Agreement Regarding Pre-negotiated Restructuring

AGREEMENT
REGARDING PRE-NEGOTIATED
RESTRUCTURING


FITZGERALDS GAMING CORPORATION
FITZGERALDS BLACK HAWK, INC.
FITZGERALDS BLACK HAWK II, INC.
FITZGERALDS LAS VEGAS, INC.
FITZGERALDS MISSISSIPPI, INC.
FITZGERALDS RENO, INC.
FITZGERALDS SOUTH, INC.
101 MAIN STREET, Limited Liability Company
FITZGERALDS INCORPORATED
FITZGERALDS FREMONT EXPERIENCE CORPORATION


and


Philip D. Griffith
Michael E. McPherson
Max L. Page
Paul H. Manske


and


MEMBERS OF INFORMAL COMMITTEE OF HOLDERS OF
12.25% SENIOR SECURED NOTES DUE 2004


December 1, 2000


TABLE OF CONTENTS


PAGE


RECITALS ..............................................................1


AGREEMENT ..............................................................2


Article I Definitions...................................................2


Article II General Terms of Restructuring...............................10
Section 2.1 General Purpose of Agreement...........................10
Section 2.2 Acknowledgment of Obligations..........................11
Section 2.3 Acknowledgment of Security Interests...................11
Section 2.4 Acknowledgement of Binding Effect of
Documents..............................................11
Section 2.5 No Other Waivers; Reservations of Rights...............11


Article III Liquidation of Operating Companies and the Chapter
11 Cases.....................................................12
Section 3.1 Sales of Operating Companies and
Commencement of Chapter 11 Cases.......................12
Section 3.2 Sale Negotiations......................................13
Section 3.3 Certain Agreements to Cooperate and Other
Rights Respecting Claims Purportedly Owned
by Fitzgeralds Sugar Creek, Inc........................14
Section 3.4 Forbearance by Consenting Noteholders and
the Indenture Trustee..................................14
Section 3.5 Consenting Noteholder Representation...................14
Section 3.6 Treatment of FGC Equity Interests......................14
Section 3.7 Treatment of Subsidiary Equity Interests...............14
Section 3.8 Pre-Petition Cash Distribution to Certain
Unsecured Creditors....................................15
Section 3.9 Treatment of the Foothill Claim........................16
Section 3.10 Certain Obligations in respect of Official
Noteholder Committee...................................16


Article IV Treatment of Noteholder Claims...............................16
Section 4.1 Pre-Petition Cash Distribution.........................16
Section 4.2 Additional Excess Cash Distributions...................16
Section 4.3 Distribution of Sale Proceeds..........................17


Article V Senior Management Incentive Program..........................17
Section 5.1 Senior Management Role.................................17
Section 5.2 Cash Distribution Incentive............................18
Section 5.3 Senior Management's Ownership of Nevada
Purchase Notes.........................................20
Section 5.4 Retention and Severance................................20
Section 5.5 Certain Agreements with Senior Management
Regarding Compensation Clawback and
Non-Compete Agreements.................................21


Section 5.6 Senior Management Employment Agreements and
Compensation...........................................22
Section 5.7 Bankruptcy Court Approval..............................23
Section 5.8 Agreement to Waive Claims by Senior
Management.............................................23
Section 5.9 Replacement of Executives..............................24
Section 5.10 Waiver of all FSI Warrants.............................24


Article VI Liquidating Trust............................................24


Article VII Lockup and Conditions on Transfer of Notes...................25
Section 7.1 Reserved...............................................25
Section 7.2 Restrictions On Transfer of Notes, Claims
and Interests..........................................25
Section 7.3 Material Reliance......................................26
Section 7.4 Remedies...............................................26


Article VIII Representations and Warranties...............................27
Section 8.1 Senior Management......................................27
Section 8.2 Debtors and Senior Management..........................27
Section 8.3 Consenting Noteholders.................................29


Article IX Bankruptcy Process...........................................30
Section 9.1 Bankruptcy Filing......................................30
Section 9.2 Support of Agreement and Restructuring.................30
Section 9.3 No Improper Solicitation...............................32
Section 9.4 Official Noteholder Committee..........................32
Section 9.5 Debtors' Professionals.................................32
Section 9.6 Rights of Parties in the Event the Indenture
Trustee Acts in a Manner inconsistent with
this Agreement.........................................33


Article X Conduct of Business..........................................33
Section 10.1 Conduct of Business....................................33
Section 10.2 Capital Expenditures...................................35


Article XI Conditions Subsequent, Defaults and Remedies.................35
Section 11.1 Debtors' Right to Terminate Agreement Upon
Condition Subsequent...................................35
Section 11.2 Consenting Noteholders Right to Terminate
Agreement Upon Condition Subsequent....................36
Section 11.3 Senior Management's Right to Terminate
Agreement Upon Condition Subsequent....................36
Section 11.4 Consenting Noteholder Default..........................37
Section 11.5 Remedies in the Event of a Consenting
Noteholder Default.....................................38
Section 11.6 Debtors' Default.......................................38
Section 11.7 Remedies in the Event of a Debtors' Default............39
Section 11.8 Senior Management Default..............................39
Section 11.9 Remedies in the Event of a Senior Management
Default................................................40


Section 11.10 Limited Right To Terminate Agreement By
Consenting Noteholders.................................40
Section 11.11 Limitation on Right To Terminate Agreement
By the Debtors' or Senior Managements'
Default................................................42
Section 11.12 Termination Due to Failure to Settle Papers
and Orders.............................................42


Article XII Miscellaneous................................................42
Section 12.1 Successors and Assigns.................................42
Section 12.2 Successors and Assigns.................................42
Section 12.3 Notices................................................43
Section 12.4 Amendments.............................................45
Section 12.5 Enforcement............................................45
Section 12.6 Headings...............................................45
Section 12.7 Counterparts...........................................45
Section 12.8 Entire Agreement.......................................45
Section 12.9 Time Is of the Essence.................................45
Section 12.10 Extension of Senior Management's Employment............45
Section 12.11 Effect of Termination of This Agreement................45
Section 12.12 Jurisdiction; Waiver of Jury Trial.....................45


EXHIBIT LIST


EXHIBITS TO
AGREEMENT REGARDING PRE-NEGOTIATED RESTRUCTURING


Exhibit "1" Protocol Motion


Exhibit "2" Form of Escrow Agreement for the Retention and Severance Payment
(See Section 7.2(b))


Exhibit "3" Compensation Motion


Exhibit "4" Form of Liquidating Trust Agreement


Exhibit "5" Form of Transferee Agreement


Exhibit "6" Form of Legal Opinion


Exhibit "7" List of Subsidiaries


Exhibit "8" Agreement Regarding Use of Cash Collateral


Exhibit "9" Interim Fee Procedures Motion and Order


Schedule 2.3 Liens


Schedule 8.1 Claims/Interests


This RESTRUCTURING AGREEMENT dated as of December 1, 2000 (this "Agreement") is entered into by and among Fitzgeralds Gaming Corporation, a Nevada corporation ("FGC") and the following Subsidiaries; Fitzgeralds Mississippi, Inc. a Mississippi corporation, ("FMI"), 101 Main Street, Limited Liability Company, a Colorado limited-liability company ("101 Main"), Fitzgeralds Reno, Inc., a Nevada corporation ("FRI") and Fitzgeralds Las Vegas, Inc., a Nevada corporation ("FLVI" collectively with FMI, 101 Main and FRI, the "Operating Companies"), Fitzgeralds Black Hawk, Inc. ("FBHI") a Nevada corporation, Fitzgeralds Black Hawk II, Inc. ("FBHII"), a Colorado corporation, Fitzgeralds Fremont Experience Corporation, a Nevada corporation ("FFEC"), Fitzgeralds South, Inc. ("FSI"), a Nevada corporation, Fitzgeralds Incorporated, a Nevada corporation ("FI" and collectively with FGC, FBHI, FBHII, FFEC and FSI and the Operating Companies, the "Debtors") and Philip D. Griffith, Michael E. McPherson, Paul H. Manske and Max L. Page (each an "Executive" and collectively, "Senior Management"), and with various funds and accounts advised by affiliates of Putnam Investment Management, Inc., The Putnam Advisory Company and Putnam Fiduciary Trust Company identified specifically on the signature pages hereto (collectively, "Putnam"), Morgan Stanley Dean Witter High Yield Securities, Inc., Morgan Stanley Dean Witter High Income Advantage Trust, and Morgan Stanley Dean Witter High Income Advantage Trust II, Morgan Stanley Dean Witter High Income Advantage III, Morgan Stanley Dean Witter Variable Investment Series High Yield Portfolio, Morgan Stanley Dean Witter Diversified Income Trust, and Morgan Stanley Dean Witter Select Dimensions Investment Series--The Diversified Income Portfolio (collectively, "MSDW"), various affiliates of Contrarian Capital Management, L.L.C. and Contrarian Capital Advisors, L.L.C. (collectively, "Contrarian"), Prudential High Yield Fund Inc. and The Prudential Series Fund Inc., High Yield Bond Portfolio (collectively, "Prudential").


RECITALS


WHEREAS, pursuant to that certain Indenture dated as of December 31, 1997, (the "Indenture") by and among FGC as obligor; the Operating Companies, FSI, FI, FBHI, FFEC and FBHII as guarantors (the "Guarantors"); and The Bank of New York, a New York banking corporation, and any successor in interest (the "Indenture Trustee"), as trustee thereunder, FGC has issued $205,000,000 principal amount of its 12.25% Senior Secured Notes due 2004 (the "Notes"); and


WHEREAS, FGC is currently in default of certain of its obligations with respect to the Notes including, among other things, its failure to make interest payments due thereunder on June 15, 1999, December 15, 1999 and June 15, 2000, which failures constitute "Events of Default" under the Indenture; and


WHEREAS, the Debtors, Senior Management and the Consenting Noteholders believe that the fair market value of the real and personal property securing the Notes is less than the total outstanding principal and interest due under the Notes, and that the fair market value of Debtors' real and personal property not securing the Notes is less than the amount of the unsecured deficiency claim of the Noteholders; and


WHEREAS, the parties' primary objective in this restructuring is to maximize the value of the Noteholders' recoveries in as much as the obligations


owed by the Debtors to the Noteholders constitute in excess of 90% of the Debtors' liabilities, and the parties' desire to obtain this objective through an expeditious and orderly sale of the Operating Companies as going concerns by asset and/or stock sales and the distribution of the net proceeds therefrom; and


WHEREAS, the Consenting Noteholders and the Debtors are desirous of maintaining the stability of operations and gaming licensing during the sale of the stock and/or assets of the Operating Companies, and have determined that it is important to retain Senior Management; each Executive has advised the Consenting Noteholders and the Debtors that, subject to the conditions set forth in this Agreement, each Executive is prepared to remain in such employ and forego alternative employment opportunities in favor of remaining with the Debtors through the Liquidation Date and the Cash Distribution Incentive and Retention Payment have been developed and negotiated (and as incorporated in the Chapter 11 Senior Management Retention and Severance Program entered into by Debtors and Senior Management) to provide an incentive for Senior Management to remain with the Debtors, thereby enhancing the probability that maximum sale proceeds will be realized from the sale of the assets (or the stock) of the Operating Companies and the sale of the remaining assets of FGC in an expeditious manner.


WHEREAS, certain of the Executives are licensed under gaming laws and regulations applicable to the Debtors and own a substantial portion of Existing Common Stock.


AGREEMENT


NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Debtors, Senior Management and where applicable, each of the Executives and the Consenting Noteholders (severally and neither jointly nor jointly and severally) hereby covenant and agree as follows:


ARTICLE I
DEFINITIONS


For purposes of this Agreement, the following capitalized terms shall have the following meanings:


"101 Main" has the same meaning as set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FBHII.


"363 Motion" means each motion(s) filed by one or more of the Debtors seeking an order authorizing the sale of the assets of one or more Operating Companies, or the stock of such companies, free and clear of Liens pursuant to Section 363 of the Bankruptcy Code and the assignment (and in some cases the assumption) of certain assumed executory contracts and unexpired leases pursuant to Section 365 of the Bankruptcy Code, as set forth in the Protocol Motion.


"Affiliate" has the same meaning as the term "affiliate" in the Indenture.


"Agreement" means this Restructuring Agreement.


"Article" means an Article of this Agreement, unless the context otherwise indicates.


"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, Title 11, United States Code, as now in effect or hereafter amended, 11 U.S.C. ss.ss. 101 ET SEQ.


"Bankruptcy Court" means the United States Bankruptcy Court for the District of Nevada, Northern Division.


"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, promulgated pursuant to 28 U.S.C. ss. 2075 and the Local Rules of Practice of the United States Bankruptcy Court, District of Nevada as applicable from time to time during the Chapter 11 Cases.


"Beneficial Owner" has the meaning set forth in Section 7.2.


"Best Rejected Offer" means with respect to the assets (or the stock) of each Operating Company, the Rejected Offer with the highest proposed purchase price.


"Bonus Formula" has the meaning set forth in Section 5.6.


"Business Day" means any day except Saturday, Sunday, or a day in which commercial banks in the state of Nevada or state of New York are authorized or required by law to close.


"Cash Collateral Stipulation" has the meaning set forth in Section 9.1.


"Cash Distribution Incentive" has the meaning set forth in Section 5.2.


"Chapter 11 Cases" has the meaning set forth in Article II.


"Compensation Motion" has the meaning set forth in Section 5.7.


"Confirmation Date" means the date upon which the Bankruptcy Court enters its order confirming the Plan for FGC.


"Consenting Noteholders" means, collectively, (i) Putnam, MSDW, Contrarian and Prudential, (ii) any Transferees to whom a transfer of any Notes has been effected by any Consenting Noteholder after the date hereof and (iii) any Noteholders that are Affiliates of any Transferees.


"Contrarian" has the meaning set forth in the Preamble to this Agreement.


"Court Approval Date" has the meaning set forth in Section 5.2.


"Debtors" has the meaning set forth in the Preamble to this Agreement.


"Debtors' Professionals" means Gordon & Silver, Ltd., KPMG, LLP, Arthur Andersen, LLP, Hughes, Hubbard and Reed, Deloitte & Touche LLP and such other professionals retained by the Debtors to advise and represent them in the Restructuring and in the Chapter 11 Cases.


"Deemed Sales Prices" means the sales price at which the assets (or stock) of each Operating Company are ultimately sold, including a credit bid by the Indenture Trustee; provided, however, that if a bid for the assets or stock of any Operating Company made at any auction is not accepted by the Indenture


Trustee and the auction is terminated, the last bid before such auction was terminated shall be the Deemed Sales Price of such Operating Company.


"Default Date" has the meaning set forth in Section 5.2.


"Default Extension Period" with respect to each Operating Company shall be a period of three months plus the time to obtain Bankruptcy Court and gaming regulatory approvals of a new sale transaction.


"Delay Extension Period" has the meaning set forth in Section 5.2.


"Discount Rate" has the meaning set forth in Section 5.2.


"Distributable Cash" means the sum of: (a) all Excess Cash Distributions paid to the Indenture Trustee; (b) net cash and non-cash consideration received by the Indenture Trustee or the beneficiaries of the Liquidating Trust from the sales of assets (or stock) of Operating Companies and the Deemed Sales Price (without duplication); (c) all Purchase Notes received by the Debtors; (d) the Nevada Purchase Notes received by the Debtors; (e) the proceeds of the Net Residual Assets; (f) the amount of the Retention Payment; (g) the amount paid to Houlihan Lokey by FGC and/or the other Debtors in excess of $600,000.00; (h) the sum of each Higher Offer Amount; and (i) the Deemed Sales Price to the extent not included in subpart (b) of this paragraph. No component of Distributable Cash shall be reduced by the Cash Distribution Incentive payment(s) when determining Distributable Cash.


"Distribution Date" has the meaning set forth in Section 5.2.


"Effective Date" means the later of the first Business Day following the closing date of the sale of the last of the assets (or stock) of the Operating Companies or the first Business Day that is at least eleven calendar days after the Confirmation Date of the FGC Plan.


"Events of Default" as used in the Recitals and Article II of this Agreement shall have the meaning provided in the Indenture.


"Excess Cash" means $13,000,000 distributed pursuant to Section 4.1 of this Agreement and, with respect to any applicable period after the Petition Date, all cash and all cash equivalents held by the Debtors (excluding Restricted Cash and the Retention Payment to the extent not included in the definition of Restricted Cash) in Excess of $15,000,000.00 PLUS the applicable Purchase Agreement Cash Reserve PLUS the amount of any bid protection (i.e. Breakup fee) or expense reimbursement then pending in an application or stated in an order therefore .


"Excess Cash Distributions" has the meaning set forth in Section 4.2.


"Executive" has the meaning set forth in the Preamble to this Agreement.


"Executive Claims/Interests" has the meaning set forth in Section 7.2.


"Executive Payment" has the meaning set forth in Section 5.5.


"Existing Common Stock" means all the outstanding and existing common stock and related options and warrants (if any) of FGC.


"Existing Preferred Stock" means all of the outstanding and existing preferred stock of FGC and related options and warrants, including the cumulative redeemable preferred stock of FGC issued pursuant to a Certificate of Designation of Preferences and Rights dated the 8th day of December 1995.


"Extended Transactions" has the meaning set forth in Section 5.2.


"FBHI" has the same meaning set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FI.


"FBHII" has the same meaning set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FBHI.


"FFEC" has the meaning set forth in the Preamble of this Agreement, and is a wholly owned subsidiary of FLVI.


"FI" has the same meaning set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FGC.


"FLVI" has the same meaning set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FSI.


"FAMI" has the same meaning set forth in Section 5.8 and is a Non-Debtor Affiliate.


"Final Order" means an order, judgment or other decree of the Bankruptcy Court which has not been appealed, vacated, reversed, modified or amended or stayed, and for which the time to appeal or seek review or rehearing has expired.


"FM" has the same meaning set forth in Section 5.8 and is a non-Debtor Affiliate.


"FMI" has the same meaning set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FSI.


"FRI" has the same meaning set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FGC.


"FSI" has the meaning set forth in the Preamble to this Agreement, and is a wholly owned subsidiary of FGC.


"Fitzgeralds Black Hawk" means the assets comprising the Fitzgeralds Black Hawk Casino owned and operated by 101 Main.


"Fitzgeralds Las Vegas" means the assets comprising the Fitzgeralds Las Vegas Hotel and Casino owned and operated by FLVI.


"Fitzgeralds Reno" means the assets comprising the Fitzgeralds Reno Hotel and Casino owned and operated by FRI.


"Fitzgeralds Tunica" means the assets comprising the Fitzgeralds Tunica Hotel and Casino owned and operated by FMI.


"Foothill" means Foothill Capital Corporation, a California corporation.


"FSI Warrants" means any warrants to purchase shares of common stock of FSI, formally known as Fitzgeralds Gaming Corporation, issued in connection with the issuance of $36,000,000 in aggregate amount of Senior Secured Notes in February 1994.


"Guarantors" has the meaning set forth in the Recitals to this Agreement.


"Higher Offer Amount" means with respect to the assets or stock of each Operating Company, the difference between: (a) the Best Rejected Offer; and (b) the Deemed Sales Price; PROVIDED, HOWEVER, if (a) is less than (b), the Higher Offer Amount shall be deemed to equal zero. For purposes of calculating the Higher Offer Amount, the assets (or stock) of any Operating Company, which remain unsold as of the Liquidation Date, shall have a Deemed Sales Price of zero only if there was no bid at the auction other than the credit bid of the Indenture Trustee.


"Houlihan Lokey" means Houlihan Lokey Howard Zukin Capital.


"Indenture" has the meaning set forth in the Recitals to this Agreement.


"Indenture Trustee" has the meaning set forth in the Recitals to this Agreement.


"Informal Committee" means the informal committee of Noteholders comprised of Consenting Noteholders signatory hereto.


"Informal Committee Professionals" means Ropes & Gray and Houlihan Lokey and such other professionals retained by the Informal Committee from time to time.


"Interim Fee Procedures Motion and Order" has the meaning set forth in Sections 9.4 and 9.5.


"Legal Opinion" has the meaning set forth in Section 7.2.


"Leveraged Offer(s)" means any offer to acquire one or both of the Nevada Properties, which among other things, is conditioned upon the applicable selling Debtor accepting a Nevada Purchase Note(s) as consideration.


"Lien" has the meaning set forth in Section 101(37) of the Bankruptcy Code.


"Liquidation Date" means the date which is the later of: (a) December 31, 2001; (b) the termination of the last Delay Extension Period; and (c) the termination of the last Default Extension Period.


"Minimum Spread" means an amount equal to 500 basis points plus the product of 20 basis points times the difference between 25% and the percentage of shareholders' equity as a portion of total financing debt and equity capitalization of the Buyer on the closing date of the sale.


"Motions" means individually and collectively the Protocol Motion, Compensation Motion, 363 Motion, Motion to Approve the Cash Collateral Stipulation and the Interim Fee Procedures Motion.


"MSDW" has the meaning set forth in the Preamble to this Agreement.


"Net Distributable Cash" means cash and non-cash consideration available for distribution to the Indenture Trustee (and the Noteholders) and s ...