, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or formation and has the corporate, limited liability company, or partnership power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby.  Such Person is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder.  Such Person has the limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery, and performance of this Agreement has been duly authorized by all necessary limited liability company action.  This Agreement constitutes the legal, valid, and binding obligation of such Person enforceable in accordance with its respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency or other similar laws affecting creditor’s rights generally, and except that the availability of equitable remedies is subject to judicial discretion).

(b)           No Conflict With Restrictions; No Default.  Neither the execution, delivery, and performance of this Agreement nor the consummation by such Person of the transactions contemplated hereby (i) will conflict with, violate, or result in a breach of any of the terms, conditions, or provisions of any law, regulation, order, writ, injunction, decree, determination, or award of any court, any governmental department, board, agency, or instrumentality, domestic or foreign, or any arbitrator, applicable to such Person, (ii) will conflict with, violate, result in a breach of, or constitute a default under any of the terms, conditions, or provisions of the articles of organization or operating agreement of such Person or of any material agreement or instrument to which such Person is a party or by which such Person is or may be bound or to which any of its material properties or assets is subject, (iii) will  conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, give to others any material interests or rights, or require any consent, authorization, or approval under any indenture, mortgage, lease agreement, or instrument to which such Person is a party or by which such Person is or may be bound, or (iv) will result in the creation or imposition of any lien upon any of the material properties or assets of such Person.

(c)           Governmental Authorizations.  Any registration, declaration or filing with or consent, approval, license, permit or other authorization or order by, any governmental or regulatory authority, domestic or foreign, that is required in connection with the valid execution, delivery, acceptance, and performance by such Person under this Agreement or the

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consummation by such Person of any transaction contemplated hereby has been completed, made, or obtained on or before the Effective Date, except as set forth in this Agreement.

(d)           Litigation.  There are no actions, suits, proceedings, or investigations pending or, to the knowledge of such Person, threatened against or affecting such Person or any of its properties, assets, or businesses in any court or before or by any governmental department, board, agency, or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit, or proceeding, which if adversely determined could) reasonably be expected to materially impair such Person’s ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Person; and such Person has not received any currently effective notice of any default, and such Person is not in default, under any applicable order, writ, injunction, decree, permit, determination, or award of any court, any governmental department, board, agency, or instrumentality, domestic or foreign, or any arbitrator which could reasonably be expected to materially impair such Person’s ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Person.

(e)           Investigation.  Holding acquired its Membership Interest based upon its own investigation, and the exercise by Holding of its rights and the performance of its obligations under this Agreement will be based upon its own investigation, analysis, and expertise.  Holding’s acquisition of its Membership Interest was made for its own account for investment, and not with a view to the sale or distribution thereof.

(f)            Accredited Investor.  Holding is an “accredited investor” within the meaning of applicable state and federal securities laws.  Holding’s overall commitment to investments that are not readily marketable is not disproportionate to its net worth, and the acquisition of its Membership Interest will not cause such overall commitment to become excessive.

(g)           No Statute of Limitations Defense.  The Company, Holding, Parent, Station and GC agree that during any period under the Construction Loan Documents, Expansion Project Loan Documents or Permanent Loan Documents, including any Pledge/Guaranty Documents, such Persons are required to “stand still” with respect to claims against one another, each such Person agrees not to assert the statute of limitations as a defense to any action brought by another such Person to the extent such statute of limitations applies solely because of such “stand still” and all such Persons agree that any such statute of limitations period shall be tolled for the period of time that any such Person is required to “stand still.”

(h)           Manager’s Obligations with Respect to Entitlement Claims.  Notwithstanding anything herein to the contrary, in the event the Manager receives notice of any claim, assertion of a claim or other proceeding (“Entitlement Claims/Proceedings”) with respect to any governmental permits, licenses, zoning, approvals relating to the uses of, or similar land use entitlements (collectively, “Entitlements”) for the Resort Property, Manager shall promptly notify the Company, Holding, Parent and GC, and GC shall have the right, instead of the Manager, but at the expense of the Company and subject to the limitations contained in the last sentence of Paragraph (n) of Schedule 3.4, to control the defense or prosecution of such Entitlements Claims/Proceeding; provided, however, the Manager shall have the rights that GC

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otherwise would have under Paragraph (n) of Schedule 3.4.  In the event that GC gives notice to the Company, Holding, Parent and Manager that it desires to control such negotiations, litigation and other proceedings related to such Entitlement Claims/Proceeding, (i) GC shall provide the Company, Holding, Parent and Manager with copies of all correspondence, filings and/or submissions not less than one (1) business day prior to the delivery, filing or submission thereof and shall be entitled to participate in all negotiations, litigation and other proceedings, (ii)  neither GC nor any GC Affiliate shall take any action on behalf of the Company or otherwise in connection with such Entitlement Claims/Proceeding which would have a material adverse impact on the Entitlements for the Resort Property, (iii) if the Manager gives written notice to GC that, in the reasonable judgment of the Manager, GC is not reasonably pursuing the Entitlement/Claims Proceeding or that GC was not taking action reasonably calculated to protect the interests of the Company, the Manager may resume, and GC shall relinquish, full control of the Entitlement Claims/Proceeding on behalf of the Company, and (iv) GC may not settle such Entitlement Claims/Proceeding without the approval of the Manager (which shall not be unreasonably withheld, conditioned or delayed).  Nothing in the preceding sentence shall be construed or interpreted to prevent or prohibit GC or any GC Affiliate from appearing at or participating in any proceeding, hearing or other actions regarding Entitlements provided it does so in its individual capacity and not as a representative of, or on behalf of the Company.  Further, nothing herein shall be deemed to have modified the provisions of Section 3.8(d) or to impose any restrictions on any GC Affiliate from taking positions adverse to the Company so long as neither GC nor any GC Affiliate is controlling the Entitlement Claims/Proceeding on behalf of the Company.  In the event that GC or a GC Affiliate controls any Entitlement Claims/Proceeding, it and its Indemnitees shall be entitled to indemnification under Section 3.29 as if it were the Manager thereunder (subject to the same limitations contained therein as applicable to the Manager).

ARTICLE VI

Dissolution, Liquidation and Termination

6.1           Dissolution.  The Company shall dissolve and its affairs shall be wound up upon the occurrence of any of the following:

(a)           the Executive Committee’s consent; or

(b)           the occurrence of any other event that effects a dissolution of the Company under the Act.

6.2           Liquidation and Termination.  On dissolution of the Company, the Manager shall act as liquidating trustee or may appoint one (1) or more EC Members as liquidating trustee.  The liquidating trustee shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act.  The costs of liquidation shall be borne by the Company.  Until final distribution, the liquidating trustee shall continue to operate the Company properties with all of the power and authority of the Manager.  The steps to be accomplished by the liquidating trustee are as follows:

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(a)           as promptly as possible after dissolution and again after final liquidation, the liquidating trustee shall cause an accounting to be made by a firm of independent public accountants of the Company’s assets, liabilities and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable;

(b)           the liquidating trustee shall pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of the Company (including, without limitation, all expenses incurred in liquidation) or otherwise make adequate provision for payment and discharge thereof (including, without limitation, the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidating trustee may reasonably determine); and

(c)           all remaining assets of the Company shall be distributed to Holding in accordance with Section 4.5(a).

6.3           Articles of Dissolution.  On completion of the distribution of Company assets as provided herein, the Company’s existence shall be terminated, and the Manager (or such other person or persons as the Act may require or permit) shall file Articles of Dissolution with the Secretary of State of Nevada under the Act and take such other actions as may be necessary to terminate the existence of the Company.

6.4           Negative Capital Accounts.  Holding shall not have any obligation to make any contribution to the capital of the Company with respect to any deficit balance in its Capital Account, and such deficit shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever.

6.5           Limitations on Rights of Holding.  Holding shall look solely to the assets of the Company for the return of its Capital Contribution.

ARTICLE VII

Amendments

7.1           Amendments.  Except as otherwise provided in this Article VII, and notwithstanding any contrary provision of the Act, any amendments to this Agreement and to the Articles may be adopted only with Holding’s and the Executive Committee’s consent; provided, however, that in no event may the provisions of Sections 3.1 through 3.8, 3.10, 3.13 and 3.26 through 3.29 (including the related Schedules) or this Article VII regarding amendments to such provisions be amended without the approval of the Manager as long as Station is the Manager.

ARTICLE VIII

Miscellaneous

8.1           Notices.  All notices, requests, consents and other formal communication between Holding, the Manager, the EC Members and the Company that are required or permitted under this Agreement (“Notices”) shall be in writing and shall be sent to the address for the respective addressee provided on Exhibit I (each a “Notice Address”).  Notices shall be (a) delivered

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personally with a written receipt of delivery, (b) sent by a recognized overnight courier requiring a written acknowledgment of receipt or providing a certification of delivery or attempted deliver (e.g., Federal Express, Airborne, UPS), (c) sent by certified or registered mail, postage prepaid, return receipt requested, or (d) transmitted by facsimile machine provided that the facsimile transmission is received between 8:00 a.m. and 5:00 p.m. (as determined by the time zone of the addressee), Monday through Friday but excluding holidays on which the primary office of the addressee is closed, and provided, further, that a duplicate copy of the Notice is delivered to the respective Notice Address on the first regular business day following the date of facsimile transmission.  Notices shall be deemed delivered when actually received by the addressee at the respective Notice Address; provided, however, that if the Notice was sent by overnight courier or mail as aforesaid and is affirmatively refused or cannot be delivered during customary business hours by reason of the absence of a signatory to acknowledge receipt, or by reason of a change of address with respect to which the addressor did not have either knowledge or written notice delivered in accordance with this Section, then the first attempted delivery shall be deemed to constitute delivery.

Holding, the Manager, the EC Members and the Company shall be entitled to change its Notice Address from time to time, and to add up to two (2) additional notice addressees, by delivering to Holding, the Manager, the EC Members and the Company notice thereof in the manner herein provided for the delivery of Notices.

8.2           Binding Effect.  Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement shall be binding upon and inure to the benefit of Holding and its successors, transferees and (subject to the limitations in Article V) assigns.

8.3           Headings.  Section and other headings contained in this Agreement (except for the definitions in Section 1.1) are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

8.4           Severability.  Every provision of this Agreement is intended to be severable.  If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement.

8.5           Further Action.  Holding, upon the request of the Manager, agrees to perform all further acts and execute, acknowledge and deliver any documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement.

8.6           Governing Law.  The laws of the State of Nevada shall govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the Members.

8.7           Waiver of Action for Partition.  Each Member irrevocably waives any right that it may have to maintain any action for partition with respect to any of the Company’s assets.

8.8           Counterpart Execution.  This Agreement may be executed in any number of counterparts with the same effect as if all of the Parties had signed the same document.  All counterparts shall be construed together and shall constitute one agreement.

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8.9           Publicity.  Neither the Company, Holding, GC, Parent nor Station shall make any formal public statement(s) or announcements regarding the Project or this Agreement without the prior consent of the other, which consent shall not be unreasonably withheld; provided, however, that if any Party is unable to obtain the prior consent of the other with respect to a formal announcement that is, on the advice of legal counsel, believed to be required by law, then such party may make or issue such legally required statement or announcement and promptly furnish the other Parties with a copy thereof.

8.10         Transition as Manager.  After Station no longer is Manager for any reason, (a) Station shall reasonably cooperate with the Company, Holding and GC to make a transition in the management of the Project, including transferring all of the property of the Project, including books and records, customer lists, employee and services records and manuals, supplier lists and other similar documents or information, which shall remain the sole property of the Company, and (b) Station shall make itself reasonably available for reasonable and customary compensation to advise and consult in any transition for a reasonable period of time.

8.11         Broker Fees.  Holding represents and warrants that upon the formation of the Company or transfer of the Resort Property to the Company, there will be no brokerage fees or commissions or other compensation due or payable on an absolute or contingent basis to any person, firm, corporation, or other entity, with respect to or on account of the formation of the Company , arising by, through or under either such Party.

8.12         Securities under the UCC.  Notwithstanding any rule or construction to the contrary, the Membership Interest owned by Holding  is hereby deemed to be a “security” as that term is defined in Article 8 of the Uniform Commercial Code in effect on this date in the State of Nevada and, as such, the Membership Interest shall be governed thereby, and any certificate issued to evidence any Membership Interest shall bear a legend to that effect.

[The remainder of this page is left blank intentionally.]

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement  as of the Effective Date.

COMPANY:
ALIANTE GAMING, LLC
By:	Aliante Station, LLC, its Manager
	By:	Station Casinos, Inc., its Manager
	By:	/s/ RICHARD. J. HASKINS
		Richard J. Haskins
		Secretary

MEMBER:
ALIANTE HOLDING, LLC
By:	Aliante Station, LLC, a Member
	By:	Station Casinos, Inc, its Manager
	By:	/s/ RICHARD. J. HASKINS
		Richard J. Haskins
		Secretary
By:	G.C. Aliante, LLC, a Member
	By:		/s/ BRIAN L. GREENSPUN
			Brian L. Greenspun
			Manager

MANAGER:
ALIANTE STATION, LLC
By:	Station Casinos, Inc., its Manager
	By:	/s/ RICHARD. J. HASKINS
		Richard J. Haskins
		Secretary

Signature Page To Operating Agreement

ACKNOWLEDGED AND AGREED TO:
ALIANTE STATION, LLC, a member of Holding
By:	Station Casinos, Inc.
	Its Manager
	By:	/s/ RICHARD. J. HASKINS
		Richard J. Haskins
		Secretary
G.C. ALIANTE, LLC, a member of Holding
	By:	/s/ BRIAN L. GREENSPUN
		Brian L. Greenspun
		Manager

EXHIBIT A

Articles of Organization

See attached.

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EXHIBIT B

Original Operating Agreement

See attached.

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EXHIBIT C

Additional Property

See attached.

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EXHIBIT D

Example of Shared Expenses

The following are examples of costs that are allocated between Parent’s Subsidiaries that operate non-restricted gaming facilities (the “Hotel/Casinos”).

Room Reservations— Room Reservations is a centralized function that is accounted for at the Parent level.  This department books all rooms pre-sold at the Hotel/Casinos.  The costs incurred by Room Reservations relate to payroll, telephone service fees, and reservation fees paid for reservations booked by outside vendors.  These costs are allocated based on each Hotel/Casino’s share of total room inventory controlled by Parent’s Subsidiaries.

Station Advertising— Parent’s in-house advertising department performs various advertising functions for the Hotel/Casinos, including the following, the costs of which are allocated as follows:

·Media purchases — billed directly to the Hotel/Casino which required the purchase at one hundred percent (100%) of cost (Purchasing media in-house avoids paying a fifteen percent (15%) media commission to an outside advertising agency).

·Multi-Hotel/Casino media — allocated based upon a formula (generally).

·Public relations—allocated equally between all Hotel/Casinos.

·Special promotions — system-wide (allocated on a formula dependent upon participation).

·Special promotions — single Hotel/Casino; billed to that Hotel/Casino.

·In-house production — publications for human resources, video production, commercials, sign animation, web-site, etc.  (allocated based upon the type of activity and the number of Hotel/Casinos participating).

·General operations — allocated based on a total revenue formula.

Information Technology (IT) — Parent runs its IT group centrally, allowing for specialists (programmers, help-desk, system administrators, etc.) to perform services at all Hotel/Casinos. This centralization and allocation eliminates the need for each Hotel/Casino to hire specialists and purchase related equipment. Direct costs, such as maintenance or service agreements for on-property equipment, are billed directly to the applicable Hotel/Casinos.  Indirect costs (primarily payroll and related benefits costs) are allocated to the Hotel/Casinos based upon percentage of total revenue.

Central Mail — Parent processes all direct mail at a central location rather than outsourcing this function.  The capital and operating costs of this function are allocated to each Hotel/Casino based upon the actual volume of mailings performed for that Hotel/Casino.

Food & Beverage Management — In order to ensure that the food and beverage operations at each of the Hotel/Casinos remains at the highest level of quality and consistency, Parent has centralized the supervision of food and beverage activities.  This function is allocated based on food and beverage revenue for each of the Hotel/Casinos.  The costs allocated are primarily

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payroll and related benefit costs, as well as travel and entertainment, general supplies, and some consulting expenses.

Relationship Marketing — Parent operates its relationship marketing (database marketing) function centrally and allocates all costs equally between the Hotel/Casinos.  The costs allocated are primarily payroll and related benefit costs as well as travel and entertainment expenses.

Bank Charges — Parent manages its banking relationships centrally and bills each Hotel/Casino for direct charges generated by that Hotel/Casino.  These costs are specifically identifiable to the Hotel/Casino and relate to the transaction charges, primarily generated in the cage.  No payroll is allocated for this item.  Transactions include check cashing, purchasing and depositing currency, armored car services, etc.

Sportsbook — Parent manages its race and sportsbook operations centrally and allocates costs equally to each Hotel/Casino for the personnel required to administer this function.  The costs allocated are primarily payroll and related benefit costs.

Payroll Department — Parent processes all Nevada payroll from a central location and allocates the costs related to this function based on the number of employees at each Hotel/Casino.  The costs allocated are primarily payroll and related benefits costs.

* * * * *

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EXHIBIT E

Legal Description Losee Property

1.             The Losee Project, consisting of the following five parcels:

PARCEL ONE (1):

THAT PORTION OF THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M, DESCRIBED AS FOLLOWS:

LOT ONE (1) AND TWO (2) OF THAT CERTAIN PARCEL MAP ON FILE IN FILE 71, PAGE 75 IN THE OFFICE OF THE COUNTY RECORDER, CLARK COUNTY, NEVADA.

PARCEL TWO (2):

THE NORTHEAST QUARTER (NE ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.

BEING FURTHER DESCRIBED AS LOT ONE (1) OF THAT CERTAIN CERTIFICATE OF LAND DIVISION NO. 91-80 RECORDED JULY 18, 1980 IN BOOK 1250 AS DOCUMENT NO. 1209181, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

EXCEPTING THEREFROM THE NORTH THIRTY (30) FEET, THE EAST FORTY (40) FEET, AND THAT CERTAIN SPANDREL AREA LOCATED IN THE NORTHEAST CORNER (NE COR.) AS CONVEYED TO THE COUNTY OF CLARK FOR ROAD PURPOSES BY DEED RECORDED JULY 8, 1980 IN  BOOK 1250 AS DOCUMENT NO. 1209182, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

PARCEL THREE (3):

THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.

EXCEPTING THEREFROM THE SOUTH FIFTY (50) FEET AND THE EAST 40 FEET, AS CONVEYED TO THE COUNTY OF CLARK FOR ROAD PURPOSES BY DEED RECORDED JULY 8, 1980 AS DOCUMENT NO. 1201982 IN BOOK 1250 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

BEING FURTHER DESCRIBED AS LOT 2 OF THAT CERTAIN CERTIFICATE OF LAND DIVISION RECORDED JULY 8, 1980 AS DOCUMENT NO. 1209181 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

PARCEL FOUR (4):

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THE SOUTHWEST QUARTER (SW ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.;

ALSO KNOWN AS LOT THREE (3) OF CERTIFICATE OF LAND DIVISION NO. 91-80, RECORDED JULY 8, 1980 IN BOOK 1250 AS DOCUMENT NO. 1209181, OFFICIAL RECORDS, CLARK COUNTY, NEVADA;

EXCEPTING THEREFROM THE WEST 30.00 FEET, THE SOUTH 50.00 FEET, AND THAT CERTAIN SPANDREL AREA LOCATED IN THE SOUTHWEST CORNER (SW COR.) THEREOF AS CONVEYED TO CLARK COUNTY FOR ROAD PURPOSES BY THAT CERTAIN DEED RECORDED JULY 8, 1980 IN BOOK 1250 AS DOCUMENT NO. 1209182, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

PARCEL FIVE (5):

THE NORTHWEST QUARTER (NW ¼) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHWEST QUARTER (SW ¼) OF SECTION 13, TOWNSHIP 19 SOUTH, RANGE 61 EAST, M.D.B.&M.

EXCEPTING THEREFROM THE NORTH 30 FEET AND WEST 30 FEET, AS CONVEYED TO THE COUNTY OF CLARK FOR ROAD PURPOSES BY DEED RECORDED JULY 8, 1980, IN BOOK 1250, AS INSTRUMENT/FILE NO. 1209182, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

BEING FURTHER DESCRIBED AS LOT 4 OF THAT CERTAIN CERTIFICATE OF LAND DIVISION RECORDED JULY 8, 1980 AS INSTRUMENT/FILE NO. 1209181, CLARK COUNTY, NEVADA.

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EXHIBIT F

Legal Description of Resort Property

ALL OF PARCEL 34 AS SHOWN ON THE FINAL MAP OF ALIANTE NORTH, RECORDED IN BOOK 110 OF PLATS, PAGE 72, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA

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EXHIBIT G

Restricted Area

See attached

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EXHIBIT H

Location of Relocated Drainage Easement

See attached.

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EXHIBIT I

	Notice Addresses
Company:	Aliante Gaming, LLC
	c/o Aliante Station, LLC, its Manager
	c/o Station Casinos, Inc, its manager
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Frank J. Fertitta III
with copy to:	Station Casinos, Inc.
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Richard J. Haskins, Esq.
Holding:	Aliante Station LLC, a member
	c/o Station Casinos, Inc, its manager
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Frank J. Fertitta III
	and
	G.C. Aliante, LLC, a member
	c/o The Greenspun Corporation
	901 North Green Valley Parkway, Suite 210
	Henderson, NV 89074
	Attention: Brian L. Greenspun
with copies to:	Station Casinos, Inc.
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Richard J. Haskins, Esq.
	and
	The Greenspun Corporation
	901 North Green Valley Parkway
	Suite 210
	Henderson, NV 89014
	Attention: Key Reid

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GC:	G.C. Aliante, LLC
	c/o The Greenspun Corporation
	901 North Green Valley Parkway, Suite 210
	Henderson, NV 89074
	Attention: Brian L. Greenspun
with a copy to:	The Greenspun Corporation
	901 North Green Valley Parkway
	Suite 210
	Henderson, NV 89014
	Attention: Key Reid
Station:	Aliante Station, LLC
	c/o Station Casinos, Inc., its manager
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Richard J. Haskins, Esq.
Manager:	Aliante Station, LLC, Manager
	c/o Station Casinos, Inc, its manager
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Frank J. Fertitta III
with copy to:	Station Casinos, Inc.
	2411 Sahara Avenue
	Las Vegas, NV 89102
	Attention: Richard J. Haskins, Esq.

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SCHEDULE 3.3

Manager’s Duties During Pre-Opening Period

In addition to the provisions of Section 3.3 of the Agreement, the Manager shall have the following duties and responsibilities during the Pre-Opening Period:

(a)           The Manager shall develop and submit to the Executive Committee for its approval, along with supporting information therefor, the following:

(i)            the preliminary conceptual architectural design for the Project;

(ii)           the  preliminary Timetable for the Project; and

(iii)          the preliminary construction budget for the Project.

(b)           Master Development Plan.  The Manager shall consult with the Executive Committee on a regular basis regarding the formulation of the components of the Master Development Plan and shall submit such components for approval by the Executive Committee prior to submittal thereof to the City of North Las Vegas, Nevada, (or other application or filing to any governmental or quasi-governmental entity) and at times necessary in order to commence construction of the Project in accordance with the Timetable.  Further, at the sole expense of the Company, pursuant to the approved Design, Development and Construction Budget, the Manager shall, subject to Force Majeure, take commercially reasonable steps to cause the Company to obtain timely all Governmental Approvals necessary in order to commence construction of the Project in accordance with the Timetable.  In addition, at the sole expense of the Company, pursuant to the approved Design, Development and Construction Budget, the Manager shall take commercially reasonable steps to cause the Company to procure and maintain insurance during construction that conforms to reasonable industry standards; such insurance shall conform to the applicable requirements of Paragraph (l) of Schedule 3.4 (e.g., Holding being an additional insured, thirty (30) day notice of cancellation, etc.).

(c)           Construction and Permanent Financing.  The Manager shall develop and submit to the Executive Committee for its approval, along with supporting information therefor, (i) the term sheet for the Construction Financing and Permanent Financing for the Project and (ii) written expressions of interest from one or more lenders interested in providing such financing to the Company.  Subject to Section 3.13(vv) of the Agreement, the Manager shall make application for, and shall, subject to Force Majeure, take all commercially reasonable steps within its control to cause the Company to obtain, at the Company’s sole cost and expense, a commitment or signed engagement letter for Construction Financing and Permanent Financing in accordance with the Timetable.

(d)           Construction of Improvements.  Subject to Force Majeure, the Manager shall take commercially reasonable steps to cause the Company to commence rough grading of the Resort Property and construction of the Improvements in accordance with the Timetable and the Master Development Plan and shall diligently prosecute such construction to completion, and in any

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event shall use commercially reasonable efforts to protect the Resort Property’s land use entitlements.

The Manager may authorize a change order which changes the Design Plan, the Construction Plan, the Design, Development and Construction Budget or Master Development Plan without the prior approval of the Executive Committee; provided, however, the Executive Committee’s prior approval shall be required for any change order that materially changes the Design Plan, the Construction Plan, the Design, Development and Construction Budget or Master Development Plan.  The Manager shall provide to each of the EC Members a written request for approval of each proposed material change in the Design Plan, the Construction Plan, the Design, Development and Construction Budget or Master Development Plan.  In the event that neither EC Member notifies the Manager within seven (7) calendar days after receipt of such written request for approval of a material change to the Design Plan, the Construction Plan, the Design, Development and Construction Budget or Master Development Plan that he objects to such change, the Executive Committee shall be deemed to have approved such material change.  A material change requiring the approval of the Executive Committee is any item that: (i) materially changes the scope, appearance or functionality of the Project; or (ii) increases the cost of the design and construction of the Project as set forth in the Design, Development and Construction Budget by more than the lesser of (A) the aggregate amount of the contingency reserve or (B) ten percent (10%) of the aggregate budgeted cost of the Project, as set forth in the Design, Development and Constructions Budget, or (iii) changes in the cost of any single line item in the Design, Development and Construction Budget by more than $1,000,000.

(e)           Major Land Use Approvals.  The Manager shall use commercially reasonable efforts to obtain, within nine (9) months after the Executive Committee approves the preliminary architectural plans for the Project, all major land use approvals necessary for the construction of the Project in accordance with such preliminary architectural plans.

(f)            Construction Contract Approvals.  The Manager shall submit the Company’s contracts with the architect, interior design and landscaping prime contractors for the Project and the general construction contractor for the Project for the prior approval of the Executive Committee.

(g)           Pre-Opening Plan.  The Manager shall prepare and submit for Executive Committee approval within ninety (90) days prior to the Opening, and put into effect as appropriate after receiving such approval, a Pre-Opening Plan for the organization, services, sales and marketing program of the Project, and shall use commercially reasonable efforts to cause the Company to engage the General Manager and such employees as may be necessary in connection with the operation of the Project.

(h)           Pre-Opening Services.  Consistent with the approved Pre-Opening Plan, the Manager shall use commercially reasonable efforts to cause the Company to enter into agreements and arrangements with concessionaires, licensees, tenants, suppliers, sub-contractors or other intended users of the facilities of the Project, subject to the prior approval of the Executive Committee in the case of leases, licenses or concessions or other contracts as set forth in Paragraph (m) of Schedule 3.4 and Section 3.13 of the Agreement.  The Manager shall recruit and train for and on behalf of the Company the initial staff of the Project through such training

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programs and other training techniques as the Manager shall deem advisable and test the proposed operation of the Project by furnishing the services normally offered in the operation of a hotel/casino, including the serving of food and beverages, and generally operating the completed portions of the Project for a reasonable test period immediately prior to the Opening.

(i)            Reporting.  During the Pre-Opening Period, the Manager shall provide the Executive Committee with monthly progress reports not later than the twenty-seventh (27th) day of each month, which progress reports shall set forth in reasonable detail all expenditures during the preceding month together with a comparison of such expenditures to budgeted amounts and a revised estimate of the Project’s remaining cost to completion.  In addition, representatives of the Manager shall be available to meet with the Executive Committee on at least a monthly basis to review the status of the Project.

(j)            Contracts.  The Manager shall use commercially reasonable efforts to cause the Company to comply with and not to become in default under any contract, agreement, loan document or other obligation of the Company if the failure to comply therewith or a default thereunder would have a material adverse effect on the Company or any Member.

(k)           Additional Responsibilities.  The Manager shall comply with the provisions of Paragraphs (c), (h), (j), (n) and (p) of Schedule 3.4 prior to Opening, and Holding and the Executive Committee shall have their respective rights as set forth therein.  Also, the provisions of Paragraphs (d), (e) and (f) of Schedule 3.4 shall apply prior to the Opening to the extent that they reasonably should be applicable.

(l)            Opening Date.  Notwithstanding anything to the contrary in the Agreement or in this Schedule 3.3, subject to Force Majeure, the Manager shall use commercially reasonable efforts to cause the Company to take all actions necessary to cause the Project to be completed and the Opening to occur not later than the Opening date set forth in the Timetable.

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SCHEDULE 3.4

Manager’s Duties During Operating Period

                In addition to the provisions of Section 3.4 of the Agreement, during the Operating Period and, to the extent applicable, prior to the Operating Period, and with respect to each Expansion Project, the Manager shall have the following duties and responsibilities, which, except as provided in the Agreement (including the necessity for approval of the Annual Plan and Operating Budget or inclusion in the Design, Development and Construction Budget, as applicable), shall be at the sole cost and expense of the Company:

(a)           Annual Plan and Operating Budget.

(i)            Not fewer than ninety (90) days prior to Opening and not fewer than forty five (45) days prior to the commencement of each full Fiscal Year thereafter, the Manager shall submit for approval by the Executive Committee a proposed Annual Plan and Operating Budget.  If the Executive Committee fails to approve the proposed Annual Plan and Operating Budget by December 1 of any given calendar year, the Project shall continue to operate under the most recent Annual Plan and Operating Budget as if it were for such upcoming Fiscal Year until the Executive Committee otherwise agrees pursuant to the terms of the Agreement; except that capital expenditures (including equipment leases and similar transactions) for Capital Improvements and Replacements shall be permitted to the extent that amounts on deposit in the Reserve Fund are sufficient to fund the costs of such expenditures and thereafter only to repair or replace damaged or worn portions of the Project or damaged, worn, obsolete or unusable Furniture, Fixtures and Equipment.

(ii)           The Manager shall propose revisions to the Annual Plan and Operating Budget from time to time to reflect any unanticipated significant changes, variables or events or to include significant additional unanticipated items of income or expense.  Any such revision shall be submitted to the Executive Committee for approval.  If the Executive Committee fails to approve such revision within thirty (30) days after the date of such submission, the Project shall be operated in accordance with the original Annual Plan and Operating Budget until the Executive Committee otherwise agrees pursuant to the terms of the Agreement.

(iii)          Except as expressly set forth in Section 3.13 of the Agreement or elsewhere in the Agreement, the Manager may enter into any contract, agreement, license or other financial obligation so long as the amounts required to finance the Company’s performance of such contract, agreement, license or other financial obligation during the then-current Fiscal Year have been included in the then-current Annual Plan and Operating Budget, or make any change in the interior or exterior use, operation, functionality or appearance of the Project (that is not a material change), without the prior approval of the Executive Committee.  In the event that the Manager requests the approval of the Executive Committee for a material change to the interior or exterior use, operation, functionality or appearance of the Project and neither member of the Executive Committee notifies the Manager within seven (7) calendar days after receipt of such

written request that he objects to such change, the Executive Committee shall be deemed to have approved such material change.

(iv)          A pro forma for the first five (5) years of operation of the Project, including compensation projected to be payable to the Manager pursuant to Section 3.5 of the Agreement, shall be provided to Holding and the EC Members prior to the Opening.  The pro forma shall be for illustrative purposes only and shall not be an approved Annual Plan and Operating Budget. and neither Holding nor GC nor Station  shall make any representations or warranties with respect thereto.

(b)           Capital Expenditures.

(i)            The Manager shall recommend to the Executive Committee from time to time proposed Capital Improvements and Replacements and the design and specifics thereof.  If the Executive Committee approves such Capital Improvements and Replacements (including a budget therefor), the Manager shall use commercially reasonable efforts to cause the installation thereof.  All Capital Improvements and Replacements approved by the Executive Committee shall be made at the sole cost and expense of the Company (subject to the budget therefor) and to the extent reasonably feasible in a manner that will minimize any adverse impact on the normal operation of the Project.

(ii)           The Manager shall, to the extent Company funds are available following disbursement of funds in accordance with Paragraph (k) below, set aside within fifteen (15) days following the end of each Fiscal Month after Opening an amount equal to three percent (3%) of Gross Revenues for each such Fiscal Month, which amounts shall be deposited into the Reserve Fund to pay for Capital Improvements and Replacements; provided, however, to the extent that there is borrowing availability under the Expansion Financing or Permanent Financing, as the case may be, in an amount equal to or greater than the amount then required to be deposited in the Reserve Fund, then the Manager may, to the maximum extent permitted under any Expansion Financing or Permanent Financing, maintain borrowing availability from such credit facility to be drawn in lieu of such “cash-funded” Reserve Fund.  To the extent that the Manager so maintains borrowing availability under any Expansion Financing or Permanent Financing for the Reserve Fund, then Holding shall not have any obligation to make additional Capital Contributions pursuant to Section 4.2(c) of the  Agreement.  Any expenditures for Capital Improvements and Replacements during any Fiscal Year which have been budgeted in the Annual Plan and Operating Budget or otherwise approved by the Executive Committee may be made by the Manager without additional approval and, to the extent funds are available, such payments shall be made by the Manager from the Reserve Fund (including accrued interest and unused accumulations from earlier years) or from borrowing under the Expansion Financing or Permanent Financing, as the case may be.  Any amounts remaining in the Reserve Fund at the close of a Fiscal Year shall be carried forward and retained in the Reserve Fund until fully used as herein provided.  To the extent the Reserve Fund is insufficient at a particular time, or to the extent the Reserve Fund plus anticipated contributions for the existing Fiscal Year is less than the amount required by the Annual Plan and Operating Budget for the ensuing Fiscal Year, then

additional expenditures shall be subject to the prior approval of the Executive Committee pursuant to the terms of the Agreement and, if such expenditures are approved, the Executive Committee shall determine the source of funds for such Capital Improvements and Replacements; provided, however, that Holding shall have the funding obligation set forth in Section 4.2(c) of the Agreement.  The Manager may, in its reasonable discretion, sell capital items that are obsolete or are no longer needed for the operation of the Project and deposit the proceeds thereof in the Reserve Fund; provided, however, that prior approval of the Executive Committee shall be required with respect to the sale of any capital item with a fair market value of $500,000 or more.

(iii)          In the event a condition should exist with respect to the Project of an emergency nature, including structural repairs, which requires that immediate repairs are necessary to preserve and protect the Project, assure its continued operation or protect the health and safety of its guests or employees, the Manager, on behalf and at the sole cost and expense of the Company and as an Operating Cost, is authorized to take all steps and to make all expenditures reasonably necessary to repair and correct any such condition, whether or not provisions have been made in the applicable Annual Plan and Operating Budget for any such emergency expenditures, up to a maximum of $500,000 for any single  emergency.  The Manager agrees that it shall cause the Company to make such repairs and replacements only after it has made a reasonable attempt (if circumstances permit) to inform the Executive Committee of the existence of such emergency, the repairs and replacements it proposes to make, and the estimated amount of expenditures to be incurred.  If the Manager has been unable to advise the Executive Committee in advance, it shall promptly notify the Executive Committee after taking any necessary action.  Expenditures made by the Manager in connection with an emergency shall be paid for first by the Company from the Reserve Fund to the extent funds are available, and then from the Operating Bank Account.

(iv)          In the event that repairs to, or additions, changes or corrections in, the Project of any nature shall be required by reason of any laws, ordinances, rules or regulations now or hereafter in force, or by order of any governmental or municipal power, department, agency, authority or officer, the Manager shall inform the Executive Committee of the existence of the governmental regulations and the repairs, additions, changes or corrections it believes are required to be made and the estimated expenditures to be incurred.  The Executive Committee shall determine whether to contest the validity or application of any such governmental requirements or to make such repairs; provided, however, that the Manager shall be authorized and empowered to take all actions it reasonably believes are necessary to comply with applicable laws if the failure to so comply might expose the Company, Holding or the Manager to criminal liability, materially and adversely affect the operation of the Project, or jeopardize any Gaming License held by the Manager, Parent, any of Parent’s Subsidiaries, Holding or the Company.

(c)           Permits.  The Manager, at the sole cost and expense of the Company, shall use commercially reasonable efforts to obtain on or before the Opening and thereafter keep in full force and effect, all Governmental Approvals, including Gaming Licenses and liquor, bar, restaurant, sign and hotel licenses, as may be required for the operation of the Project pursuant to

the operations standard in Section 3.1(b) of the Agreement, other than any Gaming Licenses or liquor licenses, permits or approvals required to be obtained by Holding, Parent, GC and their Affiliates in their individual capacities (which Holding agrees to use its best efforts to obtain at their respective sole cost and expense prior to the scheduled Opening, including the timely submission of all applications and disclosures required or requested by the Gaming Authorities and liquor licensing authorities).  The Manager shall operate and manage the Project in a manner that will not materially adversely affect the Governmental Approvals necessary for the operation of the Project, but in all events shall use all reasonable efforts within its control to cause the Company, at the Company’s sole cost and expense, to comply with all material conditions or requirements set out in any Governmental Approvals.

(d)           Operating Supplies and Operating Consumables.  After Opening, the Manager shall, on behalf of the Company, use commercially reasonable efforts to obtain and maintain such Operating Supplies and Operating Consumables as it deems reasonably necessary for the operation of the Project in accordance with the Master Development Plan and subject to the provisions of the Agreement and the then-current Annual Plan and Operating Budget.

(e)           Personnel.

(i)            The Manager shall hire all employees of the Company for and on behalf of the Company.  All personnel hired by the Company for the Project (other than those that constitute Shared Expenses) shall be employees of the Company and all wages, compensation and benefits shall be the exclusive obligation of the Company and the Manager shall not be liable to any of the Company’s personnel therefor, except to the extent that the Manager sets the compensation in contravention of the Annual Plan and Operating Budget without the Executive Committee’s approval.  Subject to the Annual Plan and Operating Budget, the Manager shall hire, supervise, direct, discharge and determine the compensation, other benefits and terms of employment of the Company’s personnel.  With the exception of the General Manager, the Manager shall be the sole judge of the fitness and qualifications of such personnel and is vested with absolute discretion in hiring, supervising, directing, discharging and determining the compensation, other benefits and terms of employment of such personnel.  Holding may consult, advise or communicate with the Manager, Construction Manager or the General Manager regarding Project personnel or problems related to personnel at any time, but Holding shall not interfere with or give orders or instructions to any personnel employed at the Project.

(ii)           The Manager shall use commercially reasonable efforts to cause the Company to obtain workers’ compensation insurance and employer’s liability insurance.  The insurance coverages required hereunder shall be set forth in the Annual Plan and Operating Budget.

(iii)          The general hiring policies and the discharge of employees at the Project shall in all material respects comply with all “Equal Employment Opportunity” laws and regulations, and the Manager agrees to comply in all material respects with all laws, regulations and ordinances regarding the employment and payment of persons engaged in

the operation of the Project, including without limitation all “Equal Employment Opportunity” laws and regulations.

(iv)          The Manager shall keep the Executive Committee informed of all negotiations with labor unions representing employees at the Project, and neither the Manager nor the Company shall enter into any union contracts covering its employees without the prior approval of the Executive Committee pursuant to the terms of the Agreement, unless required by law to do so (which contracts, in all cases, shall be furnished to the Executive Committee as soon as reasonably possible).

(f)            Sales, Marketing and Advertising.  Subject to the Annual Plan and Operating Budget, the Manager shall, at the sole cost and expense of the Company, advertise and promote the business of the Project, institute and supervise a sales and marketing program, and coordinate with tour programs marketed by airlines, travel agents and government tourist departments when the Manager deems the same to be advisable for the operation of the Project.  Subject to the Annual Plan and Operating Budget, the Manager may cause the Project to participate in sales and promotional campaigns and activities involving complimentary rooms, food and beverages to customers, bona fide travel agents, tourist officials and airline representatives where such is customary and appropriate in the gaming industry.

(g)           Maintenance and Repairs.  Subject to the Annual Plan and Operating Budget, the Manager shall make or cause the Company to make, at the sole cost and expense of the Company, all repairs, replacements, corrections and maintenance items to the Project as shall be required in the normal and ordinary course of operation of the Project.  In conjunction therewith and subject to the Agreement (including Section 3.13 of the Agreement) and the Annual Plan and Operating Budget, the Manager is authorized to make and enter into in the name of, for the account of and at the expense of the Company, all such contracts and agreements as in the Manager’s opinion are reasonably necessary for the repair and maintenance of the Project and to cause the same to be paid by the Company when due.

(h)           Compliance with Legal Requirements.  The Manager shall take all commercially reasonable actions necessary to materially comply with, and to cause the Company to materially comply with, any and all laws, orders or requirements of any federal, state, county or municipal agency affecting the Project or the ownership or operations thereof.  The Executive Committee shall determine whether to contest any tax payment or assessment, or any governmental or regulatory order or requirements (except that, where failure to comply promptly with any such order or requirements might expose the Company, any Member or the Manager to criminal liability, materially and adversely affect the operation of the Project or jeopardize any Gaming License held by the Manager, Parent, any of Parent’s Subsidiaries, Holding or GC or their Affiliates, the Manager may take such action without Executive Committee approval).  The Manager shall promptly notify the Executive Committee in writing of all such orders and notices or requirements that are received by the Manager.  Except as otherwise provided in the Agreement, the costs of such compliance shall be at the expense of the Company.

(i)            Financial Statements.

(i)            On or before the fifteenth (15th) day of each Fiscal Month, the Manager shall deliver to Holding a Profit and Loss statement, statement of income and balance sheet showing the results of the operation of the Project for the preceding Fiscal Month and the year-to-date, and having attached thereto a computation of the Base Management Fee and Incentive Management Fee for such preceding month and the year-to-date.

(ii)           Within ninety (90) days after the end of each Fiscal Year, the Manager shall deliver to Holding an audited balance sheet together with a comparison to the previous Fiscal Year (after the first full Fiscal Year) and a related detailed statement of Profit and Loss (including all supporting departmental schedules of revenues and expenses), together with a comparison to the previous Fiscal Year and the current Annual Plan and Operating Budget, and having annexed thereto a computation in reasonable detail of the Base Management Fee and Incentive Management Fee for such Fiscal Year; and

(iii)          Upon the written request of Holding, such other additional statements, computations and reports regularly or otherwise prepared by the Company, or otherwise contemplated or required under the Agreement.

(j)            Accounting Matters and Fiscal Periods.

(i)            At the cost and expense of the Company, the Manager shall cause an audit of the Company’s annual financial statements to be performed following the end of each Fiscal Year (and upon termination of the Agreement if not coincident with a Fiscal Year end) by a nationally-recognized, independent certified public accounting firm with expertise in gaming proposed by the Manager and approved by the Executive Committee pursuant to the terms of the Agreement.

(ii)           The books and records reflecting the Project operations shall be kept by the Manager in accordance with GAAP applied on a consistent basis, and shall be maintained in the Las Vegas, Nevada metropolitan area. Holding, Parent and GC and their accounting firms shall have the right to examine and copy the books and records of the Project upon reasonable prior notice to the Manager.

(k)           Operating Bank Account.  Subject to the terms and conditions of the Agreement, all sums received from the operation of the Project and all sums advanced by the Company for purposes other than Capital Improvements and Replacement shall be deposited in the Operating Bank Account.  The Manager shall disburse funds from the Operating Bank Account on a monthly basis in the following order of priority and to the extent available:

(i)            when due, all Operating Costs;

(ii)           when due, the payment of debt service with respect to the Construction Financing, Expansion Financing or Permanent Financing;

(iii)          when due, the payment of debt service with respect to other loans from third parties;

(iv)          the Base Management Fee and Incentive Management Fee (including any accrued Base Management Fee and Incentive Management Fee from prior periods); except in the event that Station (A) is no longer a member of Holding, the Base Management Fee and Incentive Management Fee (including any accrued Base Management Fee and Incentive Management Fee from prior periods) shall be paid as an Operating Cost under Clause (i) above, or (B) is in default of its obligations as a member of Holding, in which event the Base Management Fee and Incentive Management Fee that accrues following such default shall be paid after the payment of any debt service due to any lender under Clause (vii) below;

(v)           the payment for emergency expenditures to the extent paid from the Operating Bank Account or from amounts on deposit in the Reserve Fund;

(vi)          deposits into the Reserve Fund and any other reserves established by the Executive Committee for anticipated expenditures, liabilities or contingencies;

(vii)         when due, the payment of debt service with respect to any loans from Holding, GC or Parent; and

(viii)        the remaining balance thereof shall constitute “Distributable Cash” for purposes of the Agreement.

In following the priorities set forth above, the Manager will reserve funds in the Operating Bank Account each Fiscal Month for payment of any Operating Costs for any of the above items which the Manager has a duty to pay that are not paid on a monthly basis (e.g., real estate taxes, insurance premiums and so on).  To the extent that there are sufficient funds on deposit in the Operating Bank Account, the Manager shall perform the function of paying all Operating Costs and other items set forth above (including but not limited to debt service, real estate taxes, insurance premiums, etc.) unless otherwise agreed by the Executive Committee.

(l)            Insurance Coverage.  The Manager agrees to use commercially reasonable efforts to cause the Company to procure and maintain at all times during the term hereof, as an Operating Cost, insurance in such amounts and coverages as may be required by the then-current Annual Plan and Operating Budget, which shall be no less than that necessary to conform to reasonable industry standards for a similar hotel and casino, taking into consideration inflation and any events or trends of liability which affect the risks attendant to owning and operating the Project.  All such insurance shall be provided under policies issued by insurance companies of good reputation and of sound financial responsibility and licensed by the State of Nevada.  All liability, business interruption and crime insurance policies shall be written in the name of the Company with Holding, each of the members of Holding and the Manager being named thereon as additional insureds.  All insurance policies shall be endorsed specifically to the effect that the proceeds of any crime or business interruption losses shall be made payable to the Company, or to the extent required by any lender of Construction Financing, Permanent Financing, Expansion Financing  or other financing, to such lender.  All such policies of insurance shall also be endorsed specifically to the effect that such policies shall not be canceled or materially changed without at least thirty (30) days prior written notice to Holding and the Manager.  To the extent obtainable without significantly increasing the premium cost, all policies of comprehensive

public liability insurance and comprehensive crime insurance shall contain an endorsement to the effect that such insurance shall be primary to any other similar insurance carried by the Company, Holding or the Manager.  Certificates of insurance shall be sent to Holding and the Manager pursuant to Section 8.1 of the Agreement.

(m)          Lease Agreements.  The Manager shall be responsible for the leasing of space in the Project in the Company’s name to third-party lessees, licensees and concessionaires, subject to the prior approval of the Executive Committee of the tenant, licensee or concessionaire, and terms of such leases, licenses or other occupancy agreements.  The Manager will enforce such leases, licenses or other occupancy agreements in a manner which is consistent with sound business practices.  Revenues received by the Company under any lease, license or occupancy agreements shall be deemed a part of Gross Revenues as defined under the Agreement, except for reimbursements for utilities, taxes or similar matters.

(n)           Legal Action.  The Manager shall have the right to institute, on behalf of and in the name of the Company, any and all legal actions or proceedings affecting the Project, including the construction thereof, such as, but not limited to, to collect charges, rent or other income from the Project or to remove any tenants, terminate a lease, license, or concession agreement, a breach thereof or default entered by any tenant, licensee, concessionaire, supplier, or contractor, or to protect and/or litigate to final decision in any appropriate forum, any violation, rule, regulation or agreement concerning the Project, including the construction thereof; provided, however, that approval of the Executive Committee pursuant to the terms of the Agreement shall be required with respect to the institution or defense of any action (or settlement thereof) where there is a reasonable possibility of exposure to the Company in excess of $250,000 or that could have a material adverse effect on the operation of the Project; provided, further, that the Executive Committee shall be deemed to have approved the institution of any action or defense of an action unless either EC Member notifies the Manager that he disapproves such action within seven (7) days after receipt of written notice requesting such institution or defense.  Any counsel to be engaged under this subsection (n) with respect to any matter with a reasonable possibility of exposure to the Company in excess of $250,000 or that could have a material adverse effect on the operation of the Project shall be proposed by the Manager, subject to the prior approval of the Executive Committee pursuant to the terms of the Agreement.  The Annual Plan and Operating Budget shall contain an amount, approved pursuant to Paragraph (a) above, with respect to any litigation or legal fees the Company anticipates incurring (as the same shall be amended pursuant to Paragraph (a)(ii) above from time to time at the request of Holding, the Manager or GC in the event of the need to incur litigation or legal fees after the establishment of the Annual Plan and Operating Budget), which may be incurred by either Holding, the Manager or GC (or an Affiliate of GC) as provided in the Agreement.

(o)           Consultation.  When requested to do so, representatives of the Manager and the General Manager shall meet with the Executive Committee to discuss the performance of the Project and of the Manager of its obligations hereunder and the Manager’s plans and expectations for the Project for the remaining Fiscal Year.

(p)           Emergencies.  Notwithstanding anything to the contrary contained within this Schedule 3.4, if at any time it becomes necessary in the Manager’s reasonable judgment to cease operations of all or part of the Project to protect the Project from material and adverse

consequences or to protect the health, safety or welfare of the guests or employees of the Project, then the Manager may close and cease operations of that portion of the Project, reopening the same when the Manager reasonably believes that such event has passed; provided, however, that the Manager shall immediately notify the Executive Committee of such event and shall keep that portion of the Project closed for the minimum reasonable period of time.

(q)           Contracts.  The Manager shall use commercially reasonable efforts to cause the Company to comply with and not to become in default under any contract, agreement, loan document or other obligation of the Company if such failure to comply or a default thereunder would have a material adverse effect on the Company or Holding, unless such action is approved by the Executive Committee, to the extent so affected.

(r)            Expansion Project(s).  With respect to each Expansion Project:

(i)            In General.  Subject to Force Majeure, the Manager shall use commercially reasonable efforts to (A) supervise and cause the completion of each  Expansion Project in accordance with the applicable Expansion Project Construction Plan and Expansion Project Design Plan in line with the Expansion Project Budget for such  Expansion Project, (B) protect the Resort Property’s land use entitlements and (C) obtain on behalf of the Company all Furniture, Fixtures and Equipment requisite for the operation of the Expansion Project, at the Company’s sole cost and expense.

(ii)           Expansion Project Construction Manager.  The Manager shall select the  Expansion Project Construction Manager with the prior approval of the Executive Committee pursuant to the terms of the Agreement.

(iii)          Expansion Project Design, Plan and Budget.  The Manager shall submit to the Executive Committee for approval each Expansion Project, consisting of the Expansion Project Design Plan, Expansion Project Construction Plan and Expansion Project Budget.  The Expansion Project Design Plan and Expansion Project Construction Plan may be approved in whole or in segments or by components by the Executive Committee pursuant to the terms of the Agreement.

(iv)          Contractors.  The Manager shall select, subject to the prior approval of the Executive Committee, the general contractor and architectural, interior design and landscaping firms for each Expansion Project.  The Manager shall submit the Company’s contracts with the architect, interior design, landscaping prime contractor and general construction contractor for the prior approval of the Executive Committee pursuant to the terms of the Agreement.

(v)           Change Orders.  With respect to change orders relating to an Expansion Project, the Executive Committee shall establish the parameters within which the Manager may make change orders without the approval of the Executive Committee at the time the Executive Committee approves the Expansion Project Budget.

(vi)          Reports.  The Manager shall provide the Executive Committee with monthly progress reports on each Expansion Project no later than the twenty seventh

(27th) day of each calendar month, which progress report shall state in reasonable detail all expenditures during the preceding calendar month together with a comparison of such expenditures to budgeted amounts and a revised estimate of the Expansion Project’s remaining costs to completion.  In addition, representatives of the Manager shall be available to meet with the Executive Committee when so requested to review the status of such Expansion Project.

ATTACHMENT I

Form of License and Support Agreement

See Attached

1

ATTACHMENT II

Form of License Agreement

See Attached

1

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF STATION CASINOS, INC.

Palace Station Hotel & Casino, Inc.

Boulder Station, Inc.

Texas Station, LLC

Sunset Station, Inc.

Santa Fe Station, Inc.

Fiesta Station, Inc.

Rancho Station, LLC

Lake Mead Station, Inc.

Tropicana Station, Inc.

Charleston Station, LLC

Magic Star Station, LLC

Gold Rush Station, LLC

LML Station, LLC

Palm Station, LLC

Fiesta Palms, LLC (6.7% ownership)

Green Valley Station, Inc.:

Town Center Amusements, Inc.

d.b.a. Barley’s Casino & Brewing Company (50% ownership)

Greens Café, LLC

d.b.a The Greens (50% ownership)

Sunset GV, LLC (50% ownership)

GV Ranch Station, Inc.:

GV Ranch Station Capital Holdings, LLC (100% ownership)

Green Valley Ranch Gaming, LLC (50% ownership)

Aliante Station, LLC:

Aliante Holding, LLC (50% ownership)

Durango Station, Inc.

Front Street Station, LLC

SC Rancho Development, LLC:

Rancho Road, LLC (50% ownership)

Station Holdings, Inc.

Town Center Station, LLC

Carey Station Holdings, LLC

Fiesta Station Holdings, LLC

Lake Mead Station Holdings, LLC

Vista Holdings, LLC

Centerline Holdings, LLC

Station California, LLC

Station Development, LLC

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-70342, 33-63752, 333-11975, 333-80925, 333-40540, 333-88490, 333-127414) and in the Registration Statement (Form S-3 No. 333-134936) of our reports dated February 18, 2007, with respect to the consolidated financial statements of Station Casinos, Inc. and its subsidiaries, Station Casinos, Inc. and its subsidiaries management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Station Casinos, Inc. and its subsidiaries, included in the Annual Report (Form 10-K) for the year ended December 31, 2006.

/s/ Ernst & Young LLP

Las Vegas, Nevada

February 27, 2007

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Frank J. Fertitta III, certify that:

1.I have reviewed this annual report on Form 10-K of Station Casinos, Inc.;

2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b)designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2007
	/s/ Frank J. Fertitta III
	Frank J. Fertitta III
	Chairman of the Board and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Glenn C. Christenson, certify that:

1.I have reviewed this annual report on Form 10-K of Station Casinos, Inc.;

2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b)designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2007
	/s/ Glenn C. Christenson
	Glenn C. Christenson
	Executive Vice President, Chief Financial Officer and Chief Administrative Officer (Principal Accounting Officer)

EX-32.1

Exhibit 32.1

Station Casinos, Inc.
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350)

Pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Sections 1350(a) and (b)), the undersigned hereby certify as follows:

1.Frank J. Fertitta III is the Chief Executive Officer of the Company (the “Company”).

2.The undersigned certifies to the best of his knowledge:

(A)The Company’s Form 10-K for the year ended December 31, 2006 accompanying this Certification, in the form filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

(B)The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  February 28, 2007

/s/ Frank J. Fertitta III

Frank J. Fertitta III

Chairman of the Board and

Chief Executive Officer

EX-32.2

Exhibit 32.2

Station Casinos, Inc.
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350)

Pursuant to the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Sections 1350(a) and (b)), the undersigned hereby certify as follows:

1.Glenn C. Christenson is the Chief Financial Officer of the Company (the “Company”).

2.The undersigned certifies to the best of his knowledge:

(A)The Company’s Form 10-K for the year ended December 31, 2006 accompanying this Certification, in the form filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (the “Exchange Act”); and

(B)The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  February 28, 2007

/s/ Glenn C. Christenson

Glenn C. Christenson
Executive Vice President,
Chief Financial Officer and
Chief Administrative Officer
(Principal Accounting Officer)